Huayu Entertainment: Tianxian really wants to improve

Chapter 258 The light is like your child, so you have to pay extra!
"Thank you, Director Gu!"

Wang Changtian, slightly excited, took the contract that Gu Bei pushed towards him.

He glanced at it reluctantly, then handed it to his subordinate for review.

The remaining trivial matters do not involve the two of them for the time being.
The two went to Gu Bei's office.
Gu Bei was preparing to discuss investing in Enlight Media with Wang Changtian.

"Mr. Wang, have you heard the news that Huayi is preparing to go public?" Gu Bei pushed the tea towards Wang Changtian and asked with a smile.

"That's for sure. It's not just Huayi; we at Enlight Media have also been seeking to go public."

Wang Changtian shook his head helplessly, "Unfortunately, the requirements for listing are too high, with high requirements for the company's revenue, profit and scale. Huayi and others are also facing many difficulties."

Gu Bei glanced at him.
It will naturally be difficult for you to list your motherboard!
However, Gu Bei knew that Huayi would be listed on the ChiNext board next year, and might even be one of the first dozen or so companies to be listed on the ChiNext board.

In a few years, Enlight Media will follow in Huayi Brothers' footsteps and list on the ChiNext board, so it's not a lie for Wang Changtian to say that they are now considering going public.

Gu Bei asked curiously, "Even with the addition of Linlang Entertainment's business, isn't that enough?"

"It's still a long way off."
The revenue and profits of our cultural and entertainment industry are far behind those of other industries.

"If a movie grosses 100 million, the distributor and producer only split a little over 40 million. The minimum requirement for going public is 300 million in cumulative revenue and 30 million in profit over three years—it's just too difficult!"

Wang Changtian couldn't help but play the victim, saying, "Moreover, our Enlight Media basically doesn't make any money from your Linlang Entertainment business."
To meet your requirements, we've not only expanded our ground distribution team, but we've also reduced our distribution fees to only 8%, the lowest in the industry!

Gu Bei couldn't help but chuckle as he listened to Wang Changtian's sob story.

The classic line from the service provider: "We're not making any money!"

In this competition, Enlight Pictures defeated a number of distribution companies, and that was indeed due to the low prices they offered.

Other film companies all thought Linlang Entertainment was being ripped off.

In order to make a fortune from the issuance contract,
Only Wang Changtian could see that Gu Bei's purpose in offering a three-year contract was to lower the price.

Wang Changtian offered this price, charging only 8% of the distribution fee without covering publicity and distribution costs, leaving him with virtually no profit.

Currently, Enlight Media's television business accounts for the vast majority of its revenue. Only with the television business as its foundation can it have achieved such a level of success, sweeping away other film companies.

Regarding Wang Changtian's statement that light beam doesn't make money...
Gu Bei definitely didn't believe it, but it was also certain that Guangdian was short of money.

He looked at Wang Changtian and stated the most important purpose of this trip: "Since Enlight Media wants to expand its terrestrial distribution team, do you need external investment?"

Wang Changtian was slightly taken aback upon hearing this.

Then, he crossed his arms and stared at Gu Bei with a slightly wary look: "Is this a prerequisite for the contract offered by Linlang Entertainment?"

"Of course not!"

Gu Bei shook his head calmly.
He could see Wang Changtian's defensive posture.
Most of the founders of companies in that era had a family-run business mentality, holding onto the company's shares tightly.

When Huayi and Enlight Media went public, the founding families held an absolute controlling stake.

Gu Bei naturally wouldn't deliberately provoke Wang Changtian; he simply stated calmly, "My purpose in investing in Enlight Media is..."
It's because we see a brighter future for light technology.
The goal is for Linlang Entertainment and Enlight Media to progress together.
Instead of using contracts to forcibly seize assets.

Wang Changtian's complexion improved considerably.

Lightroom was something he built from scratch; it was like his child.
If Gu Bei wanted to use the contract to threaten him, he would rather not have the contract and let Guangming develop slowly than give half of his child to someone else.

After a pause, he politely declined, saying, "Enlight Media also has a television business, so it's not actually short of funds."

"Not lacking means not being well-off!"

Seeing that Wang Changtian's attitude had softened, Gu Bei decisively chose to take the initiative and exposed Enlight Media's weakness: "Enlight Media's television business is indeed very good and it is very famous in the industry."

But in the television business, television stations are always the most powerful, so the revenue sharing period for advertising must be quite long, right?

Wang Changtian's expression immediately turned sour.

He gave Gu Bei a deep look, knowing that Gu Bei's decision today was not impulsive, but rather well-prepared.

Lies don't hurt, but the truth is the sharpest knife!

Enlight Media's TV programs are thriving, so why would it venture into the seemingly less profitable film business? Isn't it because of the indefinite payment terms offered by local TV stations?

It can take anywhere from five or six months to a year and a half.
Whether it's a TV series or a variety show, they have to pay a lot of money upfront for production, but the return on investment is nowhere in sight.

Many peers, even those who create hit variety shows, are dragged down by the payment deadlines of TV stations.

Enlight Media is already considered one of the top companies in the industry. It can manage the payment cycles for different programs, unlike smaller companies that are constantly facing cash flow shortages.

However, after being scarened by the TV station, Enlight Media became more stingy with its film investments compared to other film companies.

Wang Changtian said helplessly, "Director Gu is indeed very knowledgeable. Enlight Media has always had insufficient cash flow, and we are working hard to improve that."

"Then why did Mr. Wang reject my proposal?"

Gu Bei revealed a smile, like the temptation of a devil, "With my investment, Enlight Media can better establish its distribution network, which will also benefit the box office of Linlang Entertainment's future films. This matter was originally beneficial to me as well."

Furthermore, if Lightspeed & Quantum wants to go public in the future,
Enlight Media, a company whose main business is television.

Enlight Media, with its television and film businesses each accounting for half of its business,

I probably don't need to say which light beam is more valuable, right?

Wang Changtian's resolve began to waver.

If Gu Bei had kept emphasizing the benefits of the investment for Enlight Media, Wang Changtian might have thought it was a bit fake. But once he realized that Gu Bei himself also benefited from the investment, Wang Changtian could understand Gu Bei's behavior.

Moreover, Wang Changtian had long wanted to establish a ground distribution network, but he had been unable to do so due to insufficient cash flow.

If he can secure investment from Gu Bei, he can start building a ground distribution network right now.

Wait!
I came here to sign a contract, how did it turn into me selling my own company?

Wang Changtian came to his senses.
His possessiveness over the lighting made him insist one last time: "Director Gu, I built the lighting system myself, and I have a very deep affection for it."

“I understand. Lighting is like your child, and to compensate for your emotional investment, you have to pay more!”

Gu Bei patted Wang Changtian on the shoulder and said very sincerely, "Linlang Entertainment and Enlight Media will continue to cooperate closely for the next three years. I definitely won't let you suffer any losses!"

Add money?

When Wang Changtian first heard about the proposal to add money, he still felt somewhat angry.

But when he saw Gu Bei's sincere eyes,

Upon further reflection, it seems that money can indeed solve a large portion of the problems.

He suppressed his anger and remarked with admiration, "Director Gu's words really hit the nail on the head!"

After a pause, he made up his mind: "Since Director Gu has already said so, then Enlight Media is willing to strengthen its cooperation with Director Gu!" "Then we'll discuss it in more detail later!"

Gu Bei revealed a satisfied expression.

The first step to acquiring Lightspeed is to invest in Lightspeed and then place one of your own people on the board of directors.

Later, they will increase their shareholding and power, and finally subtly integrate Light into the Linlang Entertainment system.

These are all methods he learned from his former employer, Tencent!

"Shhhhh!"

Gu Bei and Wang Changtian signed their names on the reviewed contract.

Then they stood up and shook hands: "It's a pleasure working with you!"

The other employees in the conference room looked at the two people smiling at each other with some confusion, feeling that the relationship between the two big bosses had obviously improved a lot since they returned.

However, they soon found out the reason.

Because Enlight Media welcomed an audit team.
This is the prelude to accepting financing!

"Mr. Gu, the audit results for Enlight Media are here."

Assistant Li Wanyun placed a document on Gu Bei's desk. "Enlight Media's profits have been declining for the past few years. 2005 was the peak year for Enlight Media's profits, reaching 6000 million yuan."
But based on the current pace, this year's profits will drop to less than 2000 million!

Gu Bei picked up the document and began to read it carefully.

It turns out that the past two years have been a downturn for the television industry. Although Enlight Media is not facing a life-or-death situation, its cash flow is very tight, and it is struggling to survive.

Thanks to this industry crisis, the valuation of Enlight Media has been driven down!

He looked up at Li Wanyun: "Profits during industry downturns are not very valuable for reference."
I recall that Enlight Media had several rounds of funding talks before. What were the valuations those investment teams gave Enlight Media?

Enlight Media did not receive any financing before its IPO, but that does not mean they did not have access to financing.

As a leader in the television industry

Enlight Media has never lacked investment teams interested in him.

"At the industry's peak in 2004, SoftBank had agreed to invest $5000 million in Enlight Media at a valuation of $1000 million, giving SoftBank a 16.7% stake after the financing."

However, because the agreement included a performance-based clause, the two parties ultimately broke up.

Li Wanyun briefly reported, "Also, last year Enlight Media planned to acquire Huayou Century, a music SP company, and list on the NASDAQ market in North America through a reverse merger."

The original plan was for the merged Enlight Media Group to be valued at $1.6 million, with Enlight Media holding a 42% stake. If the merged share price could be maintained above $8.5, Enlight Media would be able to increase its stake to 65%.

However, Huayou Century felt the price was too low, and the acquisition plan was halted!

"That means Wang's bottom line for Enlight Media is $6700 million, and the overvaluation is $1 million!"

Gu Bei thought for a moment and said to Li Wanyun, "Then let's negotiate based on a valuation of $8000 million. We will invest $20 million and take a 2000% stake after the financing is successful."

After the successful financing, Enlight Media was valued at only $100 million, equivalent to more than 700 million Chinese yuan.

When Enlight Media goes public three years later,
This $2000 million investment could at least tenfold to become $2 million.
Moreover, this time, Enlight Media, which has a track record of film distribution with three years of extensive entertainment, is going public and has also benefited from accelerated development through financing. Its valuation is likely to be even higher!
So even though Gu Bei is almost penniless right now...

He still decisively chose to increase leverage a little: "For this money, I'm going to contact the bank and use the copyright revenue from Twilight as collateral for a loan."

The first window of opportunity for Twilight is coming to an end.

DVD discs are ready to be released and will be available for sale next month.
Gu Bei wasn't worried about his cash flow at all.
Soon he will go from worrying about not having enough money to worry about not being able to spend it!

"Understood, I will keep an eye on things." Li Wanyun nodded.

"You should also take our board seat at Enlight Media."

Gu Bei assigned Li Wanyun another task, "I'm about to start filming The Message. Is there anything else I need to take care of before I join the crew?"

The pre-production preparations for the film "The Message" are complete.
Gu Bei went to the site to take a look.
The interior layout has already met his expectations.

Actors such as Wang Zhiwen and Ying Da have also joined the crew, and they are just waiting for the others to arrive to start filming.

"There's one last thing, which is the approval process for the co-production film 'Gravity'."

Li Wanyun flipped through the documents, looked up, and answered.

Gu Bei nodded after hearing this.

The so-called review process involves the co-production company reviewing the co-production, including the project approval, script, overseas personnel, overseas equipment, and so on.

But this is just a formality.

Because Linlang Entertainment does not have the qualifications for co-production.

Therefore, the gravity calculation was submitted by China Film Group to the co-production company for review.

The co-production company is a subsidiary of China Film Group.

How could a son disagree with a project his father wanted to approve?
"It's been a whole year!"

Gu Bei also felt a bit emotional.
This is his first Hollywood A-list production project as director.
It has been more than a year since Gravity ended in Cannes last year that the project has just completed the approval process.

This speed is considered fast even by global standards.

Because at least on the funding side, China Film Group and Gu Bei have already reached a consensus.
The initial budget is $100 million, and both parties are prepared to continue investing should the budget be exceeded.

Gu Bei stood up and said to Li Wanyun, "Get the car ready. I'm going to China Film Group to discuss this matter with Chairman Han."

After a while,
Gu Bei appeared in Han Sanpin's office.

Han Sanpin chuckled and teased Gu Bei, "Director Gu, what a rare guest!"

"Is Chairman Han blaming me for rejecting China Film Group?"

Gu Bei responded with a smile as well.

"It's market competition, so it doesn't matter. With Enlight Media's offer, I was even considering handing over China Film Group's films to them for distribution!"

Han Sanpin waved his hand.
He wouldn't bother with such trivial matters!

After a pause, he asked, "So, what brings you here this time?"

"Chairman Han, shouldn't we activate Gravity now?"

(End of this chapter)