Web Giant Tencent Purchases Stake in Chinese Film Company

By Beecher Tuttle May 10, 2011

Chinese Web behemoth Tencent has agreed to purchase 27.8 million shares of Huayi Brothers Media, making it a 4.6 percent stakeholder in the film and TV production company.

Five Huayi Bros shareholders – Ma Yun, Yu Feng, Jiang Nanchun, Gao Min and Wang Yulian – each sold moderate percentages of their stake in the entertainment company for a combined 450 million yuan, or $69.2 million, according to a statement released on Monday. The transaction price per share was 9.89 percent above the secondary market closing price as of Friday. Tencent now represents the biggest institutional investor in Beijing-based Huayi Bros.

Tencent proxy Liu Zhiping said that the two companies hope to collaborate on many projects in the areas of film, TV and new media in the near future.

"This investment is the first step of our cooperation," Liu noted in a statement.

Huayi Brothers Chairman Wang Zhongjun added that the two media powerhouses will partner to "bring integration in the industry to a new higher level." Neither party provided any specifics on how the two companies will incorporate their services.

Shenzhen, China-based Tencent is responsible for a number of online services, including search engine soso.com, web portal QQ.com and the highly popular QQ instant message service, which currently boasts a user base of 647 million.

Just last month, the Chinese Internet giant announced that it was setting aside around $77 million to invest in the entertainment space, according to Variety. The majority of that is now wrapped up in Huayi Brothers Media, which is dominant force in the film and TV space in China. The company launched an IPO on the domestic Growth Enterprise Market in 2009 and accounted for a whopping 30 percent of all films released in China in 2010.

Huayi Brothers Media films brought in box office revenue of more than $1.5 billion in 2010, the AFP notes, citing the State Administration of Radio, Film and Television, the country's movie regulator.

Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves

TechZone360 Contributor

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