Media & Gaming

Wishing on a star

Media firm bets big on Fan Bingbing by buying her company

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Fan: looks on course to be world’s highest earning actress in 2016

Forbes magazine famously collates an annual list of the highest paid Hollywood actors and actresses. But last year it decided to broaden the rankings beyond America’s shores.

The names of the best-remunerated stars weren’t radically different from previous years, although one new face did appear on the list of actresses – Fan Bingbing, who came in fourth. (Jennifer Lawrence was the highest earning actress, reportedly making $52 million.)

Forbes reckons that Fan made as much as $21 million last year, surpassing Angelina Jolie and Julia Roberts in earning power. In addition to being one of the biggest film stars in China, she also has endorsement deals with French beauty group L’Oreal and jewellery maker Chopard. “Fan Bingbing – being the only non-American on the list – is the pride of China. She is the true embodiment of baifumei,” one netizen celebrated, using a term which means that she is fair-skinned, rich and beautiful.

Fan could soon be topping up her bank balance (and ranking). In late March, Zhejiang Talent Television and Film, a media company listed in Shenzhen, announced that it plans to buy 51% of her company Ai Mei Shen in an all-cash transaction. The deal values it at around Rmb800 million ($123 million), meaning Fan could walk away with $62 million.

Ai Mei Shen was only established last July with registered capital of Rmb3 million. According to its official filing, the actress is chairwoman, while her mother Zhang Chuanmei serves as company secretary.

Zhejiang Talent is the executive producer of the hugely popular (and controversial) TV series The Empress of China, which stars Fan in the leading role as Wu Zetian (see WiC265). The show accounted for 72% of the company’s total revenues in 2014, mainly from sales of the broadcasting rights to different satellite networks. The actress is also a major shareholder, owning 1.3 million shares in Zhejiang Talent.

Industry observers say one reason for the Ai Mei Shen acquisition is that the media firm will now have fuller control over one of China’s most popular actresses. Although it doesn’t mean that Fan will work exclusively with Zhejiang Talent, projects funded by the firm are likely to be given priority.

“This expensive acquisition is likely to lay the foundation for long-term collaboration between the two, binding Fan Bingbing with Zhejiang Talent. For the latter, having the actress on board means it could secure a stable revenue stream,” says Sohu, a portal.

Sceptics say the deal makes less commercial sense. Tencent Finance calls Ai Mei Shen an “empty shell company” as it doesn’t own any assets and the acquisition has caught the attention of the Shenzhen Stock Exchange, which is asking how Zhejiang Talent values Fan’s production firm at such a level. Insiders say the query is a telling one, since the bourse has not shown a tendency to be fazed by start-ups pushing for stratospheric IPO valuations.

Perhaps the truer intent of the deal is to give Zhejiang Talent more of a selling point for tapping the capital markets for money, Tencent Finance surmises. The media firm has previously announced plans to sell 30 million shares at a 10% discount to its current stock price of Rmb65 (at a punchy price-to-earnings ratio of 100). If successful, the share offering could help it raise around Rmb1.8 billion. The firm’s latest financial statements reveal that as of the end of last year, Zhejiang Talent had net cash outflow of Rmb120 million.

“As a public company, Zhejiang Talent’s outrageously generous offer should make investors worry. What it is doing is to use the star power of Fan Bingbing to tap retail investors for money and to justify its own rising valuation,” one media analyst wrote.

Zhejiang Talent isn’t the first media firm to buy into companies backed by movie stars. Last year the film production giant Huayi Brothers spent Rmb756 million on 70% of the equity of Dongyang Media, which has on its shareholding roster A-listers like Li Chen (Fan’s boyfriend), Angelababy and Cheng Kai. Tech firm Beijing Baofeng Technology also splurged Rmb1 billion on a TV and film production firm founded by Taiwanese actor Nicky Wu.

So the old maxim that ‘celebrity sells’ looks to be alive and well. But just because Fan stars doesn’t necessarily guarantee a hit. Film producer Chun Qiu Hong recently learned this lesson the hard way. The company tapped Fan to star in the historical drama Lady of the Dynasty, a film that ran almost twice over budget to Rmb235 million.

But Lady of the Dynasty tanked with audiences, taking only Rmb134 million in ticket sales. With less than Rmb9.6 million in assets as of the end of 2014, Chun Qiu Hong found the losses hard to absorb. Its market capitalisation on the New Third Board (a stock exchange in Beijing for small and medium-sized companies) fell from Rmb900 million to Rmb232 million in the weeks after the film was released.

“Chun Qiu Hong is hardly an isolated case. A lot of new film companies are putting all their fortunes into one project, taking on loads of debt and now face an uncertain future. Investors need to be careful. Not every film studio is the next Huayi Brothers,” warns Shanghai Morning Post.

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