STX Entertainment’s plans for an IPO on the Hong Kong Stock Exchange are facing new questions given a volatile Hong Kong market and a recent string of box office misfires.
Melissa McCarthy’s “Happytime Murders,” which opened to a dismal $10 million last weekend, follows other recent underachievers such as Mark Walhberg’s “Mile 22,” which has pulled in $25 million domestically on a $50 million budget, and “Adrift,” which earned a modest $31 million on a $35 million budget.
STX has helped shield itself somewhat from some of its poor performers by teaming up for co-productions, engaging in various output deals with backend bonuses and other means of mitigating risks.
But the studio which prides itself on mid-budget releases hasn’t had what would be widely considered a blockbuster outside of its two “Bad Moms” comedies.
STX Entertainment entered Hollywood in 2011 with two goals: Be a successful studio banking on the dearth of mid-budget films, while truly becoming a U.S.-China operation.
Now the studio is awaiting regulatory approval in China to be publicly listed on the Hong Kong Exchange, not an easy task for any U.S.-based company.
STX filed documents with the Hong Kong Exchange in April to take the company public, with an IPO that would provide an infusion of roughly $500 million that the company hoped would help fuel growth.
In a prospectus filed with the Hong Kong exchange and Chinese regulators, STX reported that the company has incurred losses every year since it began operations, including gross losses of $28.1 million in its 2017 fiscal year.
However, the company reported it has $100 million in cash.
But President Donald Trump’s trade war with China, coupled with a volatile Chinese market, still makes for a rocky IPO landscape in Hong Kong.
Chinese media had suggested an IPO as early as this month, but the timing is now completely up in the air.
A rep for STX declined to comment for this story.
STX is backed by major players both in the U.S. and China, including Liberty Global, TPG, Tencent — one of the largest conglomerates in China — and Hony Capital.
That has attracted the interest and admiration of investors like Gerber Kawasaki CEO Ross Gerber put it.
“This is a company that gets it. If I were going to start a business in Hollywood today, I can’t imagine not thinking about China. There’s going to be a Chinese IPO because this is basically a Chinese company,” Gerber said, adding that the board consists of “some heavy hitters.”
The company’s current mix of investments are roughly 40 percent from Asia, 40 from the U.S. and 20 percent from Europe. And with coproductions with Alibaba and Tencent in the pipeline, one of STX’s major plays is to be able to leverage its ties to China.
The studio is even distributing Netflix’s “The Irishman” in the country, an insider at STX told TheWrap, because the streaming giant doesn’t have distribution there.
STX is undoubtedly in growth mode. The company has ramped up its theatrical distribution every year from two releases in 2015 to 14 next year, all with budgets ranging from $20 million to $80 million.
And the TV division has six scripted and unscripted series either in development or set up at networks, including the Nat Geo series “Valley of the Boom,” premiering this fall, and an untitled drama series at Amazon from “Crazy Rich Asians” author Kevin Kwan.
“I typically like this kind of company,” Gerber said. “You need to be able to leverage your content over multiple platforms and products.”
12 Chinese-Owned Media Companies, From Dick Clark Productions to AMC (Photos)
A firehose of Chinese investment has been flowing into Hollywood for the last few years, as Middle Kingdom firms have scooped up production companies and theater chains by the billion. And while D.C. has finally taken notice -- and is asking the government to take a closer look at foreign ownership of American content companies -- Chinese firms have already accumulated a substantial portfolio of media and entertainment-related companies often at healthy premiums. And Hollywood isn’t ready to look that gift horse in the mouth.
AMC/Carmike/Legendary/Getty Images
AMC THEATRES Owner: Dalian Wanda Group
Wanda, a real estate and entertainment conglomerate owned by China’s richest man, Wang Jianlin, made its first Hollywood splash in 2012 when the company paid $2.6 billion for AMC Entertainment, the parent of AMC Theatres, the second-largest theater chain in the U.S.
AMC Theatres
Carmike Cinemas Owner: Dalian Wanda Group
Wanda-owned AMC paid $1.2 billion to acquire Carmike Cinemas in a deal that just closed in November. The combined chain will be America’s largest theatrical exhibitor, passing former No. 1 Regal Entertainment.
Mike Kalasnik
Legendary Entertainment Owner: Dalian Wanda Group
Wanda paid $3.5 billion for the “Jurassic World” production company in January, even though Legendary lost $500 million last year, according to a Chinese regulatory filing. However, plenty of Legendary’s high-octane action and fantasy flicks have been bigger hits in China than the U.S., such as “Warcraft.”
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Dick Clark Productions Owner: Dalian Wanda Group
Wanda spent $1 billion to acquire the producer of the Golden Globes, American Music Awards and “New Year’s Rockin’ Eve.” The deal marks Wanda’s first foray into television after spending billions on the big screen.
Dick Clark Productions
Voltage Pictures Owner: Anhui Xinke New Materials
Anhui Xinke, a copper processing company, bought an 80 percent stake in Voltage parent Midnight Entertainment for $351 million. Voltage is the production company behind Oscar-winning films including “The Hurt Locker” and “Dallas Buyers Club.”
Voltage
STX Entertainment Owner: Hony Capital, Tencent
Independent distributor STX was founded with investments from private equity giant TPG and Chinese firm Hony Capital. The company also has a co-financing deal with China’s Huayi Bros. Media, and this year secured a strategic investment from Tencent to expand into digital content, music and virtual reality.
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World Triathlon Corporation Owner: Dalian Wanda Group
Wanda paid $650 million last year for the company that organizes the Ironman Triathlon races, folding it into its new Wanda Sports division.
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IM Global Owner: Tang Media Partners
Tang Media Partners, which has offices in Shanghai and L.A., acquired a controlling stake in Stuart Ford’s film finance firm from Indian conglomerate Reliance in June. IM Global has financed or produced more than 30 Hollywood films, including Mel Gibson’s “Hacksaw Ridge.”
IM Global
Studio8 Owner: Fosun Group
Chinese conglomerate Fosun is the largest shareholder in former Warner Bros. chief Jeff Robinov’s production company, having invested $200 million in Studio8.
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Dichotomy Creative Group Owner: LeEco
Consumer tech company LeEco’s subsidiary Le Vision Pictures opened an L.A. office this year and hired former Paramount Pictures President Adam Goodman to run it and oversee a slate of English-language films. As part of the deal, LeEco acquired Goodman’s production company, Dichotomy.
Adam Goodman
Cirque du Soleil Owner: Fosun Group
It’s a Canadian circus, not a movie or TV studio, but Cirque du Soleil operates six Vegas shows, several tours and earned $845 million in revenue in 2014. Last year, TPG and Fosun acquired a majority stake in Cirque du Soleil for $1.5 billion.
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Riot Games Owner: Tencent
Tencent acquired a 93 percent stake in the video game publisher for $400 million in 2011 and acquired the remainder last December. Riot’s “League of Legends” is the most played PC game in the world.
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Firms from China have been scooping up production companies and theater chains by the billion in recent years
A firehose of Chinese investment has been flowing into Hollywood for the last few years, as Middle Kingdom firms have scooped up production companies and theater chains by the billion. And while D.C. has finally taken notice -- and is asking the government to take a closer look at foreign ownership of American content companies -- Chinese firms have already accumulated a substantial portfolio of media and entertainment-related companies often at healthy premiums. And Hollywood isn’t ready to look that gift horse in the mouth.