Chinese Film Giants Unwind Troublesome Share Stakes

Chinese film studio, Huayi Brothers is selling off its entire interest in GDC, one of the world’s leading manufacturers of cinema management and digital projection systems. Separately, Alibaba is to cut its stake in Enlight Media, producer of recent smash hit “Nezha.”

In a Tuesday filing to the Stock Market, Huayi announced that it is to sell its controlling 91% stake in GDC to Glena Holdings, a company controlled by Dr Chong Man-nang, GDC’s colorful founder. The stake is to be sold for $55 million.

While the regulatory filing reveals GDC to be profitable – it made RMB14.1 million ($1.97 million) in the five months to May 2019 – and to have shareholders equity of RMB35.7 million ($5 million), Huayi is selling the firm at a discount to what it paid. Huayi first bought a stake in GDC in 2012 and is understood to have paid RMB200 million ($28 million) more than it is getting in the sale.

Huayi was badly hit by last year’s Fan Bingbing tax evasion scandal and lost close to $160 million in 2018. It had expected to recover in 2019 with the help of “The Eight Hundred,” a patriotic war epic made on a budget of $80 million and predicted to gross more than $200 million. But the film’s release has been halted by censorship problems. And the company lost a further RMB125 million ($17.5 million) in the first quarter, on revenue that also tumbled to RMB592 million ($82.8 million).

The pressing financial problems have caused Huayi co-founder Dennis Wang to sell some of his high-profile private art collection and the company to dispose of stakes in non-core businesses. In July, Huayi announced the sale and leaseback of RMB40 million ($5.6 million) of film projector equipment.

Alibaba’s Ali Venture Capital unit is to sell nearly a quarter, 2%, of its 8.78% stake in Enlight through a stock market auction process over the next six months.

While Alibaba risks also incurring a loss on the disposal – it paid RMB2.4 billion ($335 million) for the stake in 2015, but sees it currently valued at RMB2.19 billion ($306 million) – the e-commerce giant has no pressing financial need. And the success of “Nezha” has sharply lifted Enlight shares in recent weeks.

Chinese media has speculated instead that the thinking is strategic. Enlight has steadily drifted closer to Tencent, Alibaba’s biggest rival in many aspects of film, streaming, and digital entertainment. In 2016, Enlight bought a controlling stake in Maoyan, the Tencent-backed film ticketing provider that is the biggest competitor of Alibaba’s Tao Piao Piao app. Alibaba said its sale decision was “in line with its future investment plans.”

As some of the wealthiest players in the Chinese entertainment scene, but also relatively latecomers, both Alibaba and Tencent have built up a web of share holdings in other Chinese media players. In addition to its majority owned Alibaba Pictures and Youku operations, Alibaba has smaller stakes in Huayi, Wanda Cinema, short video firm Bilibili (through its Taobao unit), and Bona Film Group.

More Biz

  • Los Angeles Times

    L.A. Times Reaches Agreement with Guild

    The L.A. Times has reached a tentative agreement with the union that represents the bulk of its non-management employees, the paper announced Wednesday. The agreement follows more than a year of negotiations. The 475 reporters, copy editors, photographers and other staff covered by the agreement must still vote for ratification. Assuming it is approved, it [...]

  • AMC TheatresShop signs, Los Angeles, America

    AMC Theatres Accused of Firing VP Who Complained of Gender Pay Gap

    A former vice president at AMC Theatres filed a federal lawsuit on Wednesday, accusing the company of firing her after she complained that she was paid far less than her male peers. Tonya Mangels, who was vice president of product marketing, said that in March 2018 her supervisor inadvertently sent her a spreadsheet that included [...]

  • Johnny Depp

    Johnny Depp Trial Over Location Manager's Assault Suit Delayed to May

    Update: On Wednesday afternoon, Judge Holly Fujie ordered the trial postponed. A new trial date was set for May 11, 2020. Johnny Depp is expected to appear in a Los Angeles courtroom next week for a trial on a lawsuit alleging that he punched a location manager during the 2017 shoot for “City of Lies.” [...]

  • Stranger Things Season 3

    Netflix Undershoots U.S. Subscriber Adds for Q3, Beats Profit Forecast

    Netflix fell slightly short of its U.S. subscriber forecast in the third quarter — and projected lower Q4 subscriber growth than Wall Street was expecting as competition looms from Apple and Disney. Still, the company reported solid gains, announcing a Q3 record for paid subscriber additions and revenue, and handily topped analyst forecasts for profit. [...]

  • Despacito Luis Fonsi Daddy Yankee

    'Despacito' Tops Vevo's Most-Watched Videos of the Past Decade Chart

    In celebration of its 10-year anniversary, Vevo today announced its Top 10 lists of the decade’s most-watched music videos. Not surprisingly, the Most-Watched Music Video accolade goes to Luis Fonsi’s “Despacito” (featuring Daddy Yankee), with 6.4 billion views since its release in early 2017. The second most-viewed video is Mark Ronson’s “Uptown Funk” (featuring Bruno [...]

  • MoviePass card

    MoviePass Accused of Contract Breach by Oasis Ventures

    Oasis Ventures Entertainment, a Dubai-based investment fund, sued MoviePass on Monday, alleging that the loyalty-card company stole film titles to create its film unit. Oasis has had a joint venture with action movie producers Randall Emmett and George Furla since 2013. In 2018, Emmett Furla Oasis went into business with Helios and Matheson Analytics, the [...]

More From Our Brands

Access exclusive content