Movie +P2P: The "money-making game" hidden behind asset securitization

"As long as there is stable cash flow, asset securitization can be carried out." This famous saying from Wall Street has become a footnote in current P2P financing of film projects.

Author: Cao Lexi

Source: Yulezibenlun

Viewpoint 1: There are currently dozens of P2P platforms that are carrying out P2P financing for film and television projects. Most of them use the box office revenue rights of one or more movies as the basic assets. In a way similar to financial products, raise funds from the public.

Viewpoint 2: Many so-called "movies +P2P" are not real asset securitization. Many of these P2P projects under the banner of movies have become a "money-making game". Movies are just an "advertisement" for financing parties to raise funds.

Viewpoint 3: The film P2P projects represented by "Ip Man 3" are extremely chaotic, and the risks are concentrated in:

1. Whether funds flow to the film project without supervision;

2. Repeated financing through the film project has become a high probability event;

3. Short-term debt and long-term investment, and maturity mismatch. Once the capital chain breaks, it can easily lead to a collapse.

"As long as there is stable cash flow, asset securitization can be carried out." This famous saying from Wall Street has become a footnote in current P2P financing of film projects.

There is a precedent in Hollywood:

in 1997, Bear, Stearn &Inc issued asset securities based on the income of DreamWorks 'film productions over the next 10 years, and in 1998, New Line Cinema also issued US$350 million in asset securities.

In China, the era of film asset securitization has not really arrived, but this method of financial operation has been "ruined" by speculators.

In the recent "Ip Man 3" incident, film companies, guarantee companies, and asset management companies teamed up with more than a dozen P2P platforms to use this film as a cover to make a large number of repeated financing. This almost subverted the film industry's imagination of "raising funds."

Can films be asset securitized?

Studying the financing structure of "Ip Man 3" on various P2P platforms, we found that this time "Ip Man 3" basically adopted an asset-like securitization approach-film and television investment companies serve as financing parties and transfer box office income rights to small loan companies or asset management companies, which attract a large number of retail investment on P2P platforms by packaging films into wealth management products.

Currently, most film projects that are financed through P2P are based on the copyright proceeds of a single film. However, as an intangible asset, movies are often difficult to evaluate their asset value. Since domestic film revenue mainly depends on the box office, the box office is often difficult to predict.

There are also some P2P platforms that adopt the method of packaging film revenue rights. For example, the film and television investment plan on Baotuo Loan, with a total loan amount of 30 million yuan. The packaged films include "The Bombing","Ip Man 3","G Storm 2","The King of Shanghai","The Strange Journey of Young Spivey","Gun Crossing","Three Thousand Miles", and "Finding You in My Heart".

The

box office revenue of a movie is uncertain. How to avoid risks? A project manager in charge of film and television treasure told Entertainment Capital that in addition to the financing platform itself having a set of risk control processes, in the absence of a complete guarantee mechanism, film financing generally tends to target post-production or publicity.

"Movies are a purely investment product, and their gambling nature is very strong. For example, real estate or mineral projects, there are clear pledge conditions and an exit mechanism, but movies do not have them. If you lose, you will lose."

--An investor in the film industry

In fact, in the current practice of asset securitization, most of the basic assets are infrastructure, such as highway toll rights, sewage treatment income from sewage treatment plants, rent from clothing wholesale markets, etc. What puzzles Entertainment Capital is whether movies, as an intangible asset with extremely unstable returns, are they a good target for asset securitization?

Zhao Longkai, Guanghua School of Management at Peking University, said,"I think film products are not ideal targets for asset securitization. Most financial contracts must be clear about their subject matter. Not everything can be used as the subject matter. They must be very clear, cannot be manipulated by humans, and be open and fair in order to be good as the subject matter."

"The risk of movies is very high. If the risk of wealth management products based on movie projects is very low, it means that the risk of the guarantor behind it is quite high. If the guarantor is not strong enough, there will be a risk of default."

--Zhao Longkai, associate professor in the Department of Finance at Guanghua School of Management at Peking University

, believes that relatively speaking, film package financing may be a relatively safe way, but it may be more appropriate to invest in the stocks of film and television companies than investing in such targets.

Zhou Zhengbing, a professor at the School of Culture and Media at the Central University of Finance and Economics, also believes that if China films want to realize asset securitization, they can start with some large listed film companies, because these companies have film distribution records over a certain period of time, which can prove that the films they distribute have a good level of income.

"For example, Huayi, Light and China Film shoot many film and television works in one year, and the films they shoot are enough to form an asset package to provide a relatively accurate evaluation of the yield of future films. As long as there is credit, the next step is nothing more than a question of what leverage to use to decompose risks. I think this kind of film asset securitization can be done."

---Zhou Zhengbing, a professor at the School of Culture and Media of the Central University of Finance and Economics

, is a fake asset securitization, but it is real to collect money

. In fact, discussing asset securitization in the current film market is of little significance.

The reporter found that the current so-called "movie +P2P" is not real asset securitization. Many of these P2P projects under the banner of movies have become a kind of "money-making game". Movies are just an "advertisement" for financing parties to raise funds.

"In fact,'Ip Man 3' has also been funded on a platform I serve. You can understand that the movie is just a gimmick. If you dig deeper, it is actually not worth considering."

--An employee who declined to be named

According to reports from multiple media, Kuailu Group has made repeated financing through the "Ip Man 3" project on more than a dozen P2P platforms. This movie P2P game has almost evolved into a financial fraud.

Since there is no clear domestic supervision on the flow of P2P funds, the financing of a certain film project on the P2P platform does not need to be filed, which makes it possible to use a certain project for repeated financing. In the logic of these financial companies, it doesn't matter whether a movie makes money. The key is to use the appeal of the movie to continuously obtain funds on P2P platforms.

The survey found that many P2P platforms are not unaware of this current situation. For their own interests, they have also chosen to "turn a blind eye."

Due to fierce competition on P2P platforms, the cost of obtaining customers is high. Using movies to attract attention has become a means of attracting customers on many P2P platforms, and this fits well with the idea of film and television companies that need financing: film and television companies collect money and P2P platforms attract customers.

When a movie is released, it will naturally attract the attention of investors and the public. Therefore, film and television companies use the IP of movies to package financial products into film investment projects to attract platform traffic, and financing platforms have also entered the public's eye.

There are three risks in film P2P projects

. In fact, anyone with discerning eyes can understand that a good movie does not have to worry about getting money. Through more secure platforms such as film companies, individual investors, banks, and film funds, it has already been able to meet its financing needs. Against this background, we don't know what the purpose of some movie projects that are frantically raising funds on P2P platforms are.

Precisely because movies are public products and detailed box office data are released every day, once the "box office scandal" is exposed, it can easily lead to a run on investors and eventually lead to a collapse.

After careful analysis, we found that movie P2P may have the following three risks:

maturity mismatch risk

, and bid breaking often occurs on my country's P2P online lending platforms. According to a project manager who does P2P for film and television, the common problem is amount mismatch, that is, a large bid of 10 million yuan is divided into multiple small bids with the same term. On the one hand, this practice is to cater to investors 'investment preferences., and also takes into account the actual financing capabilities of some platforms.

"If the platform has a very strong fundraising ability, people like Alipay, Zhaocaibao, and Entertainment Bao are not worried because they have a very large base, so you can just invest a little. But our film and television industry is still relatively small, and we may not be able to raise 10 million yuan in a short period of time, so you can only split the amount and divide the amount into equal parts."

There is also a term mismatch, which means that long-term financing projects are split into short-term financing to achieve the goal of rapid financing. For example, the one-year target is split into four three-month periods and issued on a rolling basis.

The reporter believes that one of the crux of the run on Golden Deer Financial Bank caused by the box office fraud of "Ip Man 3" is the mismatch of deadlines.

"Let's not talk about the early planning of the movie, it will take at least more than one year from the actual production to the real box office revenue after the movie is released, which means that the loan cycle should also be more than one year. The film projects raised by "Ip Man 3" on the P2P platform either expire in three months, or six or nine months, which means that there must be a deadline mismatch."

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The problem with maturity mismatch among insiders on the P2P platform is that when the first batch of financing expires, the film project often has not yet been paid back. Normally, the only way is to use the funds raised later to fill the front "hole", that is, to tear down East Wall to pay West Wall. However, the funds raised in the later period cannot generate interest, which will objectively lead to a decrease in the utilization rate of funds, and the "hole" will become wider and wider until the money cannot be raised and the capital chain will break.

Maturity mismatch can easily cause liquidity risk. For example, the run on Golden Deer Financial Bank this time is due to liquidity that products cannot be redeemed after expiration.

Behind the maturity mismatch, there must be two other problems: the existence of a fund pool, and the mismatch between projects and funds.

Industry insiders said that the development progress of some platform film projects cannot keep up with the amount of funds from investors. Especially after the year, investment demand has exploded, funds have increased significantly, and there is no investment destination. The extra money is left in the platform account, and some platforms will invest it in money funds.

Self-financing and taking risks

. It can be seen from previous reports that the funding sources of "Ip Man 3" come from at least 18 P2P platforms. The reporter randomly inquired about several financing platforms that do "Ip Man 3" and found that for the same project, the borrowers on different platforms are different. For example, in Xiaomi Loan and Suning Crowdfunding, the borrower is Hehe Film and Television; while on Dongrong Online, the borrower has become a big-screen distribution company. In addition, there is also a way to borrow money through the transfer of asset management company bonds.

"For example, in this big-screen issuance, he raised money for the issuance stage. During the issuance stage, he raised 50 million yuan from the housekeeper Financial Management. It was really a bit too much." In interviews, even P2P industry insiders expressed this shocking.

It is difficult to estimate how much funds have been raised by various P2P financial products launched through Ip Man 3. Film itself is an industry with less transparent revenue, costs and profits. There are multiple borrowers financing the same project. Is it because the film production and publicity stages require money, or is it re-raised in the names of different borrowers? Over-raised? We don't know.

No matter how the borrower changes, most of the guarantors involved in the financing of the "Ip Man 3" film project point to one guarantee company: Shanghai Donghong Bridge Financing Guarantee Co., Ltd. In the guarantee measures of most P2P platforms, it is stated that the "Ip Man 3" project will be guaranteed by this company in full principal and interest.

Risk of lack of P2P supervision

The connection between all parties in the "Ip Man 3" incident is that Kuailu Group used its own film and television company, its own channel company (fund management company), and its own guarantee company to raise funds mostly on its own P2P platform. It seems that it has invested in its own film and television projects, and only Kuailu itself knows where the actual funds flow.

If such a self-contained and self-sustaining scam had not been exposed, many investors would have been kept in the dark forever. "In fact, if someone really wanted to investigate him, they could find him." People in the P2P industry told Entertainment Capital: "However, little information is disclosed in this industry. Some of them post too many targets on the platform. They are either packaged or the title is just a treasure without indicating which specific project it is. It's very troublesome to find them one by one."

The person revealed to reporters that the platform party should, logically speaking, track the progress of the film financing project, whether the funds are used on the film, and the current progress of the project. However, investors cannot find this information from the published information after most P2P platforms complete financing.

Since there are no clear regulations on the degree and duration of information disclosure, the degree of information disclosure on different P2P platforms is quite different. Some platforms can publish each loan, including previously sold projects and unsold projects, involving information such as the investment amount and number of people in the loan transaction project.

There are also some less standardized P2P platforms that only display film projects under financing, but detailed information cannot be found on completed projects.

The opaque film industry + lacks P2P platforms for information disclosure, and its information disclosure status is indeed worrying. In this case, why are so many people willing to participate in the investment and financing of films?

The reporter believes that many investors will only participate because of the luck that "I am not the last person to take over the offer." There are also some P2P platforms with heavy offline business, such as Golden Deer Financial Bank. Investors are more likely to trust the financial planner than the platform or the project itself, so even if there are any risky projects, someone will invest.

The chaos of movies +P2P caused by inadequate industry supervision has aroused the resentment of many film and television companies.

"I am very opposed to third-party financial management and P2P. The reason for exclusion is not because of its own system, but because of its regulatory blind spots and its lack of strict management capabilities."

--A film industry executive.

The online loan financing problem involved in "Ip Man 3" is actually not a problem of P2P itself. P2P is ultimately just an investment tool. "The bubble in the field of film financing is actually a lack of government management." Zhou Zhengbing believes that to control the current chaos in film online loan financing, we can only hope that relevant laws and regulations will be implemented. "This is a game between the government and capital operators. If management is not in place, people will naturally take advantage of the situation."

"The" Ip Man 3 "incident is equivalent to a noise in film finance innovation, bringing chaos to the film investment and financing market." Zhou Zhengbing said: "The relevant person in charge of the incident will pay a price for this, but the overall situation will not change the development trend of film finance innovation."

Editor: yvonne