10 years ago, when Wang Zhongjun spent 377 million yuan to photograph Van Gogh's original work "Poppy and Daisy Flower", he would never have thought that 10 years later he would "brand" the idea of 1 million yuan of equity. For the few remaining "usable" assets, he was also warned by the Securities and Futures Commission.
In 2014, Wang Zhongjun, who won the famous painting, was "proud of the spring breeze". Ali Ma Yun, Tencent Ma Huateng, and Ping An Group's Ma Mingzhe joined each other and invested in Huayi in the form of "three-horse marriage" at the same time. The imagination opened by "capital + culture" has become a good story for a while.
In 2024, the stories of the "brothers" have been scattered. The news surrounding the two brothers Wang Zhongjun and Wang Zhonglei as the "keywords" has become a loss of 8 billion yuan in 6 years, "looking for money everywhere", pledging equity, and selling capital to pay off debts.
Recently, Feng Xiaogang, who was called "the closest brother" by Wang Zhongjun, also had to be handed over by him.
On July 23, Huayi Brothers announced the transfer of 70% of the company's equity in Zhejiang Dongyang Meila Media Co., Ltd. (hereinafter referred to as Dongyang Meila) to Alibaba Pictures for a price of 350 million yuan. The company founded by Feng Xiaogang in September 2015, when Huayi Brothers spent 1.05 billion yuan and won 70% of the shares, and now it can be said that it has made a "fracture price".
After the completion of the transfer, Huayi Brothers will no longer hold the equity of Dongyang Mera. In other words, Feng Xiaogang's IP and Huayi Brothers will no longer be related.
However, at this time, for Wang Zhongjun, whose equity was all frozen, Alican nodded and took over, which may have been a "bailout". In the hands of Huayi Brothers, how many chips do you have that can be turned? What is the fate of the once glorious "No. 1 Chinese film and television stock", what is the future fate?
1. Huayi has nothing to sell
Huayi Brothers wants to "sell" Feng Xiaogang, or there may have been a clue for a long time. In June this year, at the Shanghai Film Festival, the promotional materials of "Catching Spies" directed by Feng Xiaogang showed that the film producers had become Alibaba Pictures and China Film Group.
Under the catastrophe, the "brothers" also had no time to take care of themselves. As of July 25, Huayi Brothers' share price was 1.56 yuan per share, with a market value of only 4.328 billion yuan. Its market value in 2015 was as high as nearly 90 billion yuan. Compared to the high, the market value has evaporated by 95%.
The "Yin and Yang Contract" case in 2018 is undoubtedly a turning point for Huayi Brothers and even the entire film and television industry. Since then, Huayi Brothers' insolvency has ceased to be news.
On the one hand, Huayi Brothers' revenue continued to shrink, from 3.814 billion yuan in 2018 to 660 million yuan in 2023.
On the other hand, the momentum of widening losses is more difficult to reverse. In 2018 and 2019, Huayi Brothers' net profit lost 1.169 billion yuan and 3.978 billion yuan respectively. In 2023, Huayi will continue to lose 524 million yuan. Although compared with last year, the loss narrowed by 47.14%; However, the road to turning around losses is still far away.
For 6 consecutive years, with a cumulative loss of nearly 8 billion yuan, in the face of urgent debt pressure, Wang Zhongjun and Wang Zhonglei started a busy search for money, selling assets, continuing to cash out, pledging equity, and seeking fixed increases.
In order to show his sincerity, Wang Zhongjun first threw his beloved paintings and mansions that he had treasured for many years to the market. In addition to bidding for Van Gogh's paintings for 377 million yuan in 2014, he also bought Picasso's original "Seated Portrait of a Woman with Bun" for 201 million yuan in 2015; In 2016, he won Zeng Gong's only authentic work "Bureau Post" for 207 million yuan.
In order to save the company, Wang Zhongjun had to cut his love and "return to blood". In August 2019, he publicly stated: "Half of Guardian's auction is my paintings. In June 2020, he sold another luxury house in Hong Kong for a return of 220 million Hong Kong dollars, and proudly said: "For the safety of the company, I can sell anything." ”
These efforts are not enough to wipe out Huayi Brothers' rising debts.
According to the financial report, Wang Zhongjun and Wang Zhonglei currently hold 11.51% and 2.39% of Huayi Brothers' shares respectively. Since 2020, the brothers' reduction and cash-out actions have accelerated significantly, with their total equity shrinking from 25.41% (2020), 22.55% (2021), 17.12% (2022), all the way to 13.90% in 2023.
The intensive reduction of holdings alarmed the regulatory authorities. In September 2023, Huayi Brothers disclosed that 13.9% of the shares held by Wang Zhongjun and Wang Zhonglei had been frozen by the judiciary. The reason is that under the restrictions of the China Securities Regulatory Commission, Wang Zhongjun still sold 328,700 shares of the company within 30 days before the release of the 2023 semi-annual report, with a turnover of 999,200 yuan.
In addition to reducing their holdings, since April 2020, the brothers have also been seeking private placement. At that time, Huayi Brothers planned to issue no more than 824 million shares at 2.78 yuan per share, raising 2.29 billion yuan. However, the road to fixed increase has been full of twists and turns, and Huayi has adjusted the subscription plan five times without success.
As of the end of the first quarter of this year, Huayi Brothers' asset-liability ratio reached 79.79%, which has reached the highest point in recent years.
2, success is also Feng Dao, defeat is also Feng Dao
Will the 350 million yuan "transfer" of Feng Xiaogang make the Huayi brothers breathe a sigh of relief? It should be noted that Huayi Brothers may not be able to get cash in this transaction.
At the beginning of 2019, Alibaba Pictures provided a loan of 700 million yuan to Huayi Brothers with a term of 5 years. According to media reports, the collateral for the loan at that time was 70% of Dongyang Mera's equity, as well as some of Huayi Brothers' own assets.
In November last year, according to public information, Huayi Entertainment Investment, a subsidiary of Huayi Brothers, signed an agreement with Zoomlion Shengshi Culture (Beijing) Co., Ltd., a subsidiary of Alibaba Pictures, to transfer 100% of the equity of Jiali Culture, a wholly-owned grandson company of Huayi Brothers, and all the claims of Huayi Entertainment Investment to Jiali Culture, for a price of 350 million yuan - at present, this agreement just offsets the loan.
In order to "pay off debts", letting Feng Xiaogang leave Huayi Brothers undoubtedly means the end of an era. Previously, Wang Zhongjun said more than once, "Zhonglei and Xiaogang are the closest brothers in my life and work." The glory of Huayi Brothers is also inseparable from the high degree of binding with Feng Xiaogang.
In 2015, when Huayi Brothers used 1.05 billion yuan to "buy" Dongyang Meila, there was a controversy in the outside world - the company was established only a few months ago, with total assets of only 13,600 yuan, and the only valuable thing was Feng Xiaogang's IP.
At that time, Huayi Brothers put Feng Xiaogang on a five-year gamble: from 2016 to 2020, it was necessary to achieve a net profit after tax of not less than 100 million yuan for five consecutive years, and an annual increase of 15% on the basis of the previous year, and a cumulative net profit after tax of not less than 674 million yuan in five years. The unfinished part of each year is made up by Feng Xiaogang.
However, a discerning person can see that even if Dongyang Mera does not make any profit in five years, the difference between the 1.05 billion yuan paid by Huayi Brothers and 674 million yuan at one time can still allow Feng Xiaogang to get more than 300 million. After all, "half of Huayi's world was laid down by Feng Xiaogang." Wang Zhonglei once said.
As the biggest guarantee of China's box office, from 1998 to 2010, Feng Xiaogang released 12 films in 13 years, 11 of which ranked among the top three at the box office that year. And Huayi Brothers and Feng Xiaogang have been associated with the third Chinese New Year movie "Endless", and they have also shared a sweet period of more than ten years.
As Huayi's biggest cash cow, after "Endless", "Big Names" (2001), "Mobile Phone" (2003), "Assembly Number" (2007), "If You Are Honest, Do Not Disturb" (2008), "Tangshan Earthquake" (2010), ...... Both won the box office championship that year, and also made Feng Xiaogang the most commercially valuable film director in China.
Relying on the Feng Xiaogang effect, Huayi Brothers became the most successful private film company in one fell swoop, and went public in 2009.
In the listing prospectus, the relationship between Feng Xiaogang and Huayi was written early: the two films "Assembly Number" and "If You Are Honest, Do Not Disturb" accounted for about 40% of Huayi Brothers' film business revenue and 18% of total operating income that year, "the company has a certain dependence on Feng Xiaogang's team".
This dependence was quickly verified by the market: the high-investment film "1942" released in 2012 was not popular, and it also became Feng Xiaogang's first commercial film to lose money, and implicated Huayi Brothers in the next two trading days, and the stock price evaporated by 1.3 billion.
Since then, as Feng Xiaogang has gradually "failed", except for the box office of "Fanghua" released in 2017, which exceeded 1 billion, the performance of his films has been mediocre in recent years. In 2013, "Private Customization" won 710 million yuan at the box office, and "I Am Not Pan Jinlian" in 2016 only had a box office of 383 million.
In 2018, a "war of words" triggered by "Mobile Phone 2" lifted the fig leaf of the film and television industry, and also made Huayi Brothers fall from the peak.
On the day of the outbreak of the "Yin and Yang Contract" incident, Huayi Brothers closed with a falling limit, and its market value shrank by nearly 2.3 billion yuan in one day. and directly led to the fact that "Mobile Phone 2" has not been released so far, and Feng Xiaogang has not reached the gambling goal for the first time. In the same year, the "hot money" capital in the film and television industry began to retreat, and Huayi Brothers was also sealed into the cold winter.
3. The blockbuster is in urgent need of bailouts
In recent years, under the tight financial situation and overstretched investment, the film and television projects invested by Huayi Brothers have begun to increase year by year.
In 2019, Feng Xiaogang's "Only Yun Knows" had a box office score of only 156 million. In 2024, during the New Year's Day schedule when the competition is not fierce, the box office of "If You Are the Truth, Do Not Disturb 3" will continue to be cold, and it will still not exceed 100 million in the first week of release.
▲ (Stills from "If You Are Honest Do Not Disturb 3".) Image source/Douban)
Looking back at 2023, the top 5 film and television works of Huayi Brothers in terms of film and television revenue are "Predecessor 4: Early Marriage", "Echo", "Love is Delicious", "The Wandering Earth 2" and "Eight Hundred". However, due to the small proportion of investment, according to the financial report, the total income of Huayi Brothers' 5 films is only 280 million yuan.
In 2024, Huayi Brothers will continue to be in the doldrums. Although there are as many as 15 movies on the "film list". But as of July 24, several films released have not performed well at the box office. "Roof Football", which was released on April 20, had a box office of only 1.035 million yuan. "Dog Formation", which was released on June 15, had a box office of 32.68 million yuan. "Rifle Hotel", which was released on June 28, had a box office of 56.43 million yuan.
At the same time, Huayi's losses are also in danger of continuing to magnify. In the first quarter of this year, Huayi's net loss was 18.56 million yuan, an increase of 76.76% year-on-year.
Caught in today's predicament, in addition to the aforementioned reasons for Feng Xiaogang's "one glory and one loss". In the "scenery" season, Huayi Brothers has carried out too many aggressive acquisitions and irrational expansion, which also accounts for a large reason.
In 2015, at the point when stars are still the biggest resource in the film and television industry. In addition to acquiring the equity of Dongyang Meila, Huayi also invested 756 million yuan to bind Dongyang Haohan, which is held by a number of celebrities, and signed a total of 607 million yuan of VAM agreement with it, and the shareholders of Dongyang Haohan Company include Fan Bingbing, Li Chen, Feng Shaofeng, Yang Ying, Zheng Kai, Du Chun, etc. In addition, Wang Zhongjun also took the lead in the acquisition of Zhang Guoli's Changsheng Film and Television.
In retrospect, these acquisitions later became representatives of high premiums.
In the five years since it was acquired, Dongyang Mera has failed to complete the VAM twice, and although it needs to make up 235 million yuan, it still makes Huayi lose 800 million yuan. With the sharp depreciation of star IP, Dongyang Haohan, which also failed to complete the bet, also ended up with Huayi's loss.
Not only that, from 2010 to 2015, Huayi Brothers, which has "deep pockets", also played investment roles in many ways: it successively invested 150 million yuan to purchase 22% of the equity of Zhangqu; invested nearly 700 million yuan to acquire 50.88% of the equity of Yinhan Technology; With a capital of 1.9 billion yuan, it became the second largest shareholder of Hero Mutual Entertainment.
Since 2014, Huayi has successively built several "movie towns". These investments, in 2018-2020, did not bring much benefit to the company. From 2020 to 2023, due to environmental impact, live-action entertainment projects will suffer heavy losses.
As a result, Huayi's non-performing assets have been rising. According to the annual report, in 2018~2022, Huayi Brothers will provide for asset losses of 1.382 billion yuan, 2.661 billion yuan, 440 million yuan, 461 million yuan and 468 million yuan respectively.
In 2020, Wang Zhonglei bluntly said in a letter to all employees: "2019 is the most difficult year for Huayi Brothers since its establishment. The side effects of rapid expansion, such as too long fronts, too much investment, and too heavy burdens on the company, were all concentrated in this year. ”
Next, Wang Zhongjun and Wang Zhonglei spent several years, hoping to quickly divest their assets and sell their shares to return to blood.
In the second half of 2021, Huayi Brothers transferred 15% of the equity of Tianjin Real Entertainment Co., Ltd. for 225 million yuan, and in September of the same year, Huayi sold 15% of the equity of Hero Mutual Entertainment in exchange for 870 million yuan, according to the "China Entrepreneur" report.
Entering 2024, in addition to continuing to "find money" to bail out, Huayi Brothers has begun to increase the number of popular micro-short dramas in an attempt to boost performance and stock prices.
According to the annual report, Wang Zhonglei served as the producer of the male frequency short drama "Hongtian Shenzun" (China Literature's S-level IP) co-produced by Huayi Brothers and China Literature. However, since the second half of last year, the supervision of domestic short dramas has become stricter, and the market has begun to cool down significantly.
At present, Huayi's film and television projects are also being promoted by Hao Jingfang's "The Maniac", Tang Jiasanshao's "The Big Tortoiseshell Master", and the movies "Di Renjie", "Painted Skin", "Tai Chi" derivative short dramas, etc. - but Huayi, which is eager to save itself, needs a cinema blockbuster that can rebuild its confidence at the moment.
Author | Zhao Zikun
Edit | Li Yuan
Operations | Liu Shan