Bona Film Archives ~ Business China : news for investors in China

News Digest: December 17, 2015

By newsdoug on December 17, 2015

The following press releases and media reports about Chinese companies were carried on December 17. To view a full article or story, click on the link next to the headline.
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Baidu (Nasdaq: BIDU) Plans Russia Entry in Tie-Up with Yandex – Reports (Chinese article)
Taiwan opposition leader calls China’s Unigroup investment plans “a huge threat” (English article)
Sohu (Nasdaq: SOHU).Receives Proposal For Investment In Stock And Convertible Notes (PRNewswire)
Japan’s Rakuten to Open Flagship Store on JD (Nasdaq: JD) Worldwide (GlobeNewswire)
Bona Film (Nasdaq: BONA) Enters into Merger Agreement for Going Private (PRNewswire)

ENTERTAINMENT: Huayi Eyes Studio Status with Ping An Tie-Up

By newsdoug on August 19, 2015

Bottom line: Huayi Bros could be moving towards an eventual goal of becoming China’s first major Hollywood-style studio through its massive new 30 billion yuan partnership with Ping An Bank.

It’s become quite common in China these days to see non-entertainment companies pour millions of dollars into entertainment-related ventures, most notably film-production deals. Everyone’s goal is to repeat the success of recent box office hits like “Monster Hunt”, which are earning big money by drawing on a fast-growing Chinese box office that could pass the US to become the world’s largest in the next decade.

But even I was surprised to see the size of the latest mega tie-up, which will see Ping An Bank pair with the highly successful independent movie producer Huayi Bros (Shenzhen: 300027) in a massive partnership with 30 billion yuan ($4.7 billion) in investment. That’s quite a large sum of money for the entertainment space, and is roughly comparable to how much e-commerce leader Alibaba (NYSE: BABA) said it would pay last week for 20 percent of retailing giant Suning (Shenzhen: 002024). Read Full Post…

MEDIA: Domestic Hits Power China Summer Box Office Surge

By newsdoug on August 5, 2015

Bottom line: Growing sophistication by Chinese film-makers will continue to power strong growth at China’s box office, and will foster a new group of homegrown players that could challenge Hollywood over the next 10-20 years.

Two blockbuster films are fueling a sudden wave of excitement over domestic Chinese films, providing new momentum for a growing stable of local film-makers and foreign-backed joint ventures. Perhaps it’s no surprise that the 2 films leading the summer charge are both animated or have animated elements, and both also use a potent combination of Chinese elements and western story-telling skills to appeal to huge audiences of young people that go to see movies during the summer holidays.

The huge success for the animated films “Monkey King: Hero Is Back” and “Monster Hunt” has fueled a big wave of national pride in Chinese film-making. It even has some observers calling for an end to the recent ban on showing foreign films during the important summer vacation period, since these new Chinese movies prove that domestic productions can compete with big foreign rivals like the “Kung Fu Panda” franchise. Read Full Post…

FUND RAISING: Bona Film Cashes Out of NY, LightInTheBox In Shoe Tie-Up

By newsdoug on June 15, 2015

Bottom line: A new strategic investment in LightInTheBox by a major shoemaker is a vote of confidence in its turnaround story, while Bona Film’s buyout offer caps a week of record privatization activity for US-listed Chinese firms.

LightInTheBox gets new strategic partner

Last week’s privatization frenzy for US-listed Chinese firms saw one more company join the queue on the final day of the week, with movie maker Bona Film (Nasdaq: BONA) adding its name to the list of companies looking to end their relationship with fickle New York investors. That final offer brought the number of US-listed Chinese firms receiving buyout offers last week to 5, which must surely be a record for such bids in a single week.

Meantime, another interesting deal has seen underperforming e-commerce company LightInTheBox (NYSE: LITB) receive its own big new investment from one of China’s leading shoemakers. That deal saw Aokang Shoes (Shanghai: 603001) buy about a quarter of LightInTheBox’s shares, hinting at a major new direction for the foreign-focused e-commerce company and also implying it’s unlikely to de-list from New York anytime soon. Read Full Post…

Fosun In Hollywood, ‘Transformers’ Clears China Way

By newsdoug on June 24, 2014

Fosun invests in Studio 8

A day after I wrote about a conflict that threatened to delay the premier of the new “Transformers” movie in China, media are reporting the commercial dispute in the matter has been resolved. Meantime, leading Chinese private equity investor Fosun International (HKEx: 656) is also catching the Hollywood fever that has been infecting Chinese media companies lately, announcing a major new investment in a start-up production house led by a former Warner Bros (NYSE: TWX) chief. Both of these stories show that the through train connecting China and Hollywood continues to gain momentum, and even Beijing is getting on board to help solve business disputes that could otherwise cost millions of dollars in lost sales. Read Full Post…

East-West Lines Blur At China Box Office

By newsdoug on November 7, 2013

Domestic films zoom at China’s box office

Two interesting new reports about China’s box office paint very different pictures about the country’s movie industry. Everyone agrees the sector is growing at a rapid clip, and will probably eclipse the US over the next decade to become the world’s largest box office. But who exactly is fueling that growth is a subject of debate, with one report saying domestic productions are suddenly surging as another says Chinese film companies are boosting their appetite for foreign productions. The underlying factor behind this apparent paradox is a growing confluence between East and West, with foreign studios increasingly working with Chinese partners and customizing their films for Chinese audiences. Read Full Post…

Murdoch Divorce: Done With China?

By newsdoug on June 17, 2013

Murdoch divorce spotlights News Corp’s China reversal

It’s been relatively quiet in China these last few days due to the Dragon Boat holiday, so I thought I’d start the new week with a look at Rupert Murdoch’s ongoing divorce with Wendi Deng and what it might mean for his flagship New Corp (Nasdaq: NWSA) in China. Many believe that Deng, a China native, was one of the main forces behind Murdoch’s previous bullishness on China, leading News Corp aggressively try to develop the market in the decade from 2000 to 2010. But the company has sharply reversed its China approach over the last 3 years, perhaps reflecting the deteriorating marriage between Murdoch and Deng. Read Full Post…

China Film: Paramount Wins, Bona Bombs

By newsdoug on April 5, 2013

Paramount, Bona discover ups and downs of China film

New headlines from top Hollywood studio Paramount (NYSE: VIAb) and publicly listed China filmmaker Bona Film (Nasdaq: BONA) are showing both the huge potential of the China box office, and also the fickle nature of the broader film industry. In the more typical Hollywood style, Paramount has splashed across the headlines with word that it will join with 2 Chinese partners to co-produce the next installment of its blockbuster “Transformers” franchise. Meantime, Bona was decidedly lower key in announcing its latest quarterly results, highlighted by a slide into the red due to lack of hit movies. Read Full Post…

News Digest: June 6, 2012 报摘： 2012年6月6日

By newsdoug on June 5, 2012

The following press releases and media reports about Chinese companies were carried on June 6. To view a full article or story, click on the link next to the headline.

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◙ Xiaomi Receives New Investment, Valuing Company at $4 Bln – Source (Chinese article)

◙ HTC (Taipei: 2498), Sina (Nasdaq: SINA) Pair on Social Networking Smartphone (Chinese article)

◙ Sichuan Airlines Launches Int’ll Expansion Plans, Signs Distribution Deal with Sabre (Businesswire)

◙ AliCloud Joins With Haier to Develop Smartphone – Source (Chinese article)

◙ Bona Film (Nasdaq: BONA) Aims to Co-Produce Movie With US Counterpart (Chinese article)

Wanda’s AMC Buy: The Show Isn’t Over Yet 万达并购美国AMC影院：表演还未结束

By newsdoug on May 22, 2012

The headlines are buzzing today with word that China’s leading theater chain operator Wanda Group has agreed to buy struggling US chain AMC Entertainment, calling it a landmark cultural exchange for Chinese firms expanding overseas. But to those applauding the deal, I would quickly caution not to celebrate just yet, as I see a greater than 50 percent chance that the sale will never close due to opposition from US politicians in this presidential election year. Let’s look at the deal first, which looks benign enough and was actually first reported 2 weeks ago when talks were in advanced stages. (previous post) Under their agreement, Wanda will buy struggling AMC from its current private equity owners for $2.6 billion, in what foreign media are calling the largest ever buyout of a US company by a Chinese one. (English article) Chinese media are noting the deal comes just a week after Rupert Murdoch’s News Corp (Nasdaq: NWSA) agreed to buy 20 percent of Bona Film (Nasdaq: BONA), a leading Chinese film distributor, implying the doors are opening in both directions to cross-border investment in the sensitive media and entertainment sectors. But anyone who follows Chinese investments in the US will know that US politicians love to get involved in anything even remotely sensitive, and that is even more likely to happen in this election year as candidates look for votes by portraying themselves as tough on China. That kind of grandstanding has led to problems mostly in the telecoms space so far, with China Mobile (HKEx: 941; NYSE: CHL), Huawei and ZTE (HKEx: 763; Shenzhen: 000063) all running into recent obstacles in their attempts to expand in the US. Politicians have also attacked the banking regulator for recently allowing several of China’s top banks to set up branches and make small acquisitions in the US for the first time, again reflecting how candidates are seizing on fears of these kinds of Chinese investments to raise their profiles. (previous post) Considering that movies are such a central part of American culture and that movie theaters are clearly a part of that picture, I could very easily see politicians raising objections to this latest deal, questioning the wisdom of letting such an important company into Chinese hands. Never mind that AMC and the theater industry in general are struggling due to tough competition not only from other theaters, but also from DVDs and newer products that let people watch and download movies over the Internet. The politicians won’t care about any of that, and they probably won’t care if AMC goes bankrupt in the end because no other company wants to buy it. All they will care about is looking tough against China in order to gain votes. All that said, I predict we will hear the first political objections to this deal within 2 weeks and potentially much sooner, and that all the negative publicity will give the deal a greater than 50-50 chance of ultimately collapsing, to the benefit of no one except the politicians.

Bottom line: The planned purchase of struggling US theater chain AMC by a Chinese buyer is likely to collapse due to objections from vote-seeking US politicians.

News Corp Makes New Play for China 新闻集团入股博纳影业集团

By newsdoug on May 16, 2012

Rupert Murdoch isn’t giving up on China’s difficult media market despite his numerous setbacks there, with word that his flagship News Corp (Nasdaq: NWSA) is buying 20 percent of Bona Film (Nasdaq: BONA), one of the nation’s few privately held movie distributors. But if past experience is any indicator, this latest tie-up could also be doomed for disappointment due to the nature of the investment. Murdoch was once one of China’s most bullish media investors, seeing huge potential in its market of 1.3 billion viewers. But the company, now at the center of an unrelated hacking scandal in Britain, largely abandoned the market 2 years ago after many failed ventures, mostly caused by News Corps’ own overzealousness and Beijing’s equally strong reluctance to open the sensitive sector. The main difference this time seems to be strong signals from Beijing that it’s finally preparing to liberalize the sector, including a big new opening to foreign investment. Let’s look at the actual news, which says that News Corp will acquire the stake from Bona’s chief executive. (English article) No other terms were given, but based on Nasdaq-listed Bona’s latest market value, that would translate to a purchase price of about $75 million. From an investor’s perspective, this deal does indeed look like an interesting play into a sector that could soon see rapid expansion. China’s movie market is already the world’s second largest after the US, with the majority of revenue coming from US films. What’s more, the market could soon be set for big new growth, following China’s relaxation earlier this year of a strict quota that previously only allowed the import of 20 foreign films each year. Under the new quota, the number will rise to 34, or about 40 percent higher than the previous total. If ticket sales rise by a similar amount, that could translate to nearly a $3 billion box office next year, a healthy boost from the $2.1 billion for 2010. This latest tie-up follows a number of previous failures for News Corp, including its operation of a TV station that never gained an audience and which it sold a couple of years ago. Other News Corp investments in Internet company NetEase (Nasdaq: NTES) and Phoenix Satellite Television (HKEx: 2008) were successful in terms of financial returns, but were also largely failures in helping News Corp gain access to China. Frankly speaking, this latest tie-up looks most similar to the earlier Phoenix one, which saw News Corp also sign on as a strategic minority investor, only to be largely ignored by the company’s charismatic founder and chief executive Liu Changle. I suspect the same will happen in this latest tie-up, since founders of Chinese companies often like to run their own shows and don’t seem to like listening to so-called strategic investors, regardless of how much experience those investors bring. If that’s the case, look for another frustrating tie-up for News Corp in terms of expanding its China presence, though it will probably earn a nice return on this modest investment.

Bottom line: News Corp’s return to China with a new investment in a film distributor is likely to earn good financial returns, but will ultimately end in frustration in terms of as a strategic tie-up.