Welcome to TCB In RMB, a weekly summary of important developments in the Chinese entertainment business.
Chen Kun: savvy investor?
Chinese Investment in Paramount Rematerialized
Newly-installed Paramount Pictures CEO Jim Gianopulos got off to a quick start out of the gate, resuscitating a $1 billion, three-year slate deal with the state-owned Shanghai Film Group and Huahua Media that was announced last year with much fanfare but never closed because of capital outflow restrictions. Chinese media report that the new deal has been modified to cover specific films rather than the studio’s total output, and that it also comes with a possible extension into a fourth year. SFG and Huahua Media will both occupy offices on the Paramount lot.
Transformers Producer Goes Low-Budget
Backed by the CITIC Guoan investment fund, Transformers producer Tom DeSanto has launched a $120 million U.S.-Sino co-production slate. The deal was announced by CITIC Guoan at the Beijing International Film Festival as a collaboration “to jointly create a series of movies incorporating Chinese culture for the global audience.”
Given the $200+ million cost of the Transformers films, and budgets of $100 million for X-Men films that DeSanto in the early ‘00s, this represents a fairly small investment, and perhaps a turn toward smaller, more human drama.
In 2015, CITIC Guoan announced a partnership with former Walt Disney Chairman Dick Cook to invest $150 million in a media company that has yet to release anything.
iQiYi Also Throws Long Green at Short Video
Tuesday, Shanghai Baiyue Culture, an animation producer announced it had secured an RMB 10 million ($1.5 million) A-series of financing from the Baidu-owned video-streaming platform, iQiYi.
Founded in 2011, Baiyue Culture, has recently achieved popularity with its Koushui animated series of comical short videos explaining the history of the Three Kingdoms era, the source of some of China’s most enduring and popular stories and legends. The Koushui series has racked up almost 800 million views online.
Baidu’s competitor, E-commerce giant Alibaba is also a player in the online short video industry. Last month Alibaba launched a $290 million initiative for its video subsidiary Tudou.com to boost short video production and acquisition.
Tencent Music + IPO = $10B Music
Tencent Music, the Chinese Internet giant Tencent’s music-streaming service is planning an initial public offering, a source told the Shanghai government-owned news portal Jiemian. As announced, the IPO will value Tencent Music at some $10 billion.
This news comes as competition heats up to win music consumers in China. Per Quest Mobile, Tencent Music’s KuGou, QQ Music and Kuwo took the top three places in terms of monthly active users in Q1 of 2017. NetEase Cloud music, the music arm of Chinese internet portal NetEase, ranked fourth.
Two weeks ago, NetEase Cloud Music secured an A-round fund of RMB 750 million ($108 million). The financing brought NetEase Cloud Music’s valuation to RMB 8 billion ($1.2 billion).
Chinese Regulators: Chinese Actors Needn’t Lose Shirt
Wednesday, Heavenly King and Chongqing Hotpot star Chen Kun announced an RMB 1 billion ($203 million) partnership with the Shenzhen Stock Exchange-listed coal producer, Shanxi Meijin Energy to invest in high-tech hardware manufacturing, internet communications, renewable energy and consumer products. Chen is committed to putting in half of the money, $101 million.
Plans were disclosed in a Shenzhen exchange filing. On Thursday, however, the coal company received a letter from the Shenzhen Exchange, inquiring into the motives and sources of this joint fund.
The Shenzhen Exchange letter expressed concern over Chen’s lack of experience with professional investment institutions, as well as his apparent unfamiliarity with high-tech manufacturing, internet technology, renewable energy or the consumer industry.
While a decision as to whether the venture will be allowed to proceed remains pending, Meijin Energy has also been suspended from trading since Feburary 20, due to a “major” asset-restructuring.
Two months ago, Chen’s good friend, Heavenly Queen Zhao Wei’s 3-billion-yuan bid for animation producer Zhengjiang Wanjia was similarly quelled by banks who refused to extend credit for the deal.
