Strict supervision, the film, television and entertainment market has cooled down as a whole, and many film and television companies have terminated mergers and acquisitions

Behind the explanations of "changes in the capital market" and "failure to reach agreement on relevant matters" of listed companies, what reflects is the tightening of regulatory reviews and the overall "cooling down" of the film, television and entertainment market, especially since the second half of this year. The "sluggish" at the box office of movies.

Original title: No one applauds the "refund" market for film, television and entertainment mergers and acquisitions by many companies

. The actual impact of the market and the tightening of regulatory standards have ushered in a "cooling-off period" for the once-popular film, television and entertainment mergers and acquisitions.

Since this month alone, a number of listed companies have made significant adjustments to their M & A plans involving film, television and entertainment assets. For example, Sanqi Mutual Entertainment announced that it would abandon the acquisition of Zhonghui Film and Television, and Huadong Heavy Machinery terminated its acquisition of China Television Heli and Qingyang Communication. Behind the explanations of "changes in the capital market" and "failure to reach agreement on relevant matters" of listed companies, what reflects is the tightening of regulatory reviews and the overall "cooling down" of the film, television and entertainment market, especially since the second half of this year. The "sluggish" at the box office of movies. Some insiders pointed out that "eliminating fire and reducing dryness" from industry to capital is conducive to squeezing out bubbles and returning the market to rationality.

Take

Sanqi Mutual Entertainment as an example. Last week, the company disclosed an adjusted major asset reorganization plan. Zhonghui Film and Television, which was valued at 1.2 billion yuan in the original plan, was removed from the merger target, and the related financing for projects such as the expansion of Zhonghui Film and Television's IP resource library was also cancelled. In this regard, Sanqi Mutual Entertainment explained that due to the recent large fluctuations in the capital market and the major changes in the market environment of the film and television industry, in order to ensure the successful implementation of this reorganization transaction, after consultation and agreement with relevant parties, the company decided that 100% equity of Zhonghui Film and Television will no longer be the subject of this reorganization.

For Sanqi Mutual Entertainment, film and television IP assets were once an important part of its layout of the pan-entertainment industry. In May this year, the company signed a debt-to-equity swap agreement with Zhonghui Film and Television. The two parties agreed that Sanqi Mutual Entertainment would provide a loan of 300 million yuan to Zhonghui Film and Television. If Sanqi Mutual Entertainment fails to complete the acquisition of Zhonghui Film and Television on schedule within one year after the loan agreement takes effect, it will use Zhonghui Film and Television to subscribe for the latter's targeted shares. After the debt-to-equity swap, Sanqi Mutual Entertainment will hold approximately 23% of Zhonghui Film and Television and have the right to send a director to Zhonghui Film and Television's board of directors.

Although Zhonghui Film and Television was still at a loss in the first half of this year, Sanqi Mutual Entertainment obviously values the IP resources behind it. As a re-entrepreneurship project of Hou Xiaoqiang, former CEO of Shanda Literature, Zhonghui Film and Television has accumulated in film and television production and investment, IP writer brokerage business, etc. On the one hand, Zhonghui Film and Television's film list from 2016 to 2017 includes the well-known IP "The Dedication of Suspect X", the second-dimensional works "Chang 'an Fantasy Night" and "Yan Shi Fan", and the popular online literature "Lotus" and "Journey"; On the other hand, Zhonghui Film and Television plans to build a movie and tourism ecosystem with IP writer brokerage, IP copyright trading, and IP content value-added services as the core to realize the realization of IP on multiple platforms. These two points coincide with Sanqi Mutual Entertainment's business philosophy of building a full pan-entertainment industry chain. In this context, even if the temporary performance was poor, Sanqi Mutual Entertainment once reported a valuation of up to 1.2 billion yuan to Zhonghui Film and Television.

However, after the original reorganization plan was released, the regulatory authorities successively used the exchange inquiry letter and feedback from the reorganization committee to focus on the rationality of Zhonghui Film and Television's valuation, the sustainability of forecast revenue, the expansion of IP resource library and the feasibility of film and television drama production projects. As a result, Sanqi Mutual Entertainment's acquisition of Zhonghui Film and Television has been difficult to easily pass at the regulatory level. Relevant market participants pointed out that the current policy environment of the film and television industry is still uncertain, and currently is not the best time to conduct mergers and acquisitions. The Sanqi Mutual Entertainment revision plan removes Zhonghui Film and Television, which is actually increasing its reorganization. chance.

A similar situation occurred in Huadong Heavy Machinery. Also last week, Huadong Heavy Machinery announced that it would terminate the acquisition of China Television Heli and Qingyang Communications. The company's explanation was: "Recently, the securities market environment, policies and other objective conditions have undergone major changes, and all parties to the transaction believe that we will continue to advance this time. The conditions for major asset reorganization are not mature enough." Researchers pointed out that in the current market environment, film and television media mergers and acquisitions that usually have "double high" characteristics (high valuation, high performance commitment) have greater uncertainty in regulatory reviews. Huadong Heavy Machinery's move may be due to the difficulties and retreat.

Box office capital is "cooling down"

As far as the film, television and entertainment industry is concerned, the high popularity and popularity it has accumulated over a period of time have gradually begun to return to the boundaries of rationality. Behind this are changes in the market environment and the downturn in the box office of movies.

In fact, the market's perception of the industry's well-being has long been reflected in failed mergers and acquisitions. In addition to the above cases, since the second half of this year, Tangde Film and Television's acquisition of Fan Bingbing's Aimei has been "suspended", Storm Group's plan to acquire Wu Qilong and Liu Shishi's shares in Caocao Bear Film has not been approved, and Wanda Theater Line has voluntarily suspended its acquisition of Wanda Film and Television and Legend Film, Beijing Culture has abandoned the acquisition of film marketing company Juhe Film and Television...

According to relevant research statistics, since the beginning of this year, among the 28 Shenwan-level industries, the growth index of the media (entertainment) industry ranks first. Several research reports have pointed out that year-to-date, the growth rate and decline of the media industry are worried about the overall market level. In terms of segments, the performance of the film, television and animation industry is even more regrettable.

What is more intuitive is the stock price. Due to the slowdown in box office growth, the stock prices of film and television leaders such as Huayi and Guangguang are under pressure. In addition, the share prices of companies such as New Culture, Wanda Cinema, and Huace Films and Television also fell significantly. In terms of performance level, New Culture and Tangde Film and Television, which had outstanding results in the semi-annual report last year, slowed down in the first half of this year. In the first half of this year, its net profit fell by nearly 40% year-on-year. In the third quarter, it once again sold the equity of Palm Technology to "support the scene". From this point of view, from the overall level of the industry, to corporate operating performance, to the trend of individual stocks, the overall changing trend of the film, television and entertainment market is clear.

If we look at the box office of movies alone, statistics show that the box office of National Day this year was 1.58 billion yuan, a decrease of 270 million yuan compared with 1.85 billion yuan last year, a year-on-year decrease of 14.6%. The number of movie-goers during the National Day holiday fell by 7 million, a year-on-year decrease of 12.4%. This is the first time in nearly a decade that the National Day box office has dropped year-on-year, and there was no case in which the single-day box office exceeded 100 million last year. The total box office of the previous Mid-Autumn Festival period was 511 million yuan, a year-on-year decline of nearly 20%, and the number of movie-goers dropped by 30.56%. The total summer box office was 8.566 billion yuan, a year-on-year decrease of 5.76%, which was the first negative growth in summer box office in recent years. Among them, the box office in July decreased by approximately 1 billion yuan compared with the same period in 2015, and a year-on-year decline of 17.85%.

When the total national box office reached 44 billion yuan last year, the concepts of "pan-entertainment" and "IP" were repeatedly hyped up by capital. For a time, film and television, games, animation, etc. have all become the most "gold-sucking" industries. In addition to a large number of mergers and acquisitions within the film, television and entertainment industry, many external investors are also rushing in, hoping to "cross-border" share the dividends of the industry's rapid growth. Nowadays, the dream of "60 billion yuan a year" box office has been dashed, and many film and television reorganization cases have also encountered obstacles and changes. In this regard, market participants analyzed that recent changes in some restructuring plans reflect from one aspect the tightening of regulatory authorities 'review of listed companies' acquisitions of film, television, games and other assets; at the same time, from an industry perspective, self-purification actions such as reducing ticket subsidies and cracking down on fake box office will help truly present the domestic box office level. With a two-pronged approach, the film, television and entertainment industry may return to rationality after its impetuosity fades.

Editor: Nancy