Chapter 1929 It’s Just a Trap

Paramount and Merrill Lynch got off to a good start, and this portfolio investment plan quickly became a popular practice in Hollywood.

Merrill Lynch, having tasted the sweetness, struck again and cooperated with comic book giant Marvel to create a platter of investment projects.

Later in the same year, Warner and Legendary Pictures also reached a similar agreement. The latter provided a total fund of US$500 million and planned to shoot 25 films in the next five years, with each party investing 50%.

However, there are some differences between this cooperation between Warner and Legend and other platter investments. Unlike other fund investors, Legend hopes to be deeply involved in the production and marketing of the film. In other words, it is involved in the film. Interested in the inner workings of industry.

Most fund investors do not have the right to choose the films on the platter, but Legendary does. There is a special right to screen in the contract. In other words, it can reject the useless films sent by Warner and require Warner to make a profit with low risks. Put the big oil and water items on the plate.

So to put it bluntly, Legendary Pictures is essentially a private equity fund, but unlike ordinary funds, it is more interested in getting involved in the physical operation of the film industry.

A similar company is Dune Entertainment. This company once signed a platter investment contract with 20th Century Fox for 28 films with a total amount of US$325 million. After Warner parted ways with Legendary Pictures, it joined hands with Dune Entertainment. Come.

Later, the well-known subprime mortgage crisis occurred. The global financial crisis caused the platter investment cooperation to fall into a trough in 2007-2008. Some hedge funds withdrew from Hollywood and sold projects to new players at a discount.

And many new players have begun to expand the direction of platter investment, not only investing in film production, but also extending their tentacles to other corners of the entertainment industry. For example, some funds have begun to invest in artist brokerage business, because they have discovered that even large companies Stars and starring movies may also fail at the box office, but no one has ever seen a star lose money. So wouldn't it be a more cost-effective business to invest in the star himself?

Recently, many funds from outside Europe and the United States are gearing up to enter the Hollywood film industry, such as funds from India, the Middle East and Country Z.

After all, platter investment is a new method of financing the Hollywood film industry since the 21st century. Traditional film companies have obtained a large amount of external funds, shared risks, and firmly grasped the creative initiative and overseas distribution rights.

This approach is essentially to convert the stable income that can be expected in the future into a security and sell it to investors. Because Hollywood film companies generally have consistent and excellent credit records and strong IP monetization capabilities, for external investors , the risks can be controlled and the returns are considerable, so that’s how it happened.

Legendary Pictures is a master of the above gameplay.

The history of this company is about how an investment-focused private equity fund was transformed into a film company engaged in film project development.

So wouldn’t Big Pharaoh know about such a huge pit?

Of course, it is impossible not to know. Investors with a little experience will understand that mergers and acquisitions are by no means as simple as just buying. Healthy companies that maintain profitability often prefer to develop alone and will not sell themselves. On the contrary, Companies that are interested in being acquired are often companies with poor management, heavy debts, rigid management, and serious problems with capital turnover.

In this way, the trouble is thrown to the acquirer, making the acquisition more like searching for goods in the second-hand antique market that are currently evaluated to be lower than their actual value. The buyer not only has to consider which one to buy, but also to put it home. If the talisman at home does not match the decoration style of the home, you also have to consider how much to buy it and how to make money after buying it.

Which one should I buy? Will it match Wanjia’s decoration style?

When it comes to choosing which one to buy, Big Pharaoh’s thinking is very clear. His goal is obviously a global entertainment group at the level of Disney and Viacom. Wanda will also completely transform from a real estate company to a service industry. A super giant that has achieved a leading position in the pan-entertainment field.

The goal of acquiring AMC, the second largest theater chain in the United States, Hoyts, the second largest theater chain in Australia, and Odeon & UCI, the first theater chain in Europe, is very clear, which is to become a world-wide theater operator.

To put it bluntly, I want to be the boss in the downstream cinema market. In this way, Wanda, which has the ability to simultaneously distribute movies globally, will no longer be subject to the major global theater operators in the United States. It can independently release movies globally, laying the foundation for the future realization of Wanda. Laying the foundation for major film and television exports to the world.

It is logical to bring under its ownership Legendary Pictures, which has created Hollywood blockbusters such as the "Batman" series, "Inception", "Jurassic World", "Pacific Rim", and "World of Warcraft", giving Wanda Zai a global distribution capability. After that, we will be able to produce Hollywood-level blockbusters suitable for various major markets.

A good example is that last year, "Warcraft" was dismal at the box office after its release in North America, while country Z's box office continued to sing, eventually exceeding half of the total box office. This result is largely due to the current good times in the domestic film industry and World of Warcraft With the support of a large number of players cultivated in the country, such a blockbuster is not only a magical movie with a Hollywood level, but also a nostalgic film that fits the feelings of players in country Z. Of course, there is nothing that can be done about the bad reputation.

But the strategic significance of the movie "Warcraft" has already been produced, and such a positive impact is what Big Lao Wang hopes to see.

But then again, Big Pharaoh has spent a lot of money overseas in recent years. Whether it is the acquisition of AMC or the recent acquisition of Odeon & UCI, Wanda's acquisition path has been full of twists and turns.

To acquire AMC, from the initial asking price of US$1.5 billion to the final deal of US$700 million, Wanda spent millions of dollars to hire a team and took several years to complete the acquisition.

The acquisition of Odeon & UCI, the largest cinema chain in Europe, was also due to the delay in negotiating the price. Later, thanks to the Brexit crisis and the European economy, it was successful. The whole process lasted for three years, with many processes in between. After many rounds of arduous negotiations, no agreement was reached due to price reasons. The UK's "Brexit" crisis brought new opportunities, and the two sides finally reached an agreement.

But here comes the most important problem. Wanda's layout intention is very obvious, but all the target companies they acquire have suffered serious losses before, so the company can't just buy it, but also has to find a way to turn losses into profits.

For theater chains, they buy during the trough period of the industry and cut off other business segments that are not profitable. Then the company can often reverse losses when the industry picks up.

AMC, which was bargain-hunting during the trough of the U.S. theater industry in 2012, lost 100 million the year before the acquisition and was in debt of nearly 3.5 billion U.S. dollars. Most of its losses were due to the bleakness of the U.S. film industry at that time. At that time, AMC was a large-scale, operating company. Mature industry giants are actually heroic and short-tempered.

After Wanda took over, in just over a year, the output of the American film industry reached a new high, driven by the stock market, and improved customer service levels, AMC's market value doubled, with an investment of less than 800 million in exchange for a market value of nearly 1.7 billion. .

This wave made Da Laowang and his Wanda make a lot of money in the short term. In the long term, this acquisition is a good opportunity to enter the US market. AMC is even regarded as the export of country Z culture to the United States. port, and through AMC, Wanda has been able to repeatedly acquire local film and television companies in the United States, successfully planting its flag in the United States.

I have to admit that this acquisition kills three birds with one stone. It is admirable. Big Laowang made this move really well. As for the acquisition of Odeon & UCI when the European economy is in decline under the influence of Brexit, people with a discerning eye will smile knowingly. , this may be another outstanding investment case.

But in terms of the film industry, Yang Cheng has a conservative attitude towards this investment in Legendary Pictures. Although Legendary Pictures has a large number of excellent IPs, while creating high-level movies, it can form a good interaction with Wanda's huge tourism ecological chain. , the movie image promoted through Wanda's huge offline business chain can not only be deeply rooted in people's hearts, but can even become a label image of Wanda culture. Once this effect is formed, the commercial value behind it is really huge.

In addition, theater chains distributed around the world allow Wanda Manufacturing to effectively export. The U.S. film market is highly competitive, but in country Z, this is still a blue ocean.

The Three Kingdoms theme, an ancient war film with the production level of "Lord of the Rings"; the Taoism and Buddhism theme, a fantasy film that combines the scenery of Country Z; or a suspense film with the level of "Inception" in the context of a contemporary metropolis. . . Such a work will undoubtedly be a feast for the audiences of country Z who have always hoped for excellent domestic films. The huge market of country Z driven by a population of 1.4 billion will create countless miracles.

Therefore, the level of Legendary Pictures is far from enough. In the middle of last year, there was news that Wanda was planning to get involved with Paramount, one of the six giants. As soon as the news came out, the United States was in an uproar. Could it be that the history of RB's domination of the United States will be changed again? Did it happen again?

It was also at this time that the super ship Wanda successfully entered the attention of Americans. It turned out that unknowingly, this consortium from country Z had opened up all aspects of production, distribution and screening of the film industry. A complete industrial chain has been realized.

With the narrow-mindedness of Americans, will they let you, Wanda, continue to grow?

In the middle of last year, news came out that Wanda was negotiating with Paramount's parent company Viacom. Wanda planned to purchase the latter's 49% stake in Paramount. However, industry insiders knew that it would be difficult for both parties to reach an agreement. Price agreed upon.

Because when Viacom hoped to reach this deal, it valued Paramount Pictures at between US$8 billion and US$10 billion. Later, news came out that the sale of Paramount was blocked by Viacom Holdings. The company, TransAmerican Entertainment, and the Redstone family, which owns the company, are fiercely opposed.

The company's articles of association were even modified for this purpose, stipulating that any transaction must be approved by a unanimous vote of the board of directors, and group boss Sam Redstone and daughter Shari Redstone, who own 80% of Viacom Group's controlling stake, are both board members. They have all explicitly opposed the sale of Paramount, believing that selling Paramount shares would harm the interests of shareholders. This also makes Wanda’s prospects of acquiring Paramount’s equity dim.

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