Confucianism "took over" Wanda Movie, Xu Jiayin and Wang Jianlin did not wish Ma Huateng to take over
Under heavy pressure, Wang Jianlin finally gave up his controlling stake in Wanda Films.
On December 6, Wanda Film announced that the company's indirect controlling shareholder Wanda Culture Group and its wholly-owned subsidiary Beijing Hengrun Enterprise Management and Development Co., Ltd., and the company's actual controller Wang Jianlin plan to transfer 51% of the company's controlling shareholder Wanda Investment to Shanghai Ruyi Investment Management Co., Ltd. If the above matters are finally implemented, it will lead to a change of control of the company.
Image source: Wanda Pictures
The Confucian film and television industry has successively invested in the movies "Hello, Li Huanying", "Send You a Little Red Flower", "To Our Dying Youth", etc., and has also produced TV series such as "No War in Beiping", "Langya Bang", "The Legend of Miyue";
Behind this sensational change of control in the film industry, in addition to Wanda's "financing to save itself", there are also Internet giants behind it.
What role does Tencent, as the "key man" behind Ruyi Pictures, play in this acquisition?
Wang Jianlin was under pressure, and Wanda Films changed hands
After the completion of the equity transaction on December 6, Shanghai Ruyi will hold 100% of Wanda Investment, and the indirect shareholding of Wanda Film through Wanda Investment will rise to 20%, while the shareholding ratio of Wanda Culture Group and its concerted actors will be reduced to 10.9%.
It can be seen that the difficult choice and balance between Wanda's actual controller's need to resolve its own liquidity needs and maintaining its control and influence over Wanda Films also shows that Wanda Group's liquidity dilemma is under the heavy pressure of the real estate downturn and the unfavorable listing of Zhuhai Wanda Commercial Management. Bai Wenxi, chief economist of IPG China, told Blue Whale Finance.
In order to consolidate its own cash flow and cope with the uncertainty of Zhuhai Wanda Commercial Management's listing at the end of the year, in addition to movies, Wanda Sports has also been rumored to be transferred.
In addition to the transfer of assets, Wanda has also recently adjusted its debt repayment plan to ease liquidity pressure.
On November 21, Wanda Commercial Management announced that it would adjust the repayment of the US$600 million debt due in January 2024 of its subsidiary Wanda Real Estate International Co., Ltd. to December 29, 2024, and plan to repay it in four installments within one year, without involving other public debt adjustments, with an early bird agreement rate of 1% and a general agreement rate of 0.25%.
Wanda Commercial Management said in the announcement that due to the continuous downturn in the real estate industry and the rising interest rates in the overseas capital market, the company is facing certain difficulties in refinancing, and there is a certain uncertainty in the approval of Zhuhai Wanda Commercial Management, a subsidiary of Wanda Commercial Management, before the end of the year, Wanda Commercial Management took the initiative to carry out liquidity management in advance to ensure that the company's liquidity continues to be stable.
According to the information disclosed in the previous prospectus, Zhuhai Wanda Commercial Management's institutional investors include Zheng Yutong's family, Country Garden, CITIC Capital, Ant, Tencent, PAG investors and other 22 investors, according to the content of the previous VAM agreement, if Zhuhai Wanda Commercial Management fails to complete the listing work by the end of 2023, Wanda Commercial Management is obliged to repurchase shares from the above investors, with a repurchase amount of more than 30 billion yuan.
Now, the deadline for Zhuhai Wanda Commercial Management's listing in Hong Kong is getting closer and closer.
"Whether it is the extension of the debt repayment plan or the transfer and disposal of assets, Wanda is to alleviate the pressure of VAM listing at the end of the year and ensure sufficient liquidity. A person close to Wanda told Blue Whale Finance.
According to the person, after submitting the prospectus to the Hong Kong Stock Exchange for the fourth time at the end of June this year, Zhuhai Wanda Commercial Management has been making "two-handed preparations", while cooperating with the Hong Kong Stock Exchange to promote the listing process, while negotiating with investors on the repayment of the 30 billion yuan repurchase money for the VAM. The person also revealed that due to the large number of Wanda assets and relatively high-quality assets, Wanda has provided investors with a variety of negotiation options, and is still in continuous negotiations with investors.
It is worth noting that Tencent is one of the earliest strategic investors of the four giants of Zhuhai Wanda Commercial Management. As early as January 2018, Wanda, which was ready to pay off its delisted shareholders, signed an investment agreement with Tencent, Suning, JD.com, and Sunac to jointly acquire 14.41% of the shares held by investors introduced by Wanda when it was delisted from Hong Kong's H-shares.
If it weren't for the difficulty of going public at the end of the year, Wanda's liquidity might not have been so difficult.
In addition to the above-mentioned US$600 million bonds, Wanda only has two US dollar bonds of US$400 million each, which will mature in batches in 2025 and 2026, and there is no pressure of concentrated debt maturity in the future.
According to public data, as of the end of September this year, Wanda Commercial Management's net assets after deducting all liabilities exceeded 300 billion, and a total of 492 plazas were opened, including 202 cooperations, which has achieved asset-light transformation, and with the continuous recovery of commercial management business, it will generate operating net cash flow every year.
Confucianism "takes over" Wanda Films, no loss
In fact, Wanda Films has long been known to have changed hands, and Shanghai Ruyi took over Wanda shares a few months ago.
In July this year, Shanghai Ruyi acquired a 49% stake in Beijing Wanda Investment held by Wanda Culture Group for 2.262 billion yuan. After the completion of the equity change, Shanghai Ruyi indirectly holds 214 million shares of Wanda Film through Wanda Investment, accounting for 9.8% of the total share capital. In the following ten days, Wanda Investment transferred Wanda Film shares twice.
Dating back to July last year, Wanda Films had a period of frequent high-level personnel changes.
On July 4, 2022, Wanda Film announced that Zeng Maojun, chairman and president of the company, submitted a written resignation application. According to the AI Finance Agency, 51-year-old Zeng Maojun has been working in Wanda for 16 years, and this resignation was very sudden, he was still working during the day on the 4th, and was called to the office in the afternoon.
Subsequently, Bu Yifei, vice president in charge of the human resources center, and Xu Jianfeng, vice president, left their posts successively. An industry insider told the Blue Whale reporter: "At that time, I thought that I would always take people to go alone, but now it seems that it should not be." ”
Why did Ruyi Films, which has frequently hit movies, acquire Wanda Films?
This is related to the "quality" of Wanda's film itself. Although the number of popular movies in recent years is not as good as that of Confucianism, Wanda Film has been deeply involved in the industry for many years and has rich experience in creating popular series of movie IPs. Previously, the "Detective Chinatown" series incubated in the Wanda system and composed entirely of domestic elements has achieved great success, with a total box office of more than 8.743 billion, becoming the highest-grossing series of film works in China.
Wanda Film said on the investor interactive platform on November 14 that the company's existing IP reserves include "Chinatown Detective", "Manslaughter", "I Want to See You", "Folding City", "Shenzhou" and other series of themes.
Different from other film and television companies, Wanda's film trump card lies in its cinema business, in the third quarter report of the film industry this year, a number of listed film companies turned losses year-on-year, and the performance of listed companies in the cinema category has recovered significantly.
The cinema business has also become a key part of helping Wanda Films recover.
According to Wanda Film's third quarter report in 2023, as of September 30 this year, Wanda Film has 877 opened theaters and 7,338 screens in China, including 709 directly operated theaters and 6,159 screens, 168 asset-light theaters and 1,179 screens, with a cumulative market share of 16.5% in the first three quarters and a profit of 690 million yuan in a single quarter, far exceeding the total profits of the five listed companies of Shanghai Film, Hengdian Film and Television, Jinyi Film and Television, Happy Blue Ocean, and Cultural Investment Holdings.
From this point of view, whether it is content IP or theater foundation, Wanda Movies is a good asset.
Ruyi vs Wanda, Tencent benefits the most?
At the current node, Ruyi has more room for imagination to obtain the cinema business of Wanda Films.
Zhang Yi, CEO of iiMedia Consulting, said in an interview with Blue Whale: "After the deep integration, both the content and the channel may have a better integration, Wanda Film has a deeper area in the offline channel, and the combination of the resource advantages of the two is also the main purpose of the integration." ”
Specifically, the advantages of this deep integration may be reflected in the "split line issuance".
Recently, domestic films have tried to implement the "split distribution" system. As the name suggests, "split distribution" means that a film is no longer screened by theaters across the country, and the filmmaker can choose to provide better conditions for the cinema chain or cinema investment management company to trade. For example, the number of prime screenings provided, the proportion of film scheduling is higher, the screening cycle is longer, and the proportion of film box office settlement and account sharing is higher, all of which belong to the category of merit-based consideration.
The original intention of "split distribution" is to help small and medium-sized films break through the market ceiling, and audiences may also be able to find more films with themes they are interested in in theaters. However, recently, the Chinese New Year file is approaching, and the gameplay of major film and television companies has made "split distribution" have a tendency to become a "capital game". Previously, the online distribution plan of the movie "Silent Record" showed that "Silent Record" selected 30 theaters for cooperation this time. The screening requirements include: no less than 8 screenings in the first three days of the first weekend (including no less than 3 screenings on the first day), no less than 3 golden screenings in the three days, and no less than 1 screening per day on weekdays.
According to Jimu News, the blockbuster Chinese New Year film "If You Are Honest Do Not Disturb 3" will adopt the model of "separate distribution", which will not be screened in theaters across the country, but will choose to provide better conditions for theaters or theaters to cooperate, that is, whoever can provide better conditions will have the opportunity to screen the film.
Under this new distribution method, film companies will undoubtedly gain more initiative if they can connect the upstream and downstream of the industry.
But Ruyi's goal does not seem to stop there, removing the clouds, behind the two film companies or a banner of Tencent's entertainment industry.
Shanghai Ruyi is a subsidiary of China Ruyi, and the largest shareholder behind China Ruyi is Tencent. As of September 22, 2023, Tencent Holdings is the company's largest shareholder (indirect shareholding), and Chairman Ke Liming holds 18.92% of the shares.
Talking about Ke Liming, the outside world is no stranger, and it was through many battles with Xu Jiayin that he finally realized the listing of China Ruyi.
The predecessor of China Ruyi was HengTen Network, which was originally jointly established by Evergrande and Tencent. In 2020, HengTen Networks acquired Ruyi Xinxin, a film and television company founded by Ke Liming, at a consideration of HK$7.2 billion, thus owning Ruyi Pictures and Pumpkin Films.
In 2021, Evergrande, which was in deep trouble, transferred 739 million shares of HengTen Networks to Ke Liming at a price of HK $4.433 billion, and Ke Liming became the second shareholder of HengTen Networks. In February 2022, HengTen Network changed its name to "China Ruyi".
As one of the major Internet companies, Tencent has a wide range of film and television entertainment layouts, Wanda Film's move fills the key gap in its offline film and television entertainment.
Previously, Tencent has laid out online literature (China Literature), film and television (Tencent Pictures), streaming media platforms (Tencent Video) and ticketing (Maoyan) almost all over the entertainment industry, but it lacks the link of cinema chains.
After this cooperation was reached, Tencent and Ali almost formed a comprehensive confrontation in the field of entertainment, and even slightly better, an industry insider said in an interview: "This (acquisition) is more like Tencent is encircling Ali." ”