MC Bookstore Chapter 68 The Dog Throws Bait to Catch the Dragon
Chapter 68 The Dog Throws Bait to Catch the Dragon
"IMHO!"
Chen Guanjiang coldly added, "If Golden Harvest had sufficient distribution capabilities in Southeast Asia, things might not be like this now."
When Yin Xun Media was established, the two sides discussed this issue. Zou Wenhuai knew very well what Chen Guanjiang was talking about, and couldn't help but roll his eyes.
Golden Harvest acquired part of the Southeast Asian Lu family's film production company, which is how it came to have its current cinemas and film studios. Before Golden Harvest was established, the film production company was Shaw Brothers' rival.
The rivalry between the film studios, Maoye and Shaw Brothers, has been brewing for a long time, extending from Southeast Asia to Hong Kong.
Because Golden Harvest was bound to be an adversary of Shaw Brothers, the Lu family of Southeast Asia sold their cinema chains and film studios to Golden Harvest.
Now, through Li Xiaolong, Ding Pei has been brought in, and Jiahe has finally established a foothold in Taiwan.
In other words, Golden Harvest was qualified to open cinemas in Taiwan and Southeast Asia, and its heritage was in no way inferior to Shaw Brothers.
But the problem is, I'm totally broke!
Otherwise, Golden Harvest wouldn't have only acquired a portion of Motion Picture Corporation's cinemas and then pulled together numerous scattered cinemas of all sizes in Hong Kong to barely form a cinema chain.
With enough money, Golden Harvest could acquire a large number of cinemas and open cinema chains in Taiwan and Southeast Asia, becoming a force to be reckoned with, comparable to Shaw Brothers, and thus able to compete head-to-head with Shaw Brothers.
However, Golden Harvest had long suffered from the suppression of Shaw Brothers, and was about to lose Li Xiaolong, a major ally, making its survival precarious. Where would it get the money to build a theater chain?
With slow and steady development, how long would it take to achieve the scale that Shaw Brothers has today? It might take twenty years or more to reach the size required for a public listing.
Seeing that the time was ripe, Chen Guanjiang revealed his purpose: "If it's because you don't have money, I do have a way to help Golden Harvest quickly gain momentum."
"What method?"
"Selling tickets at the box office!"
"Selling box office revenue? How?"
Chen Guanjiang explained, "The Big Boss has not yet been released in Europe and America. Golden Harvest can estimate the box office revenue and quote a price to sell the film in advance to recoup funds."
"The same approach was used for films like 'Fist of Fury' and 'Enter the Dragon,' including 'Game of Death,' which was temporarily shelved. They could sell tickets in a specific region or globally."
"Whether the actual box office reaches or exceeds the estimated box office is irrelevant to Golden Harvest. Golden Harvest only earns the revenue from the estimated box office sales."
Zou Wenhuai asked, puzzled, "So it's a bet?"
"Yes and no!"
"How so?"
Chen Guanjiang, half telling the truth and half lying, said: "Yinxun Media is preparing to go public. All the reasons for going public are to raise funds for rapid development, but most companies go public to speculate on stocks."
"Newspapers are not asset-heavy companies and do not need much financing. The listing of Yanxun Media is purely for stock speculation. So how should this stock be speculated?"
"The funds raised from the IPO can be used to purchase the estimated box office of Golden Harvest, while stock speculation requires drastic fluctuations in stock price. Once the film is released, the stock price will fluctuate drastically along with the box office."
"So here's the question: do you think shareholders know the daily box office figures first, or do I, as the owner of the box office revenue, know the box office performance first?"
"You must have known first!"
Zou Wenhuai's eyes immediately lit up as he said, "If we know the box office figures in advance, we can buy back the shares before the announcement if the performance is good, and sell them quickly if the performance is bad, then buy them back when the price drops. We can't lose money no matter what..."
His mindset, environment, and behavior all limited his way of thinking. Even if he had participated in the entire listing process, let alone when Shaw Brothers went public in 1971 after he had already left, he would never have imagined that there was such a way to play the game.
For a moment, it was as if Zou Wenhuai had opened the door to a new world, and he had already begun to imagine the feasibility of this kind of "box office betting".
Chen Guanjiang further tempted him, saying, "You own 30% of the Hyena Weekly, and after the IPO, you will also hold shares in Hyena News."
"By purchasing the rights to Bruce Lee's film for release, Golden Harvest can not only quickly recoup its investment, but also make money through stock speculation, truly achieving three flavors from one chicken and three ways to eat lobster."
Zou Wenhuai also started to think about it, swirling the wine in his glass as he asked, "How much market value will Yin Xun Media have when it goes public?"
Chen Guanjiang laughed and said, "In the middle of the year, Sing Tao Daily offered 25% of its shares for public offering, raising HK$3300 million and bringing its total market value to HK$1.32 million. Now the share price has doubled and the market value has reached HK$2.83 million."
"So far, the 'Wong Dog Daily' has only been published for a month, but its daily sales have already reached one-third of the 'Sing Tao Daily's', and sales are rising every day."
"Hyena Weekly sells 50,000 copies a week. The combined sales of the two newspapers are not far from those of Sing Tao Daily. Once we split the newspapers into multiple financial newspapers, we can achieve one-third of its sales."
"Sing Tao Daily has a market capitalization of HK$2.83 million, and my newspaper, The News, can go public with a valuation of HK$1 million without any problem."
"Taking out 50% equity and raising HK$5000 million, which is US$885 million, would be no problem at all to buy the global or regional box office of several films held by Golden Harvest."
"Furthermore, it's not KinoKino Media that's going public, it's just KinoKino Newspaper!"
It was then that Zou Wenhuai realized that Golden Harvest neither directly held shares in Hyena Media nor in the soon-to-be-listed Hyena Newspaper, but only in Hyena Daily, which was renamed from Hyena Daily.
Subsequently, "Hyena Daily" was renamed "Hyena Weekly", and the revived "Wang Gou Daily" was a completely new company, unrelated to Golden Harvest.
YinXun Media's subsidiary, YinXun Newspaper, is listed on the stock exchange.
The two newspapers will certainly not be split up. Instead, they will be restructured according to their pre-IPO valuation, which will greatly dilute Golden Harvest's equity.
According to Oriental Finance's estimates, after the listing and restructuring of Hyena Weekly, Jiahe's 30% stake in the company will only yield a 5% stake.
Zou Wenhuai wanted to sell Li Xiaolong's four films to Yin Xun Media in the form of equity, in order to boost the market value and speculate on stocks.
But that was just a thought. Chow Wen-huai knew very well what Golden Harvest's main business was. Only cash acquisitions of cinemas could break Shaw Brothers' encirclement, not stocks.
Once the number of cinemas reaches a certain scale, Golden Harvest can instantly turn the tide, raise funds through an IPO like Shaw Brothers, and even ditch Crowd Media to exclusively enjoy this "box office betting" model.
Zou Wenhuai gritted his teeth and said, "Ten million US dollars, and I'll sell you the global box office revenue of all five of my movies!"
At the current exchange rate, that's HK$5650 million. If we calculate based on the average cost of HK$65 to set up a cinema, it would be enough to expand to 87 cinemas in Southeast Asia in one go.
Although it still can't match the momentum of Shaw Brothers' 130 cinemas, with the addition of the original 16 affiliated cinemas, it can now compete head-on with them!
Chen Guanjiang suppressed his overwhelming joy and laughed out loud, "Uncle Zou, you know better than I do about the equity stake in Golden Harvest's film investments. If you're really serious about cooperating... this price is too high."