China’s Orange Sky Hurt by Weak Distribution

Multiplex cinema

HONG KONG – Blaming weak distribution revenues, pan-Asian cinema exhibition group, Orange Sky Golden Harvest saw profits take a 76% dive in the first half of 2014.

While the box office in its key China and Hong Kong markets was up, the company’s distribution division failed to handle any films of significance during the period.

Revenues grew by 13% from HK$456 million (US$58.8 million) to $66.3 million, but net profits dropped from $6.45 million to $1.55 million.

Revenue and profits were up in the company’s Hong Kong, China and Singapore exhibition operations, but were down by half in Taiwan, where the territory’s box office has been weak through 2014 and where the company closed cinemas for renovation.

The bigger problems came in distribution. In Hong Kong and China the company licenses titles on its own behalf and acts as a distributor for hire. But in the period it saw revenues slump by 59% to $4.12 million.

Despite the setback the company says it will press ahead in distribution and production. “In view of the growing demand for Chinese-language films, the group will continue to expand its distribution and production business through seeking opportunities in different platforms to co-operate with film and TV series production houses and looking for good scripts for Chinese language film and TV drama series co-production,” it said in a statement.

It also greenlit production of “Fly Me to Venus,” which will release at the end of 2014 or early 2015.

The company’s main thrust, nevertheless, remains a rush for growth in mainland Chinese exhibition. It operates 52 multiplexes in China with 372 screens and 7.6 million admissions in the half year. By the end of 2015 it expects to operate 71 cinemas with 508 screens.

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