Wang Zhonglei, CEO of Huayi: it is biased to say that we all rely on Feng Xiaogang

category:Finance
 Wang Zhonglei, CEO of Huayi: it is biased to say that we all rely on Feng Xiaogang


Say so. He also predicted that in the future, film production companies will become more market-oriented and financial in terms of financing their working capital or single project.

Recently, at the headquarters of Huayi Brothers in Liangmaqiao, Wang Zhonglei received an exclusive interview with shell finance reporter of Beijing News. In the one hour conversation, he faced up to the reputation of Huayi Brothers over the past two years. When every film company encounters a short period of bottleneck or a short period of outbreak, everyone should look at it from a professional point of view, and do not have to be flattered or crushed to death.

Huayi Brothers, which landed in the capital market in 2009 under the halo of the first share in the mainland entertainment industry, did not have a smooth road to capital. In the tenth year of listing, Huayi Brothers first suffered losses, and public opinion was extremely harsh on them. When the clock is set to 2020, the Spring Festival will be hit by the epidemic and the film and television industry will be hit hard. Wang Zhonglei said that the epidemic has given him time to calm down. What kind of content should the movie focus on, how to coexist with the Internet, and how to control the budget for making movies have become the focus of his attention in the epidemic.

On July 20, the cinema, which had been closed for half a year, began to work conditionally, and Huayi Brothers ushered in a turning point. After nearly two years of absentees embarrassment, Huayi Brothers fought a beautiful turnaround battle with eight hundred. As of the afternoon of September 28, cats eye Professional Edition showed that eight hundred had been released for 39 days and earned 3.023 billion box office. This hot money is very timely and important, because Huayi Brothers lost money for two consecutive years in 2018 and 2019, and will face delisting risk if it loses again in 2020.

We took the initiative to communicate with the film Bureau in June, but we were still very nervous. When we announced the schedule, we required 30% attendance. When the resumption rate was only 60% to 70%, the market share was only 18% to 21% Talking about the gamble and choice behind the release of 800, Wang Zhonglei said. At two oclock in the afternoon, the sun penetrated through the glass window, evenly sprinkled on his face, gilded with gold, but also left a shadow on the side.

In recent years, Huayi Brothers has successively acquired and acquired shares in film and television, game and cinema companies, developed IP derivative licensing, set up live entertainment Town, and made rapid progress in the strategy of eliminating single film, with a market value of more than 70 billion yuan in 2015. However, due to the suspension of star capitalization in 2016, the industry encountered the storm of tax investigation, and then to the new crown epidemic in early 2020, Huayi Brothers has been faced with doubts such as excessive dependence on the IP of Feng Xiaogangs works, high proportion of equity pledge, tight cash flow, lack of master works, etc., and the market value has also dropped to about 13.7 billion yuan at present.

Wang Zhonglei, vice chairman and CEO of Huayi Brothers.

Turn yourself into a magnet, attract good metals, and make the company bigger together

Beijing News: Huayi Brothers recently released the seventh season film list of plan H, which is the first time that you have taken over the film business. In the film list, there are old friends like Feng Xiaogang, who have been working together, Jia Zhangke, Zhou Xingchi and Cao Baoping, as well as famous foreign directors. How did you persuade them to gather under Huayi?

Wang Zhonglei: maybe (I) have been in this industry for a long time, and the resources will be relatively wide. But the most important thing is my understanding of the film. No matter how big the company is, the film itself is the creation center system, and the popular film industry still follows the director centered system.

Producers or production companies, if only management (role), cooperation may be more indifferent. (want to cooperate well) more or understanding of the film, need to have a lot of common language with the director, I have worked with the director, basically in the film concept is quite the same. Especially in recent years, cinema films have changed a lot. The directors direction of film creation, the combination with the market and the commonality with the audience have become more and more prominent, which has brought more directors partners to Huayi Brothers.

Huayi is more like turning itself into a magnet to attract good metals, and then we will make the company bigger and bigger together.

Beijing News: to do so many projects on the list requires huge capital reserves. Since last year, Huayi Brothers cash reserves have been relatively tight, including Wang Zhongjun, who also said in the interview that 2018 is the most tense time for personal finance, and 2019 is the most tense time for Huayi Brothers. At present, how can Huayi Brothers ease the tense situation of capital flow?

Wang Zhonglei: all film companies have encountered a lot of cash flow bottlenecks in recent years. Because of the ebb of capital, Huayi has also encountered such problems, especially this years epidemic situation has interrupted the entire production chain of the film and television industry. But we dont have to worry. Huayis financing capacity is very strong. We are making a fixed increase of about 2 billion yuan. At the same time, we are also making a new cooperation mode on film projects in the financial field, as well as some fund methods.

In my opinion, the financing mode of traditional film projects will also change in the future. The previous model is relatively primitive, the film company is a creation company, but also a fund company, and the operation of the film and television company itself has to invest a lot of money.

In the future, the industrialization and financialization of film projects may become a normal. Now many companies are doing similar things. Huayi has not done so. For example, there are two ways: one is copyright distribution and premium distribution; the other is to package some (financial) products to companies with (financial) license. Although there may be some problems in this process, I think there are more and more cases in the financial field to broaden the financing channels of film and television companies Follow.

Wang Zhonglei: during the epidemic period, we were given time to calm down, to sum up the past and to think about the future. In the past, we felt like we were running on the horse. We even felt that as long as we pulled the reins of the horse, others would rush over.

I used to be a relatively emotional person, and I put more enthusiasm into the creation. Now I may need to integrate these two aspects (unification). When doing emotional creation, I should make more efforts in the aspects of capital, statement and operation smoothness.

Beijing News: animation film has become an important part of the film list. In 2016, Huayi invested in the establishment of Huayi Brothers finishing Animation Co., Ltd., a wholly-owned subsidiary. How will Huayi develop in the animation film sector in the future?

Wang Zhonglei: save filameng, blade pariah and rock and roll Tibetan mastiff 2. These three animated films are all eye-catching animation products. In fact, the production process and development process of animated films are very long. These three animated films are projects that have been started when the brand is established. Now its time for the production to be completed and its time for Huayi to publish the animation list for the first time.

Animation film is also a part of Huayis attention. One reason is that animation film is very necessary in various film types. On the whole, domestic films have developed rapidly in recent years, but domestic animated films are relatively the most unstable film type. At present, it seems that it took two or three years to make a blockbuster. Therefore, I think more film companies or film creators are needed to participate in animation films.

What distinguishes our three animated films from the Striped house is that although they are Oriental stories, they use international language. For example, the directors are mature animation directors from Hollywood and Europe. In the future, Huayi hopes to localize animation films, one is the localization of content ontology, which takes root in Chinese stories; the other is the localization of creation ontology to cultivate Chinese young directors to participate.

This is behind the release of Huayi cartoon list, I hope to continue to do things, but it is really difficult. From the perspective of time cycle, the production of animated films is very difficult. The advantage is that the life cycle of animated films is relatively long. From the perspective of intellectual property rights, animated films are relatively complete. Animation films can also be committed to the all-round development of the industrial chain, such as offline theme parks, derivatives, etc.

Wang Zhonglei at Huayi Brothers h plan conference.

[on financing of film and television companies

Its better for capital to help us, not to kidnap us.

Beijing News: in recent years, many film and television companies are seeking to be listed. Listing is a way of financing for them. However, compared with other industries, it is still difficult for film and television companies to go public. What do you think of this problem?

Wang Zhonglei: Yes, the channel is a problem for film and television companies to be listed. At the same time, the financing capacity of film and television companies is also weaker than before. Taking Huayi as an example, the high debt of Huayi discussed a few days ago is also due to the original high P / E ratio. When a company has a market value of 70 billion yuan, it is normal to be in debt of 7 billion yuan. When the market value of a company becomes more than 10 billion yuan, the debt of 7 billion yuan becomes very unreasonable.

Beijing News: we still expect Huayi to have a healthy and sustainable financing channel, not only the companys overall working capital, but also the financing of single project.

Beijing News: are you looking for long-term capital partners now?

Wang Zhonglei: This is what the fixed increase is for. The investors from the fixed increase are long-term partners. We try our best to make a strategic layout for their investment. The capital from the fixed increase is relatively conducive to deleveraging. On the contrary, what we are doing with China Merchants Bank is more focused on the content ontology, which is the source of funds for a single project.

This aspect is not mature in China. Almost all films made by foreign production companies and large studios are engaged in financial portfolio, and they have fixed capital partners. In the past, we didnt care about this (financing), because the original film investment was only 12 million yuan, but now the 2.3 billion and 3.4 billion yuan are all produced by one company. We encounter some cyclical problems. In addition, with the film production companies, the (income) is not so stable.

Of course, for me, my responsibility is to make (project, revenue) as stable as possible. In the case of not so stable, that is to say, how to do when the fund allocation is not carried out according to the gear mode. These are the things that the operators of film companies have to think about now.

Beijing News: it can be understood that the money taken by the company and strategic investors is relatively long-term, and the money from the bank is more targeted projects?

Wang Zhonglei: Yes, the two things I just mentioned are actually one thing. Why deleveraging? One is that high debt ratio is not good, but why is our debt ratio high? Because the money with high debt ratio is used for medium and long-term investment, (fixed increase) replaces the original part (money), the first is to de leverage, the second is to support the companys medium and long-term development. For the part of short-term major projects, the pressure on me is the success rate of the project on the one hand, and on the other hand, the investment portfolio of the project should be more commercialized.

[on Capitalization of stars

It is biased to say that Huayi completely relies on director Feng Xiaogang, and the acquisition of high PE will decrease in the future

Beijing News: the outside world has always questioned that the core competitiveness of Huayi Brothers is Feng Xiaogangs works. Previously, the acquisition of Dongyang Meila at a premium led to the impairment of Huayi Brothers goodwill. What do you think of the voice of the outside world?

Wang Zhonglei: This voice has been heard for more than ten years, and we have not denied or argued about anything, but this statement is not accurate.

Because the films directed by Xiaogang have performed very well in the past few years. No matter in terms of box office or film type, this is also given by Huayi platform. Director Xiaogang started with the new years comedy, and then launched different types of films for three or four years in a row and achieved success. In the past year or two, he has returned to his creative heart. He has been constantly changing himself, and Huayi has always supported his film innovation, but at the same time, Huayi has made a large number of other films and produced more than 200 films. Therefore, I think this statement is actually biased.

In addition, Huayis overall film industry chain is relatively sound. Huayis publicity team is very strong, but in the past two years, because there are few popular works, we will ignore this aspect.

When every film company encounters a short period of bottleneck, or a short period of outbreak, we should evaluate it from a professional point of view. We (should) in the spirit of love, to do industry chain observation, will be more healthy.

Beijing News: the previous cooperation with directors (creators) can be signed, studios can be set up, and even equity investment can be made. What are the new ways to cooperate with directors in the future?

Wang Zhonglei: in fact, Huayi is more willing to innovate and dare to challenge in the mode of cooperation with creators. At first, Huayi was a contracted director, then a directors studio, and then a strategic partner or even an equity partner. Huayi was constantly innovating and challenging.

In addition, directors have special characteristics. They are very independent and concentrated in creation, but at the same time, they are more sensitive and insecure than people in other industries. For example, we can see that a new director is particularly good at other film companies. This is not to say that people will come when they give more money. He may cooperate with the company very happily. They may last for a period of time. However, some projects may attract him. Your project attracts him. We should cooperate together. I think this is a relatively benign market environment.

Beijing News: in the past few years, Huayi Brothers has acquired some companies in the industry chain, including actors and directors. In your opinion, will such star capitalization cases decrease?

Wang Zhonglei: in fact, its not simply a high P / E ratio acquisition. I think the film itself is a director centered system. As the production point and project leader of IP, I dont think it can be seen from the capitalization of stars.

There are also many objective changes that have caught us by surprise. For example, we use a more reasonable P / E ratio, such as Huayis 70 times P / E ratio at that time, and we use 10 times P / E ratio to lock in the resources we need. This is a very normal thing. But at the same time of high P / E ratio, goodwill impairment has also caused great pressure on us.

In fact, acquisition and merger abroad is a way for listed companies to rapidly expand their capabilities. What are you doing? For example, if the amount of financing of some small listed companies cant cover the amount of money it does for content, it wont do mergers and acquisitions; when it has enough money to expand, it will take mergers and acquisitions.

I think that in the next few years, the acquisition of film and television companies, including Huayi, according to PE (price earnings ratio) will decrease and return to rationality. I think it is also a good return. But this matter (high P / E ratio acquisition) we will bear for a period of time, industry pioneers are like this, right?

[on returning to main business

What is on the industrial chain should be preserved

Beijing News: compared with other industries, the income and profit of domestic and foreign film and television production companies are not particularly stable. Huayi has made a series of attempts before, including investment in upstream and downstream fields, theme park, IP derivatives, etc., hoping to stabilize the income and profits. Do you think these measures are effective?

Wang Zhonglei: I think it must be effective, but these measures are relatively medium-term or even long-term arrangements. I think if an enterprise does not have such a future layout, there will be certain risks. But in the short term, its effectiveness, or direct financial performance, is less obvious.

In the past, when the capital was relatively hot, there were still transactions for many immature things in the company, and there would be good profits in the short term. It turns out that Huayi investment is so accurate. After buying a company, it will earn one billion or two billion yuan. This is because it was a time of capital boom. Now is a relatively smooth stage. You have to decide which are the more important medium and long-term arrangements, including the nature of the source of funds. That is to say, if you want to make medium and long-term industrial chain arrangement, your capital layout should have medium and long-term capital, rather than short-term capital for long-term investment, which will cause some difficulties for enterprises.

Beijing News: previously, Wang Zhongjun said in an interview that he wanted to survive and keep his main film business. From a long-term point of view, for example, the game company invested by Huayi has made theme parks, as well as the layout of upstream and downstream, which aspects of layout do you want to keep?

Beijing News: in 2018 and 2019, Huayi Brothers lost money for two consecutive years. During the two years, Huayi Brothers did not invest in the blockbuster film projects dominated by the main control. It is believed that Huayi Brothers did not focus on the film production they are good at. Is this a trial and error?

Wang Zhonglei: its not that we dont focus on (the film), its just the product positioning. In addition, Huayis outstanding industrial production capacity and system have not been fully utilized. From the appearance, there may be a lack of blockbuster films, and there is a lack of important schedules. These two have a great impact.

This means that there is something wrong with productivity and there is no continuous release of works. It is equivalent to a work that was originally intended to be a spring festival archive, but it was not included in the Spring Festival archives for various reasons, but you still need to have other films on top. In fact, foreign studios or film manufacturers have done very well in this respect.

As for the above two or three years, I think its a good ability to correct the above problems.

Wang Zhonglei: in fact, our cinemas have not been expanded very much. At the beginning, our cinemas were based on the special market environment in China. We can see that after the epidemic, most of the film companies lost money because of their cinemas.

A few years ago, there was a voice saying that no matter what kind of situation, there was no paramount act. Then there was another one that every company hoped that it would not fall down (in the industrial chain). In fact, Huayi was also a cinema line at that stage. I feel that Huayi will not be an expansion strategy in the future.

[on resumption of work in film and television industry

The impact of the epidemic situation was not as bad as expected, so it took the initiative to fight with the film Bureau

Beijing News: after the resumption of work, the hospital line and the film makers have been struggling to figure out who should take the first step. Huayis eight hundred has chosen to become the first Chinese language blockbuster after returning to work. Can you tell us about the decision behind the selection of this schedule and distribution mode for eight hundred?

Wang Zhonglei: the same is true for films, including 800. In June, we took the initiative to fight with the film Bureau, because I felt that the market needed such fighting films and familiar films, but it was still very nervous. When we announced the schedule, we required 30% of the seats. When the resumption rate was only 60% to 70%, we could take the calculator as the only market 18% to 21% of the share. Or out of the sense of responsibility of the industry, as well as strong confidence in the film, it is in such a situation that we did this thing.

To some extent, I think it will help restore confidence in the whole industry, including window industries such as theme parks, cinemas and restaurants. During the epidemic period, these industries were focused. As long as these industries do not open for a day, there will be many things. Sometimes they will be exaggerated. I even believe them sometimes. However, through the release of 800 and the confidence given to us by the audience, I suddenly found that we were really only affected by the epidemic, because we could not open the door. However, it is no longer necessary to think about the impact of the epidemic on the market (scale) of the window industry. The box office from August 15 to the end of August actually exceeded that of the same period last year, and this achievement was achieved under the condition of limited attendance. This shows that the market recovery is very fast, and it took two and a half months to recover At the same time of the year, its impact is not as bad as originally thought.

Wang Zhonglei: maybe we should calm down and think about what kind of content should be focused on in the long run, how to coexist with the Internet, and how to control the scale and budget when making movies.

I think the operators of film companies should not only think from the overall financial structure, but also think about the content itself and what kind of films to make. In order to ensure the safety of the company at the same time, cinema films are increasingly focused on the head of the film and strong emotional resonance of the film, such a state, how to ensure productivity? On the surface, the productivity is to support thousands of employees, while the external is the contribution to the overall development of the industry, such as how the new generation of filmmakers find out and how rich the new film types are.

The Internet and the cinema are born together, this matter no longer need to consider. Over the past two or three years, this issue has been discussed in major film forums, but this (epidemic) has generated a recognition that cinemas will not die out, but the symbiosis of cinemas and the Internet will be normal.

This is about the cooperation between the traditional film industry and the Internet. We cant let the Internet shoulder all the responsibilities, nor can we let the film production companies shoulder all the responsibilities. For example, the three major Internet platforms are losing money every year, so that they can take another 10 billion budget every year to make some movie level films. However, they may not be able to afford the films broadcast on the Internet platforms. There are also risks for us to make such films.

We work together to form a new market, which is the TOC (user oriented) market of the Internet (movie content). In fact, there can be a theater platform on the network, just like Netflix. Which angle is more suitable to enter? Its cinematic, but its not cinematic. American cinema films are all series films, with large investment, IP, strong visual impact, and some film types are waist movies. I personally understand that part of the film is very important, but its vitality may be poor in the cinema, but this does not mean that it has no vitality. It is strong plot, heavy performance, and strong literature and film attributes, such as through novels, cases, and even real cases. I think that in the future, Huayi or other film companies can work hard with these internet platforms. Beijing News: during the epidemic period, I heard that Huayi theme parks were open very early, and also provided certain financial support? Wang Zhonglei: that was also supported by the government. At that time, we just had the requirement to allow 30% of the people to enter the site. We were the first batch to open the gate. Of course, there was a lot of pressure, because the operating costs rose as soon as the door opened. Beijing News shell financial reporter Zhang Yankai baijinglei editor Zhao Zexiao: Liu Baoqings extended reading for more production of iphone12 Foxconn: new entry award of 9000 yuan; Meng Wanzhou extradition case: the court has not determined whether the United States misled the new rescue agreement has not been reached, and tens of thousands of employees of American Airlines will start to take leave. Source: responsible editor of Beijing News: Wang Xiaowu_ NF

We work together to form a new market, which is the TOC (user oriented) market of the Internet (movie content). In fact, there can be a theater platform on the network, just like Netflix. Which angle is more suitable to enter? Its cinematic, but its not cinematic. American cinema films are all series films, with large investment, IP, strong visual impact, and some film types are waist movies. I personally understand that part of the film is very important, but its vitality may be poor in the cinema, but this does not mean that it has no vitality. It is strong plot, heavy performance, and strong literature and film attributes, such as through novels, cases, and even real cases. I think that in the future, Huayi or other film companies can work hard with these internet platforms.

Beijing News: during the epidemic period, I heard that Huayi theme parks were open very early, and also provided certain financial support?

Wang Zhonglei: that was also supported by the government. At that time, we just had the requirement to allow 30% of the people to enter the site. We were the first batch to open the gate. Of course, there was a lot of pressure, because the operating costs rose as soon as the door opened.

Zhang Yankai, shell finance reporter of Beijing News, Zhao Zexiao, editor of baijinglei, and Liu Baoqing