China Entertainment: Starting from 07 Kuainan

Chapter 457 The Decline of the Empire

The pie that I have been working on for a year has finally fallen into place.

This time, the investors of "Zhu Xian" are in addition to Shanda, Perfect, Wangda, China Film and Chinese Culture.

There is also the presence of a Hollywood company.

Warner Bros.

This is the first time Star Media has cooperated with Warner Bros., although Warner Bros. only invested US$800 million, accounting for only 8% of the share.

However, most of the overseas distribution work of "Zhu Xian" was handed over to Warner.

Universal Pictures did not participate in the investment in "Zhu Xian" because Universal Pictures felt that this IP was not very good.

Too oriental.

It's not like "Now You See Me" or "Pacific Rim" where both east and west are accessible.

To this end, the Chen Tianqiao family needs to pay US$7.4 million in cash.

A skinny camel is bigger than a horse. Even if Shanda has no money, it still has this point. The real reason that Shanda is short of money is its delisting.

Otherwise, if there is a problem in one link, it may be the collapse of the empire.

Then, Warner Bros. took advantage of the situation and obtained the overseas distribution rights of "Zhu Xian" with a very sincere account sharing ratio.

Converted into RMB, it is more than 48 billion, close to billion.

In the second quarter of this year, the profit was only US$1280 million.

Even game companies with abundant cash flow would find it difficult to spend so much money at once.

The price of Shanda's reverse repurchase is US$41.35 per American depository share, a premium of more than 26.6%.

of course.

The reason why Shanda has withdrawn so much is not because it is not optimistic about "Zhu Xian", but because there is a problem in the capital chain.

In order to get the money, Chen Tianqiao made countless connections.

Of the 8% investment share, 5% belongs to Huayi Brothers, and the remaining 3% is given to Warner Brothers by Shanda.

Not long ago, Shanda officially announced its decision to "privatize and delist".

Shanda not only transferred 3% to Warner Bros., it also allocated an additional 10%, which is million U.S. dollars, to others.

Since 09, Shanda's performance has been declining year by year. In the fourth quarter of 09, Shanda's operating profit was US$8200 million. By the first quarter of 10, Shanda's profit was only US$5160 million.

Among Shanda Games, Shanda Literature, Shanda Online, Shengfutong, Ku6 and other businesses, only Shanda Games is profitable.

and so.

Universal Pictures voluntarily withdrew its investment.

The battle line is too long, and the amount of funds required behind it is huge, unless Shanda can keep winning like Lu Yuan.

Today, Shanda has only retained an investment quota of US$700 million.

Privatization delisting and domestic forced delisting are two different concepts. The former is a voluntary act by the company. Before delisting, Shanda needs to reverse repurchase the outstanding shares.

He also looked for Lu Yuan.

After all, it’s Lu Tenyi, so he always has some money in his pocket, right?

Lu Yuan did have a little bit of money, but his money was not so easy to get. Shanda Literature, which Chen Tianqiao had longed for, opened its arms to him for the first time.

However, the two sides have different opinions on the valuation of Shanda Literature.

Big disagreement.

Shanda’s internal valuation of Shanda Literature is US$8 million, which is one of the reasons why Shanda Literature failed to go public.

Shanda Literature is still in a state of loss. The listing of Shanda Literature in July was blocked, which was also due to valuation reasons.

Merrill Lynch and Bank of America, one of the underwriters, announced that they were withdrawing from the IPO work because they could not reach consensus on the valuation.

Affected by many factors, Shanda Literature's road to listing almost failed.

Although Shanda Literature has great potential in the future, no matter how great the potential is, it cannot be sold to US$8 million. The valuation given by Lu Yuan is US$5.5 million, in exchange for 4.5 million RMB for 12.4% of Shanda Literature's equity.

Boss Chen did not agree with this plan.

He felt the price was too low.

Boss Chen did not agree, and Lu Yuan was not in a hurry. Transactions in units of hundreds of millions were not something that could be decided in a few words.

Just talk slowly.

It's not him who's anxious.

After Shanda Literature's main creatives collectively change jobs, the valuation will shrink further.

When the time comes, it will be more cost-effective to use this money to invest in the founder team. After another two or three years, it is not impossible for Boss Lu to directly acquire the whole company.

Because at that time, Lu Yuan would most likely not be short of money.

After "PlayerUnknown's Battlegrounds" was launched, with the profitability of this game, it was more than enough to buy Shanda Literature.

Even if there is no "PlayerUnknown's Battlegrounds", just relying on the profitability of mobile games such as "Temple Run" and "Fruit Ninja" and allocating $100 million will have no impact.

If "Clash of Clans" is launched, the revenue from mobile games will be even greater.

This game was once the most profitable mobile game in the world.

The person responsible for developing this game is none other than the original Finnish development team. Boss Lu also has a small stake in this company.

It’s really just a little bit, just over 30%.

This share should be neither more nor less, just right. If it is too much, it will threaten the founder's equity. If it is not guaranteed, people will change jobs.

If it was too little, Lu Yuan would not be reconciled.

……

……

The next day.

"Zhu Xian" once again hit the screens of all media, showing off its power both online and offline. The movie became popular even before it started filming.

[The filming of the super blockbuster "Zhu Xian" officially started yesterday, with a total investment of US$100 million, a new milestone for domestic films] - Renren Daily

[Multinational army operations, "Zhu Xian" has over 1700 special effects shots in the entire film] - Film News

["Zhu Xian" became popular before it was aired. Mr. Xu said he was under too much pressure and couldn't sleep the whole night] - Xinlang.com

[Conversation with Lu Yang: Zhu Xian is the biggest challenge he has encountered so far] - Tengxun.com

……

Even Renren Daily reported the news of the filming of "Zhu Xian". Although it was only on the second page, it was able to be published in such newspapers, and the power of 100 million US dollars was fully demonstrated.

The huge attention also made the two directors full of pressure.

"Zhu Xian" is a dual-director setup. Lu Yang and Xu Laoguai are paired up. One is mainly responsible for special effects shots, and the other is mainly responsible for action design and location shooting.

Although this movie has a lot of location scenes, most of the filming took place in the studio.

There are a total of 1700 special effects shots in the entire film, and special effects expenditures account for 70%.

If a special effects artist produced this movie, it would have taken 1 million hours to complete all the special effects, which translates to almost more than 2500 years.

The real situation will definitely not use such an inefficient way.

The "Zhu Xian" crew has a team of more than a thousand special effects artists, including Weta Digital, the special effects team behind "Avatar", and Digital Domain, the special effects company behind "2012" and "Transformers."

Really full luxury lineup.

If it were not for the participation of Xingyue Pictures and all the special effects were used by these two companies, the special effects investment of "Zhu Xian" would have at least doubled.

The total investment is less than 1.6 million US dollars, so it is impossible to stop it.

After all, the labor expenses of Digital Domain and Weta Digital are calculated in US dollars.

To produce the same special effects shot, if the domestic special effects artist’s working hour fee is 1 RMB, they will cost at least 6 US dollars.

Labor salary expenses are four times the minimum guarantee.

(End of this chapter)