Huayu: Starting from joining the mainstream entertainment industry in 96

Chapter 484, Section 482: Long Contract

At 1:30 a.m. Beijing time on July 13, 2003, Air China flight CA984 landed smoothly at Beijing Capital International Airport.

The runway lights stretched into two parallel strips of light in the night, guiding the Boeing 747 passenger plane, which had crossed the Pacific Ocean, to taxi to the apron.

Wang Sheng looked out the window at the familiar scenery. Although it was late at night, the airport was still brightly lit, but it was less noisy and more tranquil than usual—the aftershocks of the first half of the year.

Customs clearance and baggage claim went smoothly. At 2:15 a.m., Wang Sheng got into the black Audi A8 that had come to pick him up.

Inside the car, the assistant gave a brief report on the company's recent situation and the schedule for the next few days. He listened with his eyes closed, nodding occasionally.

The apartment located on the East Third Ring Road remains as tidy as it was when he left, only now it feels a bit more empty.

After a quick wash, Wang Sheng went straight to sleep.

Perhaps it was the special physique brought about by time travel, or perhaps it was the adaptability honed by long-term high-intensity work, but his biological clock adjusted extremely quickly. He slept without any dreams, and when he woke up the next morning, his jet lag had reversed, and he was full of energy.

At 10:00 AM, at the headquarters of Shengying Media Group in Jingxin Building.

After adjustments made in the first half of the year, the company's office area now appears more spacious and professional.

The open-plan workstations and independent glass meeting rooms are arranged in a well-organized manner, with corporate culture walls and project display screens interspersed throughout, revealing the atmosphere of a standardized and large-scale enterprise.

Wang Sheng went straight into the chairman's office.

A stack of documents was already neatly arranged on the large mahogany desk.

The top document is a report titled "Summary of Work in the First Half of 2003 and Work Arrangement for the Second Half of 2003 of Shengying Media Group," which was carefully compiled and written by the secretariat at the arrangement of the board secretary, Li Tingting.

He sat down and first flipped through the section on corporate governance structure.

Report Summary: The Group’s Board of Directors was formally established in May 2003.

Background and Necessity Analysis:
Listing Compliance Requirements: To become the first Chinese film company listed on the A-share market, in accordance with the Company Law, the Securities Law, and relevant regulations of the China Securities Regulatory Commission, a joint-stock company must establish a board of directors and a board of supervisors, and establish a sound corporate governance structure. This is a mandatory condition and necessary step before listing.

Expansion and Management Needs: Shengying Media's business has expanded to include film production, distribution, cinema chains, talent agency, film and television bases, and overseas cooperation, resulting in a rapid increase in assets and employees. The existing flat management model is no longer sufficient, necessitating a more scientific and efficient decision-making and oversight process through a board of directors.

Financing and strategic development require a board structure that can better attract strategic investors, clarify responsibilities and powers, and provide institutional guarantees for the company's long-term development and major investment decisions.

Risk isolation and standardized operation: Establishing a sound mechanism for checks and balances among the board of directors, board of supervisors, and management helps reduce the risk of individual decision-making and improve the company's transparency and market reputation.

The board of directors consists of nine members, with Wang Sheng naturally serving as chairman. Han Sanping, representing the important strategic partner Beijing Film Studio (now part of China Film Group), also serves as vice chairman.

Li Tingting successfully joined the board of directors and also served as the board secretary, thanks to her long-term experience as vice president and general secretary and her deep involvement in the company's core operations.

Other members include heads of core business lines from the Shengying Group (mainly from the sons of government officials and management from the Beijing Film Academy), as well as two independent directors with financial and legal backgrounds (from government offices in Beijing).

This adjustment may seem minor, but it is actually a crucial step in Shengying Media's transformation from a star company with a strong founder's influence to a modern and standardized public company.

Li Tingting's promotion is not only an affirmation of her past work, but also means that she will play a more central role in the company's listing process and subsequent capital operations.

Wang Sheng continued to flip through the business report.

Film production business:

Due to the impact of the first half of the year, film and television production teams across the country were once completely shut down. Of the ten theatrical films (mostly low- to medium-budget films) that Shengying Media originally planned to start filming or complete in the first half of the year, only four were completed, and the other six were delayed to varying degrees.

Stephen Chow's project: "Kung Fu Hustle," co-produced by Star Overseas and Sheng Ying Media, and directed and starring Stephen Chow, is nearing the end of post-production and is expected to be completed by the end of August. It is tentatively scheduled for release in December 2003, targeting the Lunar New Year holiday season. This is one of Sheng Ying's most important box office expectations for the second half of the year.

Hong Kong film investment under the CEPA: Taking advantage of the Closer Economic Partnership Arrangement (CEPA) signed on June 29, 2003, Sheng Ying Media acted quickly and invested in a number of carefully selected Hong Kong co-productions.

Based on his memories from his past life, Wang Sheng selected projects that all met mainland China's review requirements and possessed market potential, including:

The Infernal Affairs series, which it had previously invested in.

New Police Story (Jackie Chan returns to his signature IP, combining action and emotion)

"Dragon and Phoenix" (starring Andy Lau and Cecilia Cheung, a lighthearted urban romantic comedy, appealing genre)
The Twins Effect (a fantasy action film aimed at young audiences, starring Twins)

"Unforgettable" (directed by Er Dongsheng, starring Cecilia Cheung, an art-house drama with award potential) Most of these projects are already in preparation or filming and are expected to be released one after another between 2004 and 2005.

The first project of the China-South Korea co-production has been approved and is titled "If Love Has a Destiny".

The script was based on a framework for a future classic Korean romance film provided by Wang Sheng.

Directed by Wu Yiyi, a director signed with the company. The project aims to foster collaboration between the Chinese and South Korean teams, explore cooperation models, and accumulate experience for future large-scale co-productions.

Hollywood strategy:

The report briefly mentions Wang Sheng's control of a series of independent subsidiaries in Hollywood through a complex structure (such as companies holding rights to the Saw series, Marvel/DC character copyrights, and Twilight projects).

The subsidiaries' equity structures are carefully designed, typically involving multiple layers of holding companies registered in the Cayman Islands, British Virgin Islands, etc., ultimately controlled by Wang Sheng personally or his family trust. This effectively isolates them from the listed company, Shengying Media, through risk isolation and tax planning. Currently, these subsidiaries operate independently, and their financial data is not yet consolidated into the group.

Traditional business and issuance business:
Wedding videography business: Heavily affected, the wedding market shrank in the first half of the year, and revenue declined by more than 40% year-on-year. However, as social activities return to normal, a rebound is expected in the second half of the year.

Domestic theatrical film distribution business: Suffered heavy losses in the first half of the year due to prolonged cinema closures. Several films in which Shengying participated in distribution or investment failed to meet box office expectations.

Cash Flow and Psychological Factors:

Despite setbacks in multiple business segments, Sheng Ying Media Group's overall cash flow remains very healthy, thanks to the huge profit inflows from overseas projects such as "Night at the Museum" and "Saw," as well as the stable financial support from Enlight Media's television business.

During the shutdown, the company adhered to the principle of "no work stoppage, no payout," continuing to pay basic wages and benefits as usual. Although this increased short-term costs, it greatly enhanced employees' sense of belonging and loyalty, and the cohesion of the "Shengying Group" was unprecedentedly strengthened.

Artist management business (Shengying Media):

Unlike Enlight Media, which has a separate and large-scale artist management department, Shengying Media directly signs only three veteran artists: Li Xiaoran, Gao Yuanyuan, and Fan Xiaopang.

After giving birth, Gao Yuanyuan gradually faded out of the public eye and focused on being a wife and mother.

The report only stated that she had established her own artist management company, Star Era, and officially transitioned into a boss. Shengying Media, as a strategic partner, will provide some resource support.

Li Xiaoran maintains a "laid-back" attitude, only taking on one or two roles a year and spending the rest of her time enjoying life, and has made it clear that she has no plans to have children for the time being.

The report briefly outlined her work schedule.

Fan Xiaopang is still working hard in his career.

Last year, she earned tens of millions from endorsements and film fees.

This year, she got the opportunity to play the lead role in "Twilight".

Therefore, she has just renewed her agency contract with the company for another ten years. Including the remaining years of the original contract, the total contract period is now fifteen years. The penalty for breach of contract is set at 500 million RMB.

Analysis of the reasonableness of liquidated damages: Considering that Fan Xiaopang is currently a top-tier actress in China with huge commercial value, and that the company will invest massive resources (including top Hollywood projects) in her development, her potential returns are immeasurable.

Hundreds of millions of yuan in breach of contract penalties are not unprecedented in the long-term contracts of top stars in the industry (refer to big-name stars abroad). They are mainly used to restrain the behavior of artists and ensure the return on the company's long-term investment.

At the same time, the 50/50 revenue split is still a worthwhile deal for the artist, provided that the company can provide top-tier resources beyond the norm (such as important roles in Hollywood A-list productions). This reflects a higher level of mutual benefit and risk-sharing between the two parties.

Regarding Enlight Media: Unlike Shengying Media, which suffered setbacks in some of its businesses, Enlight Media actually benefited from the misfortune in the first half of the year.

Television content production: During this period, people spent more time at home, leading to increased television usage. Several variety shows produced by Enlight Media achieved steady growth in viewership, generating substantial advertising revenue.

Long-running TV dramas: The ten long-running TV dramas produced by Enlight Media in the second half of last year dominated the screen in the first half of this year.

Artist management business: This part of the revenue has declined significantly due to the sharp reduction in commercial performances and offline events.

Regarding the listing process of Shengying Media:

The report's final section confirms that Shengying Media's A-share IPO application has been accepted by the China Securities Regulatory Commission (CSRC), the feedback has been largely addressed, and the audit and prospectus documents are ready. The listing process has entered its final sprint, and it is expected to be officially listed and traded as early as the fourth quarter of 2003 or the beginning of 2004.

After closing the thick report, Wang Sheng leaned back in his chair and began to think about his plans for the second half of the year.

(End of this chapter)