×
You will be redirected back to your article in seconds

Problems Surround Alibaba Pictures As It Reveals $57 Million Loss

HONG KONG — Alibaba Pictures Group, the film investment and distribution arm of Chinese e-commerce giant Alibaba, has revealed losses of US$57.1 million (HK$443 million).

The figures amount to a painful house cleaning exercise and a demonstration of the many hazards of doing business in the Chinese film industry.

The losses were incurred in the six months to June and reflect impairments to the value of some of the company’s film and TV properties, as well as a restatement of the value of some derivative financial instruments.

Alibaba took control of the Hong Kong-listed company, through a 60% share stake costing US$775 million (HK$6 billion), at the end of June and changed the company’s name from Chinavision to Alibaba Pictures Group. The losses relate to the period before Alibaba’s control, but were only discovered after takeover, in August, prompting an investigation by auditors that only ended recently.

Revenues dropped from US$61.2 million (HK$474 million) in the first half of 2013 to just US$14.6 million (HK$113 million). The write-offs amounted to US$48.9 million (HK$379 million) while trading losses of US$8.36 million (HK$64.8 million) added a further burden.

The company revealed the numerous difficulties encountered in the past year as it tried to muscle its way into the forefront of the business.

Among the $9.68 million (HK$75 million) of film-specific losses, the company revealed a costly “restriction imposed by the PRC authority on the broadcasting of a film in the PRC;” and a “dispute between a film distributor and a film producer on profit sharing of a film in which the group has invested.” This is understood to be a reference to Chinavision’s stake in Stephen Chow’s Feb 2013 $200 million blockbuster “Journey To The West,” which was distributed by Huayi Brothers Media.

Notes to the accounts reveal that part of Alibaba Pictures Group’s array of deals with prominent regional film makers is also coming undone.

As Chinavision, it paid US$8.14 million (RMB50 million) for Stephen Chow to offer it investment positions in five future movies. But it chose not to go ahead with any of them and so forfeited its deposit.

In March this year, it signed a deal with Taiwan-based producer Angie Chai to deliver a slate of films involving writer-director Giddens Ko. However that is treated as a loss in the June accounts.

More happily, in May this year it also paid RMB50 million to Wong Kar-wai as down payments on five movies for Wong or his associates to deliver. Alibaba Pictures says that it expects one of those to go ahead before June 2015 – Wong recently revealed a project involving a monk travelling to India — and has restated that investment as a current asset.

Alibaba Pictures also bought mainland Chinese distribution rights to two Hong Kong movies, actioner “Rise of A Legend” and comedy “Temporary Family.”

Shares in the group began trading again Monday, after months of suspension, and in early trade rose 2% to HK$1.64 apiece.

Popular on Variety

More Biz

  • Felicity Huffman

    Felicity Huffman Issues Apology After Receiving Prison Sentence: 'There Are No Excuses'

    Felicity Huffman issued a long statement of apology on Friday after receiving a two-week prison sentence for paying to illegally boost her daughter’s SAT score. In the statement, Huffman, in addition to saying  she accepts the court’s decision, acknowledges and apologizes to other parents fighting to get their children into college. Along with the prison [...]

  • Actress Felicity Huffman (C-L) and her

    Felicity Huffman Sentenced to 14 Days in Prison in SAT Cheating Case

    Felicity Huffman was sentenced on Friday to 14 days in prison for the crime of paying $15,000 to boost her daughter’s SAT score. Judge Indira Talwani also ordered her to serve 250 hours of community service and a year of probation, and pay a $30,000 fine. The sentence came as a surprise, as Talwani had [...]

  • NEW YORK, NEW YORK - SEPTEMBER

    Rihanna Sings (Briefly), Pharrell and DJ Khaled Rock the Mic at Star-Studded Diamond Ball

    In just five years, Rihanna’s Diamond Ball has become one of the music industry’s biggest events of its kind, nearly on the level of the Clive Davis Pre-Grammy Gala. While there are several dazzling charity events with equal starpower and often-unique performances, what makes the Diamond Ball different is, obviously enough, Rihanna’s supernova aura and [...]

  • Amber Heard Seeks Info on Johnny

    Amber Heard Seeks Info on Johnny Depp's Arrests and Substance Abuse

    Amber Heard is asking Johnny Depp to turn over records related to his arrests and drug treatment, as her lawyers defend her from a $50 million defamation suit. Depp filed suit in March, accusing his ex-wife of tanking his career by writing a Washington Post op/ed alluding to her domestic violence allegations against him. Heard [...]

  • David Nevins, Chief Creative Officer, CBS

    David Nevins: CBS-Viacom Merger to Create 'Virtuous Eco-System' for Content

    CBS and Viacom leaders are looking for opportunities to create a “virtuous eco-system” for content that can prosper across the various platforms of the two companies that are set to merge by year’s end. That was the sentiment shared by David Nevins, chief creative officer of CBS and chairman-CEO of Showtime Networks, during a Q&A [...]

  • 'Resident Evil' Stuntwoman Files Suit Over

    'Resident Evil' Stuntwoman Files Suit Over Horrific Motorcycle Crash

    A stuntwoman who suffered severe injuries on the set of “Resident Evil: The Final Chapter” in 2015 has filed a lawsuit alleging that the film’s producers reneged on a promise to cover her medical costs. Olivia Jackson was driving a motorcycle that collided head-on with a camera rig during the shoot in South Africa. According [...]

More From Our Brands

Access exclusive content