The film industry has entered a period of adjustment, and the combination model of film, television and finance still needs to be run-in

Regarding the power of capital, the film industry has always had both expectations and doubts. In particular, the incident of "Ip Man 3" that broke out last year caused box office fraud due to capital operation has had a significant impact on the entire industry. The relationship between capital and films has also been ridiculed as "love and kill each other."

Original title film meets capital: Financing needs to be more integrated.

When capital meets the film industry, what method will you choose to participate in it? For China Film Industry, which is still in its growth stage, what impact will the entry of capital have? Regarding the power of capital, the film industry has always had both expectations and doubts. In particular, the incident of "Ip Man 3" that broke out last year caused box office fraud due to capital operation has had a significant impact on the entire industry. The relationship between capital and films has also been ridiculed as "love and kill each other."

High box office growth for several consecutive years is the main reason why the film industry attracts capital. However, after the growth rate of box office slows down in 2016, what new changes will be made in the relationship between financial capital and the film industry? This became the core topic of the forum during the 7th Beijing International Film Festival.

The industry enters the adjustment period, capital entry needs to be cautious

. According to the reporter, since 2007, China's film and television industry has been favored by the capital market in more and more financing channels. For example, among the 112 cultural media companies listed on the Shanghai and Shenzhen stock exchanges, 33 companies are involved in film and television business, accounting for nearly 1/3.

Dong Junfeng, executive general manager of the Investment Banking Department of CITIC Construction Investment Securities, believes that regardless of the market value and income of listed companies in the film and television industry, this industry has the characteristics of a pyramid, and the industry differentiation is very obvious. "In fact, from the perspective of capital, the film and television industry is still only a relatively small industry in China and is still in the process of rapid development."

However, because the film industry has relatively high profit margins and price-to-earnings ratios, it has still been the "darling" of the capital market in recent years. "It should be noted that since 2016, single-screen box office output has not increased with the growth of total box office, and the industry growth rate has also declined. The number of films with box office exceeding 100 million yuan was 47 in 2015, and in 2016, it dropped to 33." Dong Junfeng believes that this has something to do with capital's involvement in the film industry.

He divided the changes in China's film industry in the past 10 years into two stages according to the mainstream capital operation method-from 2007 to 2013, it was mainly listed through IPOs; after 2013, a large number of companies were listed through mergers and acquisitions, including cross-border mergers and backdoor mergers and acquisitions. "The second stage of mergers and acquisitions has brought a lot of market chaos. M & A itself is a good thing, and companies can use it to become bigger and stronger, but they must consider clearly how to achieve synergy after the M & A and how to exert greater market influence." Dong Junfeng said.

The diversified film and television investment and financing pattern has been initially established.

Experts attending the meeting agreed that the win-win relationship between film and television and financial capital has continuously stimulated the vitality of the film industry, thereby expanding the market scale, enhancing the market competitiveness of film products, and forming a series of mature cooperation models in the field of film and television finance, such as bank loans and copyright pledges, copyright pre-sales, film and television funds, trust plans, asset securitization, Internet finance, film insurance, and film completion guarantees. At the same time, some film and television financial products that combine the characteristics of the film and television industry and refer to mature foreign experience are also being explored and tried.

It is understood that financing guarantees have become an important part of the producer management system in Europe. However, since China's film industry still lacks a real producer mechanism, financing guarantees have not yet been truly realized in China. Fan Xiuchao, executive deputy general manager of Beijing City Culture Technology Financing Guarantee Co., Ltd., bluntly said: "If financing guarantees are truly introduced into China and implemented, many practical difficulties still need to be solved. In the past few years, we have been exploring and practicing. Instead of completely copying overseas forms of financing guarantees, we hope to localize financing guarantees through trial and error and fault tolerance."

Talking about the selection preferences of financing guarantee companies for film and television companies and film and television projects, Fan Xiuchao said that guarantee companies design their business structures based on risk weights. They will not only choose film and television companies, but also provide support for publicity and distribution companies and film and television cities; Compared with the incubation of a single project, the guarantee company is more concerned about the overall development process of the film and television industry and the role played by financing guarantees in it.

Xu Maomao, general manager of the Small Business Division of the Bank of Beijing Head Office, talked about the changes in the role of banks in the investment and financing field of the film industry in recent years: In the past, most of the way banks and the film industry integrated through loans, but now, investment-loan linkage and investment-loan combination have become banks 'new explorations in film and television financial innovation. According to Xu Maomao, Bank of Beijing is currently exploring the establishment of a cultural and creative bank, hoping to provide an incubation base for cultural and technology companies.

It is worth mentioning that innovation and diversification in the field of investment and financing are closely related to the development status, risk control and policy orientation of the film industry. Li Dong, vice president of investment management of China Merchants Investment, clearly pointed out the changes in the focus of investment companies in recent years: "Before 2012, the company's focus was on the middle and late stages of the film and television industry chain, and in recent years, the focus of investment has shifted to the front end of the industrial chain. We believe that in the film and television industry chain, creative teams and creative talents are the most important, and the investment cost is also higher." Li Dong said frankly that there are some new trends in the capital market, such as the film and television industry being regulated by some policies, the valuation of the secondary market falling, and some restrictions on company listings, mergers and acquisitions or reorganizations, which will gradually face relatively high valuations and relatively high risks. "Therefore, it is more prudent to invest in the front-end, especially in content companies. As long as excellent works are produced, they will be recognized by the capital market and can enjoy valuation dividends." Li Dong said.

The combination model of film and television and finance still needs to be worked in.

Although the degree of capitalization of China's film and television industry has been increasing in recent years, the combination of capital finance and film and television is not perfect.

In Li Dong's view, the high-risk attributes of the film industry are directly reflected in the box office revenue space. The number of film projects that can make money is very limited, but the embedding of financial capital is precisely based on profit. "Once a film project loses money, the investment will naturally fail. No matter what kind of financial means is used to finance, guarantee or control risks, it is not valid, because the premise of investment and financing is to make money." Li Dong believes that if "film and television + finance" is to develop continuously and healthily in the future, it is necessary to first reasonably measure and recognize investment risks, and design targeted financial instruments.

Yang Yongmin, general manager of the equity investment department of Tianhong Fund, agreed with this. He believes that at the current low level of industrialization of films in China, there are still many processes that are difficult to standardize when financial means are used to intervene in the film industry. "If financial institutions can join hands with lawyers in the future to design relatively good financial product structures and financial tools to effectively embed film and television projects, there is still huge room for development in the film and television finance field."

In fact, in the field of film and television finance, lawyers are playing an increasingly important connecting role. Gao Donghua, a partner at Beijing Tianchi Juntai Law Firm, talked from a third-party perspective about the current problems encountered by film companies and employers in the field of film and television investment and financing-unfamiliarity with the rules of the industry where the partners are working directly leads to imbalance in cooperation. In this regard, Gao Donghua suggested that as a film company, they should enhance their financial awareness. They should not only clarify the attributes of the film and television industry itself, but also learn to view their own companies from a financial perspective; investors should also actively understand the rules of the film and television industry and understand the production process and creative rules of the industry.