Interpretation: Why film and television media companies are competing to list on the New Third Board

It has become a consensus expectation that the film and television industry will usher in a golden period of development opportunities. In order to better develop the company's business and adapt to the increasingly competitive film and television industry, many domestic film and television companies have led their star shareholders or contracted artists to enter the New Third Board, under the influence of the star aura. They have sought capital support.

2015 was an extraordinary year for the domestic film and television industry. In 2015, the total box office of movies nationwide was 44.069 billion yuan, an increase of 48.7% from 2014, setting the highest annual increase in recent years. Among them, the box office of domestic films was 27.136 billion yuan, accounting for 61.6% of the total box office. Under the wave of fan economy, domestic film and television companies have developed a series of works that are favored by the market relying on high-quality IP, thus maintaining the dominant position of domestic films in China's film market with greater advantages.

The film and television industry is ushering in its golden decade. The number of listings on the New Third Board film and television companies has grown

rapidly. In 2015, the average growth rate of the entire media industry was 15%, while the growth rate of films in sub-sectors even exceeded 30%. The overall growth rate of the media sector has risen, and the growth rate of each sub-sector has increased significantly. As Wanda Group, which Wang Jianlin is in charge of, recently purchased Legendary Pictures of the United States for 21 billion yuan, said: "China's film industry is in an unprecedented golden decade. Now it is going through the first three or four years. There are still seven or eight years in the future. Years, or even a longer cycle, now is the time to share the growth of the industry."

As of January 14, 2016, there were nearly 60 film and television media companies listed on the New Third Board, of which about 35 were listed in 2015. It has become a consensus expectation that the film and television industry will usher in a golden period of development opportunities. Under the rapid development, popular works of film and television dramas frequently appear, and opportunities in sub-fields increase. In order to better develop the company's business and adapt to the increasingly competitive film and television industry, many domestic film and television companies have led their star shareholders or contracted artists to enter the New Third Board, seeking capital support under the influence of the star aura.

Dozens of star film and television companies have joined the New Third Board.

In recent years, the connection between stars and film and television companies has become closer and closer, and it is nothing new for stars to become bosses. From Feng Xiaogang and Huang Xiaoming of Huayi Brothers to Zhao Wei and Fan Bingbing of Tang De Film and Television, film and television stars whose value has increased by investing in listed companies are not uncommon in the A-share market. As more film and television companies are listed on the New Third Board, the stories of stars making wealth in the capital market have begun to be staged on the New Third Board. Due to the star effect of film and television actors themselves, the companies and works associated with them can always attract extremely high market attention.

As can be seen from the above table, the film and television companies listed on the New Third Board are star-studded. Not only do they have many popular stars joining, but there are many first-line film and television stars such as Yang Mi, Hu Ge, Liu Shishi, Sun Honglei, and Jiang Xin. At the same time, these companies have also produced many market-recognized hit products, such as Kaixin Mahua's "Charlotte Worry"(1.44 billion yuan at the box office), Evergrande Culture's "The Legend of Wu Mei Niang" and Qingyu Media's "Hidden".

Why did film and television companies choose to pile up and list on the new three boards?

By observing the pace of listing of film and television companies on the New Third Board, we can clearly see that in 2015, especially in the second half of the year, many well-known film and television companies on the market have successively listed on the New Third Board, and even listed in groups. We think there are mainly the following reasons.

First of all, centralized listing benefits from the great development of the entire film and television industry. Fifteen years are not only a big year for the film market, but also a year when online dramas and online movies have exploded. More and more young film and television companies and PGC content teams have begun to emerge, with high-quality teams and works. As the pattern of online and offline channels gradually becomes fixed, the demand for film and television content in playback channels with "theater + online video" as the main body has begun to increase. Film and television content companies have ushered in a good market situation, and film and television companies have a position in the capital market. Status is also rising.

Second, the demand for funds from film and television companies has further increased. With the increasingly fierce market competition, film and television companies are increasingly competitive for core resources such as IP and talents. The popularity of IP in 2015 caused the copyright price of IP to rise, and the copyright price of well-known IP even rose to more than 10 million. At the same time, the production cost of film and television content is also rising. The production cost of some high-quality online dramas has exceeded 5 million episodes. These changes in the situation have forced film and television companies to find more funds to invest in business operations, while listing can further increase the company's financing capabilities and meet corporate capital needs.

Third, the New Third Board is a new channel for film and television companies to seek listings. In addition to traditional IPOs and backdoor listings, the New Third Board is also one of the ways for film and television companies to quickly enter the capital market. Compared with the main board and the GEM, the company's application for listing and transfer on the New Third Board is much lower, generally at 1.2 million yuan. Around, the operating cost after listing is less than 30,000 yuan per year. In addition, the threshold for the New Third Board market is not high, and the requirements for profit of film and television companies are not as strict as the main board, making it easy to successfully log in. For example, Energy Communication and Hairun Film and Television (to be listed) turned to the New Third Board market after their IPO and backdoor borrowing failed.

The film and television industry is in full swing. The intervention of capital has changed the way the film and television industry plays. The threshold of the film and television industry has been lowered. More and more cross-border stars have entered the film and television industry and achieved good results. For example,"Tiny Times" produced by writer Guo Jingming "In the series," Gardenia Blooms "directed by host He Jiong and" Pancake Man "directed by online drama director Dapeng have all achieved excellent box office results this year. Among the star-studded New Third Board film and television companies, many high-quality works that have been recognized by the market have emerged. In the context of the future "movie IP" and "online drama explosion", more and more emerging teams and companies that seize the younger generation's movie-watching preferences will gain the favor of the market and capital. The New Third Board will also become the main position for these emerging film and television companies to enter the capital market in the future.

Editor: kong