The media and entertainment industry will usher in a new round of IPOs and mergers and acquisitions

In 2009, venture capital and private equity investment in China's media and entertainment industry failed to fully emerge from the shadow of the financial crisis and remained at a low level. The number of investment cases and investment amount dropped significantly compared with 2008. Compared with the downturn in the venture capital and private equity investment markets, the IPO and M & A markets of China's media and entertainment industry in 2009 have been rapidly exerting since the third quarter, showing a relatively strong recovery trend.

Industry insiders believe that the introduction of the "Cultural Industry Revitalization Plan" provides new opportunities for the development of the media and entertainment industry, and is expected to drive the media and entertainment industry to set off a new round of IPOs and mergers and acquisitions in 2010.

two days of Ice and Fire

The latest data released by ChinaVenture shows that in 2009, a total of 20 investment cases were disclosed in the venture capital market in China's media and entertainment industry, a year-on-year decrease of 58.3%; the investment amount was US$139 million, a year-on-year decrease of 72.4%; the average single investment amount was US$6.79 million, a year-on-year decrease of 33.7%. A total of 4 investment cases were disclosed in the private equity investment market, a year-on-year decrease of 55.6%; the investment amount was US$170 million, a year-on-year decrease of 67.5%; the average single investment amount was US$42.59 million, a year-on-year decrease of 27.0%.

Looking at the VC/PE market in China's media and entertainment industry from 2008 to 2009, after reaching its peak in the second quarter of 2008, due to the impact of the financial crisis, the number of investment cases and investment amount have shrunk significantly in the second half of 2008. Entering 2009, the industry failed to get rid of the previous downward trend, and the number of investment cases and total investment amounts throughout the year were still not as high as the second quarter of 2008. Although the market has begun to show signs of recovery since the second quarter, the growth trend has not yet been established, and industry investment is still hovering at a low level and has not yet emerged from its dormant period.

Compared with the downturn in the venture capital and private equity investment markets, the IPO and M & A markets of China's media and entertainment industry in 2009 have been rapidly developing since the third quarter, showing a strong recovery trend. There were many classic cases during the year: Huayi Brothers landed on the GEM and became the first film and television company in China to successfully IPO; Aofei Animation landed on the small and medium-sized board of the Shenzhen Stock Exchange and became the first animation listed company in China; China Television Media spent US$160 million to acquire Digital Media Group (DMG), becoming China's largest outdoor digital TV mobile advertising operator; Shanda Network and Hunan Radio and Television jointly invested US$87.82 million to establish Shengshi Film Company as the largest industry private equity transaction during the year. Industry insiders believe that these successful cases may drive the media and entertainment industry to set off a new round of IPOs and mergers and acquisitions in 2010.

favorable policies

The strong recovery of the IPO and M & A markets has been driven by policies. In the second half of 2009, the promulgation of the "Cultural Industry Revitalization Plan" is expected to spawn a wave of mergers and acquisitions of large enterprises in publishing, cable networks and other industries; promote the listing of cultural enterprises and use the capital market to achieve financing; and stimulate government capital and private capital to enter cultural industries allowed by policies. In the field of industry, participate in the joint-stock transformation of state-owned cultural enterprises. Related secondary industries such as traditional media, animation, film and television music and outdoor media will all benefit from it.

In terms of traditional media, restructuring and transformation became the annual theme in 2009. 101 publishing houses completed the transformation before the end of 2009, and cross-regional mergers and acquisitions integration has quietly begun after the transformation. In the field of radio and television, Shanghai Cultural and Broadcasting Corporation has taken the lead in breaking the ice between the separation of production and broadcasting and the transformation of enterprises. Hunan Satellite TV's restructuring plan was also approved in November. It is expected that more large groups will embark on the road of overall transformation and transformation of enterprises. Private publishing, periodicals and magazines, etc., where market access supervision has been loosened, will become the first choice for diversified capital, including private capital and foreign capital, seeking to enter China's media market.

The trend of media integration will profoundly affect the landscape of the media and entertainment industry in 2010. In 2009, traditional media tried the Internet one after another, hoping to connect content resources with network platforms with advantages. Near the end of the year, China Mobile has invested in Phoenix New Media in order to open up text, video, and audio copyright resources; Shanda and Hunan Satellite TV jointly established Shengshi Film and Television, aiming to create a complete entertainment industry chain including literature, music, games, film and television;2010 There will be more strategic cooperation and mergers and acquisitions integration between old and new media.

The film, television, music and animation industries will continue to develop well in 2010. In 2009, the total box office of movies hit a record high, with the box office of 10 domestic films exceeding 100 million yuan. After Huayi Brothers successfully tested the GEM, Poly Bona has completed the second round of 100 million yuan financing and plans to go to the United States in 2011. IPO; Shanghai Film, West Film, Light, etc. also revealed their intention to go public. It is expected that a large number of powerful state-owned film and television groups, private film and television production companies and animation companies will IPO, or launch mergers and acquisitions.

Under the influence of policies, cultural industry guidance funds led by local governments rushed to establish in 2009 to build financing platforms to integrate industry resources. On June 9, Shaanxi Cultural Industry Investment Holding Co., Ltd. with a registered capital of 2.2 billion yuan was officially established. In July, Jiangsu Province announced that it would establish a provincial cultural development fund with an initial scale of 2 billion yuan. Cultural industry investment funds are also in the ascendant. In April 2009, the Chinese Cultural Industry Investment Fund was jointly launched by Shanghai Media Group, China Development Bank and China Broadband Industry Fund, with a scale of approximately 5 billion yuan. It is the first private equity fund in China focusing on the media industry.

However, it cannot be ignored that compared with other industries, the financing channels of the cultural industry need to be further broadened, and the market-oriented operation of innovative financial instruments such as the Cultural Industry Guidance Fund needs to continue to be promoted. Analysts from China Investment Group believe that the foundation of media and entertainment-related industries is still very weak, coupled with the high endogenous risks, which is not enough to attract large-scale institutional funds at this stage. To attract more high-quality external investment, the development and growth of the industry itself must come first.