×

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

  • EFM 1st European Film Politics Seminar

    Berlin: 1st European Film Politics Seminar - Protecting Independent Film Production

    Leading industry reps gathered on the opening day of Berlin’s European Film Market for what is certain to be a continuing discussion about leveling the playing field for independent producers across Europe and demanding greater engagement in the sector from global players. The 1st European Film Politics Seminar aims to set the political agenda of [...]

  • Harvey Weinstein (C) arrives to New

    Harvey Weinstein Jury Note Stirs Frenzied Speculation on Verdict

    A note from the jury in the Harvey Weinstein trial on Friday afternoon set the media and legal worlds abuzz with speculation about the verdict. The note suggested that the jurors were deadlocked on the two most serious charges — predatory sexual assault — but had reached a unanimous consensus on three other counts, of [...]

  • Naim McNair Named Def Jam Senior

    Naim McNair Named Def Jam Senior VP of A&R

    In what may be the first signal of the next era of Def Jam Recordings, Naim McNair has been named senior VP of A&R at the company. The move comes just hours after it was confirmed that Paul Rosenberg, chairman and CEO of the label since January of 2018, is leaving his post at the [...]

  • Paul Rosenberg

    Paul Rosenberg Stepping Down as Head of Def Jam

    UPDATED: Paul Rosenberg, chairman and CEO of Def Jam Recordings since January of 2018, is leaving his post at the company, a source close to the situation confirms to Variety. Jeff Harleston, general counsel for Def Jam parent company Universal Music Group, will serve as interim chief until a new CEO is appointed; he will [...]

  • Baby Yoda - The Child Animatronic

    Hasbro's Adorable Baby Yoda Animatronic Toy Is Already Sold Out on Disney's Online Store

    The Force remains strong for toys based on Baby Yoda, the breakout star of Disney Plus original series “The Mandalorian.” Less than a day after becoming available for pre-order, Hasbro’s new $59.99 Baby Yoda animatronic toy is no longer available on Disney’s official online store: As of Friday morning, Shop Disney listed it as “sold [...]

  • BTS Leads Spotify’s New Music Friday

    BTS Leads Spotify’s New Music Friday Playlist Rebrand

    Spotify has launched a global rebrand of its popular New Music Friday playlist, which this week features BTS, The Weeknd, Noah Cyrus, Trippie Redd, Kenny Chesney, Rei Ami and others. The revamped playlist, which has 43 versions worldwide, has more than 3.5 million followers in the US and eight million globally. New elements include a [...]

More From Our Brands

Access exclusive content