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After Zhuhai Wanda Commercial Management’s IPO was postponed, Wanda, which was facing financial pressure, finally gave up control of Wanda Film.

On December 6, Wanda Film (002739.SZ) announced that it received a notice on the same day that the company’s indirect controlling shareholder, Beijing Wanda Cultural Industry Group Co., Ltd., and its wholly-owned subsidiary, Beijing Hengrun Enterprise Management Development Co., Ltd., and the company’s actual controller, Wang Jianlin, intend to transfer the 51% equity of the company’s controlling shareholder, Beijing Wanda Investment Co., Ltd. (hereinafter referred to as "Wanda Investment"), to Shanghai Ruyi Investment Management Co., Ltd. (hereinafter referred to as "Shanghai Ruyi").

Shanghai Ruyi is a "dark horse" in the film and television industry in recent years. It has successively produced many popular film and television dramas such as "Hello, Li Huanying", "Langya List" and "The Legend of Miyue". This year’s box office hit "Vanishing Her" also had Ruyi participating in the cast.

Shanghai Ruyi is owned by China’s 0136.HK. In terms of revenue volume, China Ruyi is inferior to Wanda Film. However, the largest corporate shareholder behind China Ruyi is Tencent Holdings (0700.HK).

The term of the betting agreement is less than a month away

Wang Jianlin sells Wanda Films "for money"

According to Wanda Film’s announcement, if the final implementation of the equity transfer is completed, it will result in a change in the company’s control.

In the back of the gambling agreement, Zhuhai Wanda Commercial Management impact IPO postponement, in order to resolve their liquidity difficulties, Wanda actual controller Wang Jianlin had to give up control of Wanda Film.

On November 21, Dalian Wanda Commercial Management announced that it would adjust the repayment plan for a US $600 million bond due in January 2024 of its subsidiary Wanda Real Estate International Co., Ltd. It said that due to the continued downturn in the real estate industry and rising interest rates in overseas capital markets, the company is facing certain difficulties in refinancing, and there is uncertainty in the approval of the listing of its subsidiary Zhuhai Wanda Commercial Management before the end of the year. In order to reduce the short-term liquidity pressure of the company, Wanda Commercial Management actively carried out liquidity management in advance, prepared to adjust the US dollar bond repayment plan, and adjusted the repayment plan for the bonds due in January 2024 to ensure the continued stability of the company’s liquidity.

It is understood that Zhuhai Wanda Commercial Management has submitted its statement four times, the most recent being on June 28 this year. According to the regulations of the Hong Kong Stock Exchange, the valid period of the prospectus is 6 months. If Zhuhai Wanda Commercial Management fails to pass the hearing of the Hong Kong Stock Exchange before the 28th of this month, its prospectus will become invalid. Previously, Zhuhai Wanda Commercial Management disclosed in the listing application materials that if it cannot successfully list at the end of 2023, the issuer will need to pay about 30 billion yuan to the pre-listing investors for share repurchase.

Recently, there are market news that Zhuhai Wanda Commercial Management intends to delay its IPO time in Hong Kong until 2026, and is currently in discussions with investors. In response to this news, Wanda officials have not responded yet.

According to Blue Whale Finance, a person close to Wanda revealed that after submitting the prospectus to the Hong Kong Stock Exchange for the fourth time at the end of June this year, Zhuhai Wanda Commercial Management has been making "two-handed preparations", cooperating with the Hong Kong Stock Exchange to advance the listing process, while negotiating with investors on the repayment of the 30 billion yuan repurchase money for the bet. The person also revealed that due to the large number of Wanda assets and relatively high quality, Wanda has provided investors with a variety of negotiation plans, and is still negotiating with investors.

According to public information, this year, in order to avoid a material default, Wanda has sold various assets in its hands many times to repay maturing domestic and foreign debts. According to incomplete statistics, Wanda has sold at least five Wanda plazas this year, including Guangxi Hepu Wanda Plaza and Shanghai Zhoupu Wanda Plaza. Wanda Real Estate also transferred Wuhan subsidiary Wanda Donghu Real Estate to China Huarong in June.

Previously 2.20 billion transfered 49% stake in Wanda Investment

Film and television circle "dark horse" Shanghai Ruyi takes a fancy to Wanda Film

The takeover of Wanda Film by Shanghai Ruyi is not without warning. In July this year, China Ruyi announced that Shanghai Ruyi, which is personally controlled by major shareholder Ke Liming, received 49% of Wanda’s investment for 2.262 billion yuan, becoming the company’s second largest shareholder. At the same time, Ruyi indirectly holds 9.8% of Wanda Film’s shares.

At that time, China Ruyi said that after the completion of the equity transfer, although Shanghai Ruyi will directly hold 49% of the shares of Wanda Investment, Shanghai Ruyi currently has no intention of appointing directors of Wanda Investment, nor does it intend to participate in its daily operation and management. Wanda Investment will not be a subsidiary of China Ruyi, and its financial results will not be incorporated into China Ruyi’s consolidated financial statements.

Shanghai Ruyi has been a "dark horse" in the film and television industry in recent years. According to public information, Shanghai Ruyi was established in 2013 and is mainly engaged in the production and operation of radio and television programs and film distribution business. It is a controlled structure entity in which China Ruyi holds 100% of the actual interests.

In recent years, Shanghai Ruyi has produced a number of popular films and TV dramas such as "Hello, Li Huanying", "To Youth", "Langya Bang", "Biography of Miyue", "Sewing Machine Band" and "Send You a Little Red Flower". This summer’s popular film "Vanishing Her" also has Shanghai Ruyi’s participation in investment. As of now, the box office of the film has exceeded 3.50 billion yuan. This year, the company’s main films include "Enthusiastic" and "Keep You Safe".

Shanghai Ruyi acquisition of Wanda Film, in addition to Wanda Film in the industry for many years, its overall performance this year is better than the industry average may also be one of the reasons. Financial data show that in the first three quarters of this year, Wanda Film’s operating income was about 11.347 billion yuan, an increase of 46.98% year-on-year; net profit attributable to shareholders of listed companies was about 1.114 billion yuan, net profit attributable to shareholders of listed companies excluding non-recurring gains and losses was about 1.103 billion yuan; net cash flow generated from operating activities was about 3.796 billion yuan, an increase of 127.69% year-on-year.

Wanda Film’s third quarterly report also shows that from January to September 2023, the company’s domestic theaters achieved box office of 6.22 billion yuan (excluding service fees), an increase of 67.6% year-on-year and 5.2% over the same period in 2019; the number of people watching movies 150 million, an increase of 68.7% year-on-year and 3.7% over the same period in 2019. Among them, the company’s domestic theaters achieved box office of 2.57 billion yuan (excluding service fees) from July to September, an increase of 102.1% year-on-year and an increase of 21.2% over the same period in 2019.

In addition, Wanda Film participated in the investment and production of films such as "Wandering Earth 2", "Bear Haunt: Bear Core with Me", "Cosmic Exploration Editorial Department", "Countdown to Say Love You", "Warm", "All-in-One", and "The Eighth Suspect", which were released successively. The overall box office performance was good; the invested series "Who is He" and "The Most Brilliant Us" were broadcast on satellite TV and streaming media platforms, and the ROI of film and television dramas increased year-on-year.

Behind the acquisition of Wanda Film

Is Tencent the biggest beneficiary?

In terms of revenue volume, China Ruyi is not as good as Wanda Film. Financial data show that in the first half of this year, China Ruyi’s revenue was 804 million yuan, and its net profit attributable to the parent was 262 million yuan. In 2022, China Ruyi’s revenue was 1.319 billion yuan, and its net profit attributable to the parent was 7.9 yuan. However, Ruyi is backed by major shareholder Tencent.

According to the data, China Ruyi was formerly known as Hengteng Network, and Hengteng Network was jointly established by Evergrande and Tencent. In October 2020, Hengteng Network wholly acquired Ruyi Film by allocating and issuing shares, subscribing for shares, etc. The total transaction amount was about 7.20 billion Hong Kong dollars (about 6.20 billion yuan at that time).

In November 2021, with the departure of Evergrande, Ke Liming, the actual controller of Ruyi Pictures, became the largest shareholder of Hengteng Network. In February 2022, Hengteng Network was renamed "China Ruyi". As of the end of the first half of this year, Tencent held 20.45% of China Ruyi through Lily Water Investment Limited, becoming its largest shareholder, and the second largest shareholder Ke Liming held 18.92%.

On July 4 this year, China Ruyi raised 4 billion Hong Kong dollars in funds, 90% of which is intended to be used for the development and expansion of film and game businesses. According to the Hong Kong Stock Exchange announcement, Tencent completed the subscription of China Ruyi’s new shares on the same day, and the shareholding ratio rose to 25.45%.

It is understood that Tencent has been in the online streaming media platform (Tencent video) and ticketing (cat eye) and other aspects of the layout of the entertainment industry. The acquisition of Wanda Film may help Tencent use the latter’s accumulation in offline channels to make a deeper layout of its entertainment industry.

According to Blue Whale Finance, after the cooperation was reached, Tencent and Alibaba have almost formed a full-scale confrontation in the field of entertainment, and even slightly better. An industry insider said in an interview: "This [acquisition] is more like Tencent’s siege and suppression of Ali."

　　Beijing, August 17 (Reporter Song Yusheng) The case of famous writer Jin Yong v. Jiangnan, the author of "Fan Works" and "Teenagers Here", was publicly pronounced in the Tianhe District People’s Court of Guangzhou on the 16th. This dispute, known as "the first case of a fan’s work in the mainland", was judged by the first instance that Jiangnan and other three defendants constituted unfair competition, and Jin Yong was awarded 1.88 million yuan.

　　"Fanwork" refers to a re-created work by using elements such as characters, story lines or background settings in original cartoons, animations, novels and film and television works. In recent years, there are many such works on the Internet. Does this case indicate that all the works of the same person involve similar problems?

　　In fact, as early as 2016, the dispute between Jin Yong and Jiangnan entered the public eye. At that time, Jin Yong filed a complaint with the Tianhe District People’s Court in Guangzhou, suing Jiangnan and Beijing United Publishing Co., Ltd., Beijing Jingdian Bowei Culture Media Co., Ltd. and Guangzhou Book Center Co., Ltd. for infringement.

　　Jiangnan is located in Beijing, and the Guangzhou court does not have his address, which leads to Jiangnan not receiving the relevant documents, being publicized by the court and being hanged on the Internet by netizens.

　　In April, 2017, the case was officially opened. The core focus of the court debate between the two sides was whether the names, relationships, personality characteristics and storylines of the characters such as Ling Huchong, Guo Jing and Huang Rong in "Teenagers Here" belonged to the ideological category, or were they original expressions, and whether they were protected by China copyright law.

　　Jin Yongfang believes that the above-mentioned original martial arts characters have formed a distinctive and classic image in public consciousness in the spread of decades, with strong recognition. Without permission, "The Boys Here" uses a lot of these original elements to attract readers, seek competitive advantages and make profits, which infringes on Jin Yong’s copyright and constitutes unfair competition.

　　On the other hand, Jiangnan believes that there is a fundamental difference between Boys Here and Jin Yong’s works. The original expressive parts of Jin Yong’s works are not used in the works, and no changes are involved in Jin Yong’s works themselves.

　　After the judgment of the first instance, the Tianhe District People’s Court published the comparison between Jin Yong’s and Jiangnan’s works on its WeChat WeChat official account.

　　The reporter noticed that the names of the characters in "The Boys Here" are the same as a large number of characters in Jin Yong’s works. Among them, 27 are the same as The Legend of the Condor Heroes, including Guo Jing, Yang Kang, Huang Rong, Ouyang Ke, Ouyang Feng and Huang Yaoshi. There are 13 in total that are the same as Jin Yong’s the legendary swordsman, including Ling Huchong, Lin Pingzhi, Duhu seeking defeat, Dong Fangbubai, etc. There are 18 in total, including Wang Yuyan, Duan Yu, Qiao Feng, Duan Zhu and Duan Zi. There are seven similar works to Jin Yong’s The Condor Heroes, including Guo Jing, Huang Rong, Little Dragon Girl, Yin Zhiping and Lu Wushuang.

　　The court held that "Teenagers here" was not based on Jin Yong’s works in terms of character relationship, personality characteristics and story plot, but wrote a brand-new story beginning, development, climax and ending around the characters in different times and spatial backgrounds, creating campus youth literature works different from the plaintiff’s works, which would not lead readers to have the same or similar appreciation experience. On the whole, it is not enough to constitute infringement, so it is judged that Jiangnan enjoys complete copyright.

　　At the same time, the court held that although the names of characters, relationships between characters and other elements in Jin Yong’s works do not constitute original expressions and cannot be protected as objects of copyright, it does not mean that others can use the above elements freely, freely and indefinitely. Jiangnan’s move to borrow a name is indeed suspected of profiting from the situation, which constitutes unfair competition to a certain extent.

　　In addition, the court also pointed out that "The Boys Here" and Jin Yong’s works are the same or similar in terms of characters’ names and relationships, but they belong to martial arts novels and campus youth novels in literary works, and their readers are different, and there is still room for coexistence. If Jiangnan is republished after obtaining Jin Yong’s understanding and permission, it will better meet the diverse needs of readers and be conducive to cultural prosperity.

　　Writer Jiangnan also issued a statement on the same day, saying that it is good news that there is no copyright infringement, and "unfair competition" is a resounding alarm. The statement also said that it is not a happy thing to go to court with an author whom you respect, but "it should be robbed because of its name."

　　As of press time, Jin Yong did not respond to this matter.

　　The reporter also interviewed a third-party lawyer. Chen Ruojian, the managing partner of Duan Heduan Law Firm, said that the determination of unfair competition has little to do with whether it is profitable or not. Generally, it depends on whether the commercial interests of others are damaged.

　　"In this case, Mr. Jin Yong’s works are also recognized as well-known works, which are actually commercial novels. If you borrow the elements of well-known commodities for commercial activities, it should constitute unfair competition. " Chen Ruojian said.

　　Then, do "fan works" recreated with the names of characters in well-known works constitute copyright infringement or unfair competition?

　　Chen Ruojian thinks this needs specific analysis. "It depends on the specific plot of the work here, and whether it will cause misunderstanding among readers."

　　Lawyer Chai Zheng said that from the perspective of intellectual property protection and encouraging innovation, works with their own complete intellectual property rights are definitely better than "famous brands". "If you must learn from, quote, or pay tribute to the author, you should at least get the author’s consent."

　　At the same time, Chai Zheng pointed out that everyone can’t think that as long as the work is not profitable, it will not involve infringement.