Entertainment mogul: Starting his business with the internet

Chapter 522 Losing Money! Heartbreaking!
On June 8, 2013, a piece of news was like a boulder thrown into water, creating a huge wave in China's business community.

The announcement of the delegation accompanying high-level officials on their visit to the United States by authoritative institutions such as the Ministry of Commerce and the China Council for the Promotion of International Trade has sent shockwaves through the entire Chinese business community.

This list, hailed as a "dream team" of the business world, features the shining figures of eight major conglomerates:
China National Petroleum Corporation, China National Bank, Donghai Automobile Group, COFCO Group, China Electronics Information Industry Group, China National Pharmaceutical Group, and most notably, Tengda Technology Group.

These eight business tycoons will accompany the leaders in meetings with senior U.S. officials, business leaders, and bank presidents—an unprecedented level of engagement.

Among this stellar list, Tengda Technology, as the only private enterprise, stands out like a single red plum blossom amidst a cluster of beautiful flowers.

Meanwhile, at Hengdian World Studios, the crew of "The Imperial Doctress" was filming.

Inside the lounge, the air conditioning sent out a cool breeze, dispelling the summer heat.

Liu Shishi, dressed in a light blue theatrical costume, lay lazily on a bamboo rocking chair, browsing Weibo's trending topics during a break in filming.

Topics such as "Business delegation accompanying high-level officials on their visit to the United States", "Eight major group leaders", and "Tengda Songci's only private enterprise leader" were prominently displayed, making her smile.

With slender, jade-like fingers lightly touching the screen, one clicks on an in-depth analysis by a financial blogger with millions of followers:

[Decoding the US Business Delegation: Why These Eight Companies?]

The blog post's analysis is insightful and penetrating:

China National Petroleum Corporation (CNPC) and China National Petroleum Corporation (CNPC) represent the national team in energy finance; Donghai Automobile is a name card for high-end manufacturing; COFCO ensures people's livelihood; and electronics and pharmaceuticals are the key to industrial upgrading.

The first seven are all state-owned giants, large central state-owned enterprises at the Fortune Global 500 level, as stable as a rock.

However, the most significant signal comes from Tenda Technology's Songci!

This Asian richest man is the only one born after 1985 among the eight leaders, and also the only private entrepreneur. What does this mean?
The nation is elevating the development of the internet and digital economy to a strategic level on par with energy, finance, and food!

Just a week after the 4G licenses were issued, Tenda accompanied the delegation on its overseas trip, aiming to showcase China's digital infrastructure and mobile internet ecosystem to compete with Silicon Valley giants!
Liu Shishi was deeply moved as she read, her eyes sparkling with pride, and the corners of her lips unconsciously turned up.

Seeing her husband's career reach new heights, a sense of pride and joy welled up in her heart, as if she herself had personally participated in this grand business event.

I'm delighted to give this insightful blog post a thumbs up. Please continue browsing the comments below.

"This is amazing! What a grand display! Boss Song standing shoulder to shoulder with a group of bigwigs with the name 'Hua' in their names, his presence is truly awe-inspiring."

"I don't understand those complicated analyses, but it must be incredibly impressive! Song Ci looks even more dashing standing among a group of old guys! [drooling]"

"This list can be described as a 'national calling card.' The top seven state-owned enterprises are the foundation of the real economy, representing China's hard power and ballast."

As a leader in the digital economy, Tengda Technology embodies China's soft power and future vision.

"Yiyi, she should be over the Pacific Ocean by now," Liu Shishi murmured to herself, her eyes filled with tenderness.

Just as she was about to browse other news, there was a knock on the door.

"Please come in."

Lin Xia pushed open the door and entered, followed by several middle-aged men in suits: "Senior Sister Shi, the people from Standard Chartered Bank have arrived."

Upon the arrival of Chen Deming, CEO of Standard Chartered Bank's Mainland China region and General Manager of its Donghai branch, Liu Shishi rose from her rocking chair, her theatrical costume swaying gently, and moved to a wooden tea table beside her, her demeanor impeccable.

"We are grateful to President Chen for coming to the film set. The film set is simple, and we hope you will forgive us if there is any inadequacy in our hospitality."

"Please wait outside," Chen Deming instructed his assistant, then entered the room with a respectful smile on his face.

"Mr. Liu, you're too kind. You are a valued guest of our bank, and customer satisfaction is Standard Chartered's consistent principle."

"Xiaoxia, brew a pot of good tea for President Chen."

"Okay, Senior Sister."

As the fragrant tea was served, Liu Shishi got straight to the point: "President Chen, after the initial communication, you must understand my intentions. I suppose you came here today with some preparations."

Chen Deming nodded with a smile, a hint of caution flashing in his eyes.

Even disregarding Liu Shishi's special status as the wife of Asia's richest man, a single acquisition involving hundreds of millions of dollars is enough to make Standard Chartered Bank take it very seriously.

He secretly observed the stunningly beautiful woman before him and couldn't help but admire her extraordinary demeanor.

He took two beautifully bound documents from his briefcase and respectfully handed one of them over:

"Please take a look, Mr. Liu. This is the due diligence report on Asia Television compiled by our bank. It is detailed and the data is accurate."

Liu Shishi took the document, her slender fingers lightly turning the pages as she carefully studied it.

While she was reading, Chen Deming explained in a professional and cautious tone: "If President Liu is interested in acquiring ATV, there are two paths to choose from."

One option is equity acquisition, which involves directly purchasing shares held by ATV's original shareholders.

This approach allows the inheritance of ATV's original brand, licenses, business relationships, and contracts, but it also requires assuming all of its debts, litigation, and other potential risks.

For you, this is the fastest way to get ATV up and running.

The second option is asset acquisition, which involves acquiring only ATV's core operating assets, such as equipment, copyrights, and trademarks, without taking over the company itself.

This approach can effectively isolate ATV's existing historical debts and risks, but the drawback is that it requires reapplying for a television broadcasting license.

Furthermore, existing employee labor relations and cooperation agreements all need to be reprocessed, making the process quite cumbersome.

Upon hearing this, Liu Shishi raised her eyebrows dismissively and parted her lips slightly: "ATV's most precious asset is its television license. If it loses this, what value does ATV have?"

The two men tacitly understood that ATV's free-to-air television broadcasting license was indeed a precious and heavy "crown".

Behind this license lies decades of brand accumulation, a passport to mainstream public opinion in Hong Kong, and an important bridge connecting the Guangdong-Hong Kong-Macao Greater Bay Area.

After a moment's thought, Chen Deming carefully considered his words and kindly reminded him: "Mr. Liu, according to the investigation, given ATV's current operating status, the Hong Kong Communications Authority is very likely not to renew its license."

This means that if acquired now, the license might be valid for less than two years, its long-term value is highly uncertain, and its rarity is greatly diminished.

He paused, then added, "This move is tantamount to snatching chestnuts from the fire; Mr. Liu needs to treat it with caution."

Liu Shishi waved her hand calmly, her expression composed: "If I decide to acquire ATV, the license renewal will be arranged by myself, so President Chen need not worry about it."

The entire Hong Kong entertainment circle is currently courting Tengda. If she takes over ATV, the licensing issue will naturally receive strong support. Even if not, getting the Fok family or the Hong Kong Olympic Affairs Office involved will surely resolve the matter properly.

Having fulfilled his obligation to warn of the risks, Chen Deming said no more and tactfully began to enjoy his tea.

Liu Shishi continued to flip through the documents, and when she saw the financial indicators, she couldn't help but frown.

ATV's operating situation was more severe than she had expected, which made her gasp in shock.

The losses were secondary; the HK$10.9 billion in debt left ATV in a state of severe insolvency, a bottomless pit.

Even worse, its cash flow has dried up, with negative cash flow from operating activities of HK$0.43 billion.

This means that ATV's main business operations are not only unable to generate revenue, but are also continuously consuming funds, barely surviving on shareholder subsidies.

At this moment, after much deliberation, Liu Shishi decided to back out.

She bit her lower lip lightly, her gaze sweeping over the shocking numbers on the document once more, and the words her husband had spoken that night flashed through her mind.

After careful consideration, she remained determined to acquire the company. Since her husband had said that ATV still had potential, it must have some value.

Moreover, her acquisition of Asia Television was not merely a financial investment, but rather based on its irreplaceable strategic value.

Those channels that directly reach mainstream families in Hong Kong, and the power of public opinion in the Guangdong-Hong Kong-Macao Greater Bay Area, are assets that cannot be measured in money.

If sweeping reforms can be implemented to revitalize ATV, it will help Tenda Technology extend from online to offline, connecting the mainland with Hong Kong and Macau.

This can also serve as a springboard to help Tengda Group enter the Southeast Asian market.

Having grasped this point, the last trace of hesitation in Liu Shishi's eyes vanished instantly. She then looked up at Chen Deming, her gaze piercing:
"President Chen, if we want to acquire ATV's shares and get it back into normal operation, how much additional capital will be needed besides the acquisition cost?"

Upon hearing this, Chen Deming couldn't help but look at the seemingly frail woman in front of him with new respect.

I initially thought this richest woman's decision was just a passing fancy, but I never expected her to have such boldness.

He was well-prepared for the cost issue and had everything under control. Leaning slightly forward, he turned to the last page of the hardcover report.

With a light tap of his fingertip, he saw a summary table: "Mr. Liu, please look here. The main cost breakdown has been clearly listed for you."

Liu Shishi lowered her eyes as instructed, and saw that the items in the form were clearly marked and the amounts were clearly stated.

“Given that ATV is currently severely insolvent,” Chen Deming explained calmly and methodically, “its equity acquisition only requires a symbolic payment of HK$1.”

The real bulk of the expenditure is in debt repayment, totaling approximately HK$11 billion.

Furthermore, to maintain ATV's basic operations, approximately HK$1000 million needs to be invested each month, which translates to an annual basic operating cost of approximately HK$1.2 million.

He spoke at a calm pace, listing the details of capital investment clearly and concisely, demonstrating extremely high professional competence.

“Mr. Liu!” Chen Deming’s tone changed abruptly, his expression becoming serious. “However, merely surviving is nothing more than prolonging one’s life. If you want ATV to be revitalized, you need to plan ahead and invest in the future.”

This includes upgrading aging equipment, investing in new program production, and acquiring high-quality copyrights; these items are expected to require an additional HK$2 to 3 million in investment.

After a brief pause, a concluding assessment was given: "In short, if you are determined to take over this mess of ATV, you will need to have at least HK$12 billion in initial capital in order to handle it effectively."

Liu Shishi's gaze lingered on the "Debt Settlement" section for a long time, her fingertips unconsciously tapping the table, lost in thought.

After a moment, he slowly raised his eyes, a shrewd calculation flashing in them: "President Chen, is there no room to reduce this debt of HK$11 billion?"
The major shareholder has managed ATV to the point of collapse, yet wants to avoid losses and let the next owner take over completely. Is there really such a sure thing as a guaranteed profit?

Upon hearing this, Chen Deming became even more cautious and carefully chose his words to reply: "There are many variables in the matter of debt restructuring. The specific plan and possibilities will only be clear after we contact the creditors."

Liu Shishi nodded slightly, not surprised by the answer, but her attitude was very firm: "In that case, we must do our best to reduce the debt!"

No more beating around the bush, just a direct answer: "President Chen, I'm determined to get ATV!"

I have faith in Standard Chartered's reputation and capabilities. Provided the price is fair, I entrust this acquisition entirely to your bank.

Upon hearing this, Chen Deming was overjoyed and quickly bowed, saying, "Thank you, Mr. Liu, for your trust and reliance on Standard Chartered and myself! I will do my utmost to live up to your expectations."

"I won't bother two people with one matter." Liu Shishi smiled slightly and said calmly, "I'm also planning to take out a loan from Standard Chartered Bank for the funds needed for the acquisition. President Chen, why don't you just name your price?"

"A financing need of HK$1 billion!" Upon receiving such a large order, Chen Deming was naturally delighted and his mind began to race with calculations.

Liu Shishi did not urge him, and lowered her eyes again, turning her attention to the document in her hand about the lineup of Asia TV channels.

The paper listed local channels, international channels, Asia channels, time capsules, and even the "Asia Television Information and Entertainment Channel" which was in preparation.

This profound foundation and complete channel structure further solidified her determination to acquire ATV.

After pondering for a moment, Chen Deming tentatively asked, "Mr. Liu, do you plan to use ATV Future's equity as collateral for this HK$10 billion loan?"

Or should we consider using other high-quality assets as collateral, or seeking personal joint and several liability guarantees?

Liu Shishi asked with great interest, "How much is the difference in loan interest rates between these two methods?"

Chen Deming immediately gave a professional and detailed explanation: "Frankly speaking, given ATV's current operating status, its equity is not a high-quality collateral recognized by banks."

If equity is used as collateral, considering the risks involved, the minimum annual interest rate would be 12%.

However, if you are willing to provide hard currency collateral such as gold or real estate, or have Mr. Song act as guarantor, given his excellent credit, I can arrange to reduce the annual interest rate to 5%.

"Gold?" Upon hearing this, Liu Shishi had a sudden inspiration and immediately asked, "President Chen, what is the market value of the gold I currently store in Standard Chartered's vault?"

She suddenly remembered the 500 gold bars she had purchased after selling her courtyard house at the end of 2011, as well as the subsequent additions, all of which were stored in Standard Chartered vaults.

Upon hearing this, Chen Deming's expression instantly became somewhat unnatural, and he cautiously replied, "You have a total of 1200 gold bars of 500 grams stored in your Standard Chartered vault."

Currently, international gold prices have fallen somewhat, to around 280 yuan per gram. Based on this, the total value of this batch of gold is approximately 1.68 million yuan.

"It's fallen so much!" Liu Shishi exclaimed in surprise, her brows furrowing.

She remembers clearly that when she made the big purchase two years ago, the price of gold was 380 yuan per gram.

A rough estimate revealed that, including the cost of subsequent gold purchases, the unrealized loss on this batch of gold had reached a staggering 50 million! A tremendous sense of frustration instantly overwhelmed him.

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(End of this chapter)