Chinese Entertainment: Starting from 1996

Chapter 522 Supervision and Cinemas

The specific situation of Summit Entertainment was known to only Liu Zhou and Zhang Zhao, as well as the financial director of Golden Harvest Group who was not yet present.

Because it is highly independent, with the exception of Golden Harvest International, it has almost no intersection with other branches within the group. In addition, it is difficult to transfer funds over, so Summit Entertainment seems to have little connection with the group company.

However, although Summit Entertainment has a strong sense of independence, it does not mean that it can be left to its own devices.

The specific operation of the company is of course still handed over to the general manager Edwards, a professional manager poached by Liu Zhou from Lionsgate Entertainment, and he is very capable.

However, necessary financial supervision is still in place. Liu Zhou not only invited Deloitte to audit the finances and conduct tax avoidance, but most of the personnel in the company's internal financial department were also arranged by Jiahe Group.

In addition, many people from the administrative department were arranged by Jiahe.

When it comes to professional matters such as production and promotion, we mainly follow Edwards' arrangements. This is a sign of trust in him. After all, this is in North America, and hiring foreigners can open up the situation.

However, Jiahe’s administrative and financial arrangements do not mean that it does not trust others. This is a very normal behavior and any company will make such arrangements.

What's more, they will not only arrange their own people in the administrative departments, but also in the most core production and distribution departments.

Therefore, Edwards was not only not disgusted by Liu Zhou's arrangement, but was also very happy. There is no such saying in Hollywood as "a man will die for his friend", but this is how he felt.

Because he doesn't have to worry about constraints, he can fully demonstrate his abilities and run the company according to his own ideas. After all, the core departments of Summit Entertainment are still production and distribution.

So Edwards is quite grateful to Liu Zhou. After all, not everyone has the opportunity to meet such a good boss.

He has also proved his abilities in the past few years. Even if he no longer works at Summit Entertainment in the future, he will have a very good resume.

Even with the current growth momentum of Summit Entertainment, he has a great chance of becoming the helmsman of one of the Big Seven in Hollywood.

Summit Entertainment is good, but it pales in comparison to the Hollywood 7.

If you can really become the president of one of the Big Seven in Hollywood, you will be the most powerful person in Hollywood.

Not only that, if one can perform well in the position of one of the seven presidents, it is possible to use it as a springboard to become the head of the media group behind him.

There have been many such examples before, where the president of Warner and Paramount suddenly became the president of Time Warner and Viacom.

Today's media groups are all world-class giant companies. If you can become the president of a media group, you will be a powerful figure not only in Hollywood but also in North America.

Of course, Edwards was just fantasizing about it. It is not easy to become the head of a media group. Those who can jump from Hollywood are all outstanding people.

His biggest goal now is to run Summit Entertainment well and one day receive an offer to be the president of one of the seven major Hollywood companies.

Of course, Liu Zhou never thought that he could keep Edwards forever. This is not realistic in North America. It is human instinct to move forward.

Jack Welch, the most powerful professional manager of the 20th century, is a rare existence in North America. It is rare for someone to stay in a company for more than 20 years.

Moreover, one of the reasons why Jack Welch was able to stay at GE for more than 20 years was that GE was the most powerful company in North America. Not to mention its influence, it was also once the company with the highest market value in North America.

So even if he changes jobs, there may not be a better option.

There are many companies that are stronger than Summit Entertainment, so it is impossible to keep Edwards unless he is given shares.

Although he created a lot of profits for Summit Entertainment, Liu Zhou was still rather stingy when it came to shares. He was willing to give Edwards a generous bonus, but not shares.

In Liu Zhou's mind, Edwards is just a professional manager. The fact that Summit Entertainment can develop better and better can actually be regarded as a mutual achievement.

He brings profits to the company, and the company can also become a springboard for him to rise to the top.

As for what happens after Edwards leaves, to put it bluntly, there are many excellent professional managers in Hollywood, and by that time Summit Entertainment will not be a small company anymore, so they can be selected at ease.

In fact, when Liu Zhou first acquired Summit Entertainment, it was not a small company in Hollywood. It was also a second-tier film company with distribution capabilities.

If we were recruiting a company president at that time, there would be a lot of people applying.

But at that time Liu Zhou happened to be familiar with Edwards, and was aware of his abilities and knew him better, so he chose him.

Not to mention that Summit Entertainment is now a film company that can be compared with New Line. Before the rise of Lionsgate, New Line was known as the strongest second-tier film company under the Big Seven in Hollywood.

Even now its strength is still impressive. Although it has been acquired by Warner, it is very independent. However, Warner has now begun to slowly take back power.

Summit Entertainment's performance last year attracted the attention of the entire Hollywood, so some media compared it with New Line.

If we really compare them, Summit Entertainment is definitely inferior. The foundation of New Line is not comparable to that of Summit Entertainment.

However, some media are now comparing the two companies, which also shows that Summit Entertainment's influence has indeed been growing.

So after Edwards left, it was not very difficult to find another excellent professional manager.

But it's still early, and both parties are still in the honeymoon period of their cooperation. Unless Edwards takes Summit Entertainment to a higher level, it will be difficult for him to gain the favor of the Big Seven in Hollywood.

So Liu Zhou is very confident in him at the moment, but after all, Golden Harvest Group and Summit Entertainment are separated by the Pacific Ocean, and he rarely stays in North America.

Even though he had deployed a lot of people, there were definitely areas where he was unable to reach.

There are certainly cases where people take advantage of their positions to make profits for themselves, and this cannot be completely eliminated. But as long as it is not too excessive and the company can deliver an excellent result, Liu Zhou will not care too much.

At the very least, the production and distribution team headed by Edwards did not dare to do anything too extreme, and some corruption was harmless. This is a situation that exists in any large company, it's just a matter of severity.

In fact, in Hollywood, it is very common for management to use their positions to profit for themselves, especially for companies that are just entering the industry.

Because the film industry still requires a certain degree of professionalism, people who don't know the business can easily be cheated when they first enter the industry. The two most obvious examples are Panasonic and Sony.

In the late 1980s, due to the sharp appreciation of the Japanese yen, a number of companies suddenly became wealthy and powerful. They went on a large scale to purchase well-known properties and companies in the United States, claiming to have bought half of the United States.

It was at this time that Panasonic acquired Universal from Coca-Cola and Sony acquired Columbia. Both companies were heavily ripped off in the deal, with the former costing $6 billion and the latter more than $5 billion.

What's even worse is that after the acquisition, in just three or four years, Panasonic invested two to three billion US dollars in Universal, but it still spent more than it earned. In the end, it could not bear it anymore and had to sell Universal at a loss.

Sony was similar. In the first few years after acquiring Columbia, it also invested two or three billion dollars. The difference was that Sony held on, spent money to buy lessons and experience, and slowly integrated into Hollywood.

However, the management of the two companies made a lot of money, especially the presidents and production directors of the two companies, who made a lot of money.

But they were a gang that committed the crime, and what they did was flawless, legal and reasonable, so Panasonic and Sony couldn't do anything to them at all.

These two are the most famous. There are no fewer scams in Hollywood than on Wall Street.

However, Liu Zhou and Golden Harvest are both in the film industry, and Liu Zhou has been in Hollywood for several years, so it is not easy for others to cheat him.

Edwards does have a professional ethics. He may put some small extra profits into his own pocket, but he has not done anything out of line.

So for now, everything is fine with Summit Entertainment, and it just needs to develop step by step.

Several branches of Golden Harvest Group, including Summit Entertainment, have almost all reported profitability, but there is still one branch that has been in a loss-making state.

This company is, of course, the Golden Harvest Cinemas, which is still expanding.

Golden Harvest Cinemas obtained a cinema chain license by acquiring a small cinema chain in Hunan Province.

Then, by renovating the ten theaters of this small cinema chain company, Golden Harvest invested in and built four international luxury cinemas in the four first-tier cities.

The Golden Harvest Cinema Chain was established with these fourteen cinemas as the foundation.

Then after Golden Harvest Group went public, the main investment was in Golden Harvest Cinema Line.

When Golden Harvest Group went public, it raised nearly 3 billion yuan in funds, but 2 billion yuan was invested in Golden Harvest Cinema Line.

There is no way around it. Cinemas are an asset-intensive industry and require a lot of capital.

Golden Harvest decided to operate all of its cinema chains itself, so they had to build all of them from scratch.

Because Liu Zhou understood how horribly the domestic land prices would rise in the future, in order to save costs in the future and also to increase the risk resistance of Golden Harvest Group, he asked Golden Harvest Cinemas to purchase land in the first-, second- and third-tier cities in China and then build cinemas.

The first thing to do is to buy land. Jiahe was listed in 2009. With the country's rescue of the market, land prices had begun to rise at that time.

So in order to save time, Liu Zhou arranged for Gao Jun to buy land in first-, second- and third-tier cities and even in developed counties.

It took nearly two years just to purchase the land in more than fifty cities, and it was not completed until July or August last year.

Land has always been a sensitive issue. Jiahe has never been involved in real estate and has relatively high requirements for the location, so it takes some effort to buy it.

If Golden Harvest had not had some fame and was not doing real estate under the name of building cinemas, it would not have been able to secure the land in two years.

The cost of purchasing the land alone was as high as 1.2 billion.

Of course, Golden Harvest Cinemas did not do nothing else when purchasing the land.

In the past two years, Golden Harvest has built a luxury cinema in the four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen.

These are the four largest box office bases in the country, especially Beijing and Shanghai. In the past, the box office of these two places accounted for almost half of a movie.

Therefore, in the mid-to-late 1990s and the beginning of the new century, knowing the box office in Beijing and Shanghai could roughly predict the total box office of a movie.

Although the film markets in other cities have gradually developed later, these four cities are still the largest movie ticket warehouses in the country and the focus of competition among major theaters.

Therefore, Liu Zhouming knew that the film market in second- and third-tier cities would not be inferior to those big cities in the future, and their box office contribution might even surpass them, but he still had to increase his investment in the four first-tier cities.

And if you want to become a leading cinema chain, you must remain competitive in big cities.

This is also the fundamental reason why Liu Zhou still wants to build a luxurious cinema in the four major cities, just to maintain the influence of Golden Harvest Cinemas.

These four luxury cinemas have been completed during the past two years. Currently, Golden Harvest Cinemas Line has eight luxury cinemas in four first-tier cities, with a total of 123 screens.

Then there are the ten cinemas that were acquired. Although they have undergone modernization, most of them are small cinemas after all, so these ten cinemas have a total of only 46 screens.

That is to say, Golden Harvest Cinemas currently has a total of only 169 screens, less than 200.

According to data released by a certain media at the beginning of this year, as of the end of last year, the total number of screens in China reached 6,256.

The number of screens owned by Golden Harvest barely accounts for 3% of the total number of screens, a ratio that is seriously inconsistent with the position of Golden Harvest Group in the domestic film and television industry.

It can be said that the only shortcoming of Golden Harvest Group at present is its cinema chain. This is also the reason why Liu Zhou invested 2 billion yuan in the cinema chain company, in order to catch up.

The domestic situation is similar to that of the Hong Kong film industry in the 1980s and 1990s, with cinema chains occupying an absolute dominant position.

Only film companies that own cinema chains can be called giant companies. Otherwise, companies like Huayi, Guangguang and Bona would not have invested huge amounts of money in cinema chains after going public.

It’s just that they don’t want Golden Harvest to be so wealthy and powerful that they dare to build and operate all their own cinemas.

Most of them build part of the facilities themselves and then franchise part of the facilities, or they work closely with some cinema companies directly.

Although cinema chains have more advantages than film companies, it is not absolute. Otherwise, Zhang Weiping would not have dared to rely on Zhang Yimou's tactics and fight against the cinema chains to get a few more percentage points of the share.

Cinema companies are also competing, and their core competitiveness is the source of films. It is difficult to succeed without good sources of films.

There are many companies in China that specialize in cinema chains. In order to obtain more and better film sources, they will also work closely with one or two companies.

(End of this chapter)