The Rise of Chinese Entertainment in 2008

Chapter 171 Influence

But considering Zhang Tianai and Liu Yang's reactions, he didn't completely rule out the possibility of a definitive answer.

Dreams and ideals are the things that least stand the test of time.

If Lao Ma had told his employees that the company would never go public when he started his business, would anyone still have followed him to start a business?

This is similar to the ancient feudal lords raising an army, whose slogan was definitely to quell the war and restore peace to the world.

Those followers are the same, but if the world is at peace, what can they do if they are not granted titles?

Huayi's IPO made companies and practitioners in the industry realize that entertainment companies can also go public, and with very high market value.

"These are far from our current situation and are not issues we should be considering right now," Gu Ning said.

Liu Yang said with some concern, "Director Gu, Huayi's IPO this time raised more than a billion yuan, which will likely have a significant impact on the film and television industry."

After a company goes public, the amount of funds raised is calculated based on the issue price and has nothing to do with the stock price increase.

For example, if a company issues ten million shares when it goes public, and each share is worth one dollar, then it raises ten million dollars.

After deducting various handling fees, the money will be deposited into the company's account and used for the company's development.

Even if the stock price rises to 10,000 per share, the amount of funds raised by the company will still be the same.

Huayi's stock price has risen, but based on the number of shares issued and the issue price at the time of listing, the funds raised are only a little over one billion yuan.

Although this is the first entertainment company to go public, Liu Yang still has some understanding of what other companies do after they go public.

After a company goes public and raises a large amount of capital, it typically goes on a buying spree.

By acquiring stakes and making mergers and acquisitions, the company aims to gain control of industries related to its core business, thereby driving up the stock price again.

However, Huayi is an entertainment company, and its main business is film and television dramas.

With so much money all at once, it's natural to spend it on film and television productions.

No one can predict how much impact this money will have on entertainment companies.

Their company is also in the film and television industry, so naturally they may also be affected.

Your worries are unnecessary.

Gu Ning smiled and said, "How does the film and television industry spend money? By poaching stars? Or by producing big-budget productions?"

Spending a fortune poaching stars isn't worthwhile, and large-scale productions are unlikely either. The industry is only so big; how big of a production can you possibly make while still considering recouping costs?

That's what makes the entertainment industry different from other industries.

When other companies have money, they can expand into upstream and downstream industries or increase their market share.

Horizontal mergers and acquisitions can also reduce competitors.

However, in the film and television industry, the scope for a single TV series or movie is limited.

Gu Ning could actually understand why Huayi went public and began to move away from film production.

I have too much money, but I can't possibly use it all to make movies and TV series.

Not to mention the limited market, the talent pool is also very limited.

Many people criticize Huayi Brothers for de-emphasizing film, but if Huayi Brothers hadn't done things this way and had simply operated according to the logic of a normal film and television company, its stock price wouldn't have reached nearly 100 billion.

So Huayi set its sights on the real estate industry, but the nature of Huayi's company meant that it could not, like traditional real estate companies, acquire land to build buildings.

So they used the film and television industry as an excuse to create a movie town.

It's essentially similar to Disney parks, using film and television IPs to develop real businesses.

However, Huayi does not control such large IPs, or rather, there are no such IPs in China.

What kind of movie towns can Huayi's copyrighted IPs support?

It was only in the early stages, with everything seemingly booming and flourishing, that Huayi's stock price continued to rise.

Seeing that this strategy was effective, Huayi felt that his strategic decision was correct and continued to bet on it.

Although the company was ultimately ruined, the two Wangs had already cashed out a considerable amount of money.

From a purely financial perspective, what the two did wasn't wrong.

If they had simply focused on making good movies, Huayi Brothers wouldn't have achieved such success, and they wouldn't have made so much money.

Gu Ningming knew Huayi's future direction and was not worried about it.

Liu Yang was relieved to hear this and told Gu Ning about the situation on set.

Although Li Xue had directed a TV series, it received a lukewarm reception, making her no different from a new director.

Since this was technically the company's first project, Liu Yang naturally had to come and personally oversee it.

Although Gu Ning had already filmed a movie after the company was established.

But he was the one primarily responsible; Liu Yang, the vice president, didn't do much.

The actors may not be afraid of director Li Xue, but as the manager of the investors, they naturally behave themselves in front of him.

With the male and female leads, Shu Chang and Yin Xiaotian, being very cooperative, the filming went smoothly.

Nearly an hour later, the car arrived in Hengdian.

Liu Yang drove into Hengdian World Studios through the film crew's private entrance.

Here's a little tidbit: the filming areas and the tourist-open areas in Hengdian are separate.

There isn't even a single entrance or exit, so the idea of ​​visiting Hengdian to watch film crews shoot movies or see celebrities is practically impossible.

After parking the car, Liu Yang led Gu Ning and Zhang Tianai to the Ming and Qing Palace Garden.

"Old Gu!"

Liu Sanxi came up and gave Gu Ning a hug.

"Mr. Liu, it's been hard work of personally overseeing things here!" Gu Ning said with a smile.

Liu Sanxi said irritably, "I fell for your trick!"

He originally wanted to start an investment company to invest in film and television dramas.

He doesn't have a controlling stake in the company, and his investment is limited. He only needs to assign someone to monitor the flow of funds, so he doesn't need to put in much effort.

But after he partnered with Gu Ning to start a company, he gained control of the company, and as the person in charge of the company, he had to manage many more things.

"Come on, don't you still have Liu Yang to help you?" Gu Ning said with a laugh.

"Let's not talk about that."

Liu Sanxi pulled Gu Ning aside and whispered, "Do you think our company has a chance to go public?"

"What's wrong?"

Gu Ning laughed and said, "Were you spurred on by Huayi's IPO?"

"Who wouldn't be provoked in that situation?"

Liu Sanxi said, "My dad called me not long ago, wanting to increase investment in film and television."

Xiang Bai and his family also called me, saying they're interested in increasing their investment and want to deepen their cooperation with you.

Everyone says coal bosses are rich, but even if a coal boss sold soil as coal, he wouldn't earn billions a day.

Although he knew that was Huayi's total market value, the number was still astonishing.

"We can arrange to meet and discuss the collaboration another time."

Gu Ning originally planned to discuss in-depth cooperation with Liu Sanxi and his father's generation.

Unexpectedly, Huayi's listing skipped this step.

That's good too. With the stimulus of Huayi's IPO, it will be easier to persuade them to invest in cinemas.

"Okay, I'll organize a get-together when you return to Beijing."

Liu Sanxi said, "I feel like you're not just looking to invest in film and television, are you?"

"The film and television industry seems like a big market, but there are too many people trying to get a piece of the pie. And if you only focus on film and television dramas, your foundation will be too shallow."

Nowadays, even a good theatrical film only makes a few hundred million. After deducting costs, how much money do they actually make?

Last year, the total domestic box office was only over 4 billion yuan, which also includes imported films.

If you remove those, it's even less. Even if all those billions were profit, with so many companies in the industry, how much could we actually capture?