How did this lesser-known company seize the investment rights in Paramount's "Transformers 5" film?

It is understood that many listed companies want to obtain the investment rights of "Change 5" or the marketing rights of China. Surprisingly, this time Paramount did not choose 1905 Film Network and Film Fashion, its official partner during "Change 4", but chose a lesser-known film investment company-Shanghai Huahua Culture.

Original title: Uncovering the investment rights of "Transformers 5", Paramount abandoned 1905 and selected Lugang Culture and Dongfang Network?

"Transformers 4" once broke the box office record of "Avatar" with nearly 2 billion yuan in China. Starting from "Change 4", how to join Paramount Pictures and other Hollywood Big Six films has become a direction of "research and exploration" for China companies and China capital. "Transformers 5", which will be released at the end of July next year, has once again triggered a capital frenzy in the China market.

It is understood that many listed companies want to obtain the investment rights of "Change 5" or the marketing rights of China. Surprisingly, this time Paramount did not choose 1905 Film Network and Film Fashion, its official partner during "Change 4", but chose a lesser-known film investment company-Shanghai Huahua Culture.

Relevant information shows that this company has obtained investment rights from Paramount in several blockbusters such as "Mission Impossible 5" and "Star Trek 3", as well as marketing rights in China for films such as "Change 4" and "Cloud Map".

In the multi-party competition for the investment rights of "Change 5", two listed companies, Dongfang Network and Lugang Culture, emerged. On November 4, Dongfang Network just announced that it would acquire three companies including Shanghai Huahua Culture. Among them, Huahua Culture is valued at 1.121 billion yuan.

In addition, it is reported that Century Changlong, a subsidiary of Lugang Culture, is also expected to participate in "Change 5" and obtain some investment rights or some marketing rights in China. The reporter contacted a senior executive of Lugang Culture, who said that the current investment rights of "Change 5" have not yet been determined, and the company chose to remain silent.

What is certain is that in addition to its rumored acquisition scandals such as Wanda and Alibaba Pictures, Paramount is also welcoming more and more China partners. In "Jack the Hero", which was released at the end of October this year, Tom Cruise starred, not only Huahua Culture participated, but also Century Changlong and Shanghai Film Group appeared.

Why is Paramount keen on distributing investment rights?

Before talking about the secret war of investment rights in "Change 5", one question we must first understand is: After "Mission Impossible 5","Star Trek 3", and "Jack", why does Paramount sell the investment rights in "Change 5" to China?

Normally, domestic film companies will use obtaining investment rights in Hollywood's six major films as a symbol of resources and strength. But for people who are familiar with Hollywood film investment, it is not difficult to obtain investment rights in Hollywood films, and those China companies that blindly compete for investment rights will become "big shots" if they are not careful.

According to a partner of an overseas fund, even for Hollywood blockbusters, the loss rate of a single investment is more than 80%. In order to reduce investment risks, the six largest Hollywood companies, especially Paramount, often decentralize part of the global investment rights of films, or even open up all investment rights, and only get 8%-13% of the distribution income themselves.

"Hollywood companies will pass on risks by opening up investment rights. At present, the global box office of "Terminator 5" is still losing money, while the current global box office yield of "Mission Impossible 5" is only just 3%. Moreover, for risky films, investment rights are more open." The above-mentioned overseas fund partner said.

The meaning of the so-called "global division of accounts" is not as straightforward and concise as its literal meaning suggests.

China companies as producers or co-producers do not have to face "income" in the accounting sense, but various "incomes"(total income, gross income, adjusted gross income) agreed in a contractual manner. Different incomes have different statistical standards-so, high box office does not necessarily mean that China companies can earn profits.

Moreover, even if China companies have a certain proportion of investment quotas, the "responsibilities" they bear in the contract are not small. They generally have to take into account some aspects of advertising placement, auxiliary introduction, and distribution. Moreover, it is difficult for them to obtain the income evaluation report on the investment in advance, but will not be given until a certain number of days after signing the contract.

However, the grand sweep of 2 billion yuan in "Change 4" is still fresh in my memory. It seems that "Change 5" will not lose money at the box office in China and even around the world. As a result, many China companies compete for investment shares.

Why did Paramount no longer cooperate with 1905 and choose Huahua Culture?

Unexpectedly, the ones who obtained the investment rights in "Change 5" were not Wanda and Alibaba Pictures, which had rumored the acquisition scandal with Paramount, nor the 1905 Film Network, which once collaborated on "Change 4", but a not-so-famous company-Huahua Culture.

Before and after the release of "Change 4" last year, Paramount had a high-profile honeymoon with 1905 Movies Network. At the same time, 1905 Film Network is also an official partner of China recognized by Paramount. In the investment in "Mission Impossible 5", it was reported that Alibaba Pictures and Wanda both received investment shares from 1905 Film Network.

Industry insiders revealed that the reason why Paramount gave up cooperation with 1905 Cinema Network this time was mainly because of the advertising placement cooperation of "Change 4". There was no pleasant trouble between 1905 Cinema Network and Paramount, especially with Pangu Real Estate.

At that time, 1905 Film Network split the advertising agencies of the brands in "Change 4" to several companies. Brands such as TCL and Zhou Heiya were represented by Regal Communications, while Pangu was represented by Jiafu China and Integrity Shengshi. However, in June last year, Pangu held a press conference to announce the full lifting of cooperation with "Change 4" and sued it for breach of contract.

Although the last three companies settled, during the cooperation of "Change 5", it was obvious that Paramount had given up on 1905 Film Network and chose Huahua Culture.

According to Huahua Culture's Baidu Encyclopedia introduction, this is a comprehensive film company that integrates film and television investment and production, introduction of overseas films, film marketing and distribution, and derivative development.

But in the eyes of overseas distributors, Shanghai Huahua Culture is more like an agent that can negotiate investment rights with Hollywood, especially high-quality films such as Paramount.

The reporter's previous manuscript mentioned that it was introduced that the reason why Huahua Culture was able to obtain the investment rights of Paramount Films was because the actual majority shareholder behind Huahua Culture is an American company, Jiaflix. The actual controllers of this company are the Ganis brothers. Among them, Mark Ganis is the former chairman of the Academy Awards; and his brother Syd Ganis is known as the invisible godfather of Hollywood and has countless connections with Paramount.

It is such a company that can obtain Paramount's investment rights. A few days ago, Dongfang Network announced that it would be acquired at a high price of 1.121 billion yuan, with a premium rate of 960.58%.

Some people may think that since Huahua Culture can obtain Paramount's film investment rights and domestic marketing and promotion rights, the valuation of 1.1 billion yuan is not high.

However, an insider from Dongfang Network revealed that Huahua Culture, as a company that represents investment rights, does not have the production and distribution capabilities. It just reverses the copyright. The valuation of 1.1 billion yuan is already expensive. "In 2014, Dongfang Network planned to purchase a 10% stake in Huahua Culture, which was valued at only 100 million at that time."

There is great pressure on gambling performance, and the long line of the century is close to Paramount and Shanghai Film Corporation?

It is reported that in addition to Dongfang Network, Century Changlong, a subsidiary of Lugang Culture, is also fighting for the investment rights of "Transformers 5" and the marketing rights of China.

An industry insider commented on Century Changlong and said that it is a very knowledgeable company. Last year, it became popular because of its investment in "Return of the Great Sage", and it was later acquired by the listed company Lugang Culture. However, Century Changlong is still under pressure from betting on performance.

According to the performance commitment, Century Changlong's net profit in 2016 should be no less than 76.05 million yuan. However, in the first half of this year, it only achieved a total profit of 12.572 million yuan.

Fortunately, some of the profits of "Tomb Robber Notes" can be expected in the second half of the year. There are not many films that have exceeded 1 billion yuan at the box office this year."Tomb Robber Notes", which Shanghai Film Group took the lead in establishing a project and guaranteed a 1 billion yuan guarantee by Century Changlong, is one of them. While ensuring the guarantee, Century Changlong is also one of the investors in the film, accounting for 10% of the investment. Therefore, Century Changlong's profit and loss line in "Tomb Robbing Notes" is about 900 million yuan, so it is a small profit.

In addition, it was reported that at the end of October this year, Century Changlong originally received a 10% investment share in "Jack the Hero" produced by Paramount and starred by Tom Cruise. In the end, Century Changlong transferred this 10% investment share to Shanghai Film Company.

A survey from Ping An Media stated that Shanghai Film and Century Changlong have a long history of cooperation and deep friendship, and will develop film business together in the future. Therefore, Lugang Culture's shares are highly recommended.

Recently, Lugang Culture shares have been rising, with a 4.8% increase yesterday and a 0.19% increase today. "Change 5" is far from being released, but the response in China's capital market has been immediate.

Editor: yvette