For 800 million yuan, "Uncle Li" from Shanghai takes over the once 90 billion-yuan "Wang Brothers"
The 5-month pre-restructuring process of Huayi Brothers has finally reached a clear direction for its outcome.
On the evening of September 16, Huayi Brothers confirmed via official announcement that China Media Capital Co., Ltd. (hereinafter referred to as "CMC") has become the industrial investor for the company's pre-restructuring case, and the two parties have signed the Restructuring Investment Agreement and its supplementary documents. CMC plans to invest approximately 836 million yuan to hold around 17% of the company's shares and become its controlling shareholder.
This does not seem to be the most ideal "script" in the minds of investors. On September 17, the share price of Huayi Brothers plunged by 10.05%, and continued to drop by 2.79% on September 18, with its total market value falling below 5 billion yuan.
On stock trading platforms such as Xueqiu, relevant news is widespread, but there are very few analysts and commentators. Only several retail investors raised questions: the 10-for-9 share capital increase plan does not involve old shareholders, leading to significant equity dilution; another approximately 473 million newly issued shares are directly used to pay off debts, equivalent to 440 million yuan, which means all existing shareholders are paying for the old debts. Occasional complaints can also be seen: "After waiting for so long, this is all we get" "Huayi is already finished, is anyone still holding onto illusions?"...
Although Huayi Brothers is already "leaking from every crack", retail investors have their own "algorithm" — the content production capabilities accumulated by the company over many years and its top-tier copyright reserves "still have extremely high scarcity in the current cultural and entertainment market"; many others believe that "Tencent and Alibaba will not let it get delisted".
After the public recruitment of investors in June, 6 institutions signed up and paid a 50 million yuan deposit, among which 5 submitted formal plans.
Most retail investors believe that for the final confirmed investor, this is a "bottom-fishing" move. They are keen to analyze how business synergy would work after a certain giant takes over Huayi Brothers. On the long list of candidates, in addition to Alibaba and Tencent which are already shareholders, there are also ByteDance and even iQiyi.
In May this year, they even had a collective "self-entertainment" moment. During the judicial auction of Huayi Brothers' shares, Zhuhai Hengqin Tiansheng Equity Investment Partnership (Limited Partnership), which has a direct connection with CITIC Group, unexpectedly won three consecutive batches of shares. Although the proportion in the total share capital is only about 0.2%, the obvious rise in share price in those few days forms a sharp contrast with the current situation, which to a certain extent shows that retail investors are very optimistic about the expectation that a central state-owned enterprise will take over Huayi Brothers.
Regarding the "uncertainty" of CMC, the most frequently mentioned topic is how assets will be injected in the future, and there is a huge variable: Shaw Brothers which it controls.
On January 21 this year, Shaw Brothers issued an announcement stating that it plans to acquire core assets under CMC including Daylight Entertainment through a rights issue. This is a "snake swallowing elephant" transaction. As of the end of September 2025, the audited total assets of the former are less than 500 million yuan, while the net value of the assets to be injected is as high as about 8.558 billion yuan.
This transaction is extremely complicated. Because the actual controllers of both CMC and Shaw Brothers are Li Ruigang (Chairman and CEO of China Media Capital), and the assets to be injected belong to the same industry, the market is concerned about whether it can obtain a whitewash exemption to avoid being identified as a reverse takeover.
On September 17, the day after Huayi Brothers' announcement was issued, Shaw Brothers suspended trading, and the next day it issued an announcement stating that it would terminate the relevant transaction with CMC.
Li Ruigang has a "persistence" for the A-share market. In 2015, he led the share swap merger between BesTV and Oriental Pearl, which was regarded as one of the largest M&A cases in China's media industry at that time. The market value of the new company once exceeded 100 billion yuan, and he witnessed first-hand the A-share market's "generosity" to media assets. However, the A-share market has always had strict IPO review standards for the film and television industry, and no related companies have successfully completed independent IPOs in recent years. As a result, in 2021, he publicly mentioned that CMC would seek a listing in Hong Kong within one or two years.
If CMC controls both Shaw Brothers and Huayi Brothers at the same time, the two companies will naturally have horizontal competition, and the review of asset injection will become stricter.
Li Ruigang, known as "China's Murdoch", is well versed in the rules of the political and business circles and is a master of capital operation. CMC's business portfolio also includes Daylight Entertainment, Shaw Brothers, UME Cinemas, Oriental DreamWorks, CMC Pictures and other businesses. It seems the most natural path for Huayi Brothers to be integrated into this system, but this is still a path that no one has ever successfully navigated.
01
The Buyer
In 2010, CMC's first investment went to Murdoch — it spent 74 million US dollars to acquire 53% of the equity of Star TV under News Corporation. After taking over, Star TV quickly turned losses into profits, and later the incubated Canxing Culture produced *The Voice of China*. This transaction set the tone for Li Ruigang's playbook in the following 15 years: pick high-quality assets in trouble, take them over at a low price, restructure them, and revitalize them. The nickname "China's Murdoch" has been called since then, but he himself does not recognize it: "The Chinese environment will not produce a Murdoch."
To understand his rise, one must first understand the era he caught up with. In the years around him leaving the public sector to enter the business world, China's film and television industry was in its most vigorous boom: the total box office of domestic films rose from 10.1 billion yuan in 2010 to 44 billion yuan in 2015, with an average annual growth rate of over 30%; satellite TV variety shows were still money printing machines for advertisers — in 2015, *The Voice of China* alone contributed 1.143 billion yuan in revenue to Canxing Culture. That was an era when as long as you dared to invest and take the lead, you could basically get returns, and every bet he placed landed right at the peak of the trend.
After that, he kept buying: 40% equity of Caixin Media in 2013, Hong Kong TVB in 2015, Hong Kong listed shell company Media International (renamed "Shaw Brothers") in 2016, UME Cinemas in 2017... After injecting capital into Daylight Entertainment in 2016, he did not interfere in content creation, only provided capital and channel resources. Works like *Nirvana in Fire* and *Mountains and Seas* were produced one after another, and few people knew that CMC was standing behind this company.
But when the tide recedes, this asset portfolio needs to be interpreted in a different way.
First look at Canxing Culture. In 2018, it applied for a GEM listing, but the review was terminated in February 2021 on the grounds of complex equity structure and goodwill impairment. After restructuring into Star Chinese Media, it moved to the Hong Kong stock market and successfully listed after submitting applications three times. In June 2023, its market value once hit 52 billion Hong Kong dollars. But two months later, the recording of Coco Lee's accusation against *The Voice of China* was exposed, the show was suspended, and its share price plummeted by 80% in half a month.
Daylight Entertainment is another case. Although Li Ruigang did not sign a performance bet agreement and indeed did not interfere in creation, capital still changed the rhythm of this company: from "one high-quality work a year" to three consecutive productions a year. After that, *Ode to Joy 3* and *Meet Yourself* both scored below 5 points on Douban. After *Reset* in 2022, Daylight Entertainment has not produced any nationwide hit work. *The Age of Quenching*, *Cherry Amber* and *Life on the Line* all underperformed one after another, and the brand reputation of "Every production from Daylight is a high-quality work" is being taken back by the audience little by little.
TVB is an asset that requires continuous capital injection. This veteran TV station has suffered losses for 7 consecutive years since 2018, laying off employees, merging channels, and closing e-commerce businesses. At the most difficult time in 2023, CMC had to join related parties to provide a 700 million Hong Kong dollar low-interest loan. It did not turn losses into profits until 2025 with *The Queen of News 2*, earning 59 million Hong Kong dollars, and its market value is only 1.5 billion Hong Kong dollars.
With drastic changes in the industry environment, CMC has also been deeply affected: its operating revenue shrank from 4.571 billion yuan in 2023 to 3.178 billion yuan in 2025, its net profit hovered around 300 million yuan, and 14.667 billion yuan of liabilities are pressing on its total assets of 21.359 billion yuan.
Of course, there is also good news. This summer vacation, the animated film *Eight Immortals!* produced by the Chengdu team of Oriental DreamWorks was released with almost zero promotion. Under the encirclement of *Kung Fu Women's Football* and *Spider-Man*, its cumulative box office exceeded 1.9 billion yuan after 56 days of release, with a stable Douban score of around 8.2, and the estimated return on investment according to industry models is about 170%.
The times have changed. Those film and television giants that are queuing up to save themselves all tasted the sweetness of the era back then. Wanda Film was sold to China Ruyi, and even its name was changed to "Ruyi Film"; Bona Pictures suffered consecutive losses for 4 years, losing more than 2.6 billion yuan in total, and the 1 billion yuan invested film *Operation Dragon Subduing* had a box office of less than 400 million yuan, and its founder Yu Dong choked up publicly at the award ceremony. Enlight Media, which was not in the center of the stage, saw its market value exceed 100 billion yuan relying on *Nezha 2*, which became the exception. The tide treats everyone equally: everyone is a hero when it rises, and no one gets special treatment when it recedes. CMC is already a "lucky one" among them, and its move to invest in Huayi Brothers is a bottom-fishing operation, and in a sense, it is also a form of "self-rescue".
02
The Decline
It has to be said that Huayi Brothers is the most representative "story" of that era — the Wang brothers' sensitivity to capital completely changed the game rules of the industry.
On the one hand, external shareholders entered the company. In November 2014, Huayi Brothers announced a private placement that shocked the market: Alibaba Venture Capital, Tencent and Ping An Asset Management subscribed for a total of 3.5 billion yuan. The heads of the three companies, Jack Ma, Ma Huateng and Ma Mingzhe, all gathered at Huayi Brothers, which was regarded by the outside world as its most glorious moment at the capital level.
On the other hand, the company "bound" celebrities. In 2015, Huayi Brothers made two "sky-high acquisitions" that were repeatedly discussed later: it acquired 70% equity of Dongyang Meila owned by Feng Xiaogang for 1.05 billion yuan — at that time, the net asset of this company was -5500 yuan, and its total assets were only 13600 yuan; it acquired 70% equity of Zhejiang Dongyang Haohan Film and Television, which was established only one day earlier, for 756 million yuan, with a valuation of over 1 billion yuan, and Feng Shaofeng, Li Chen, Angelababy, Zheng Kai, Du Chun, Chen He and others are the company's shareholders.
In October 2009, when Huayi Brothers landed on the ChiNext market, its share price rose by 122.7% on the first day, and its issue price-earnings ratio was as high as 69.7 times — far higher than the 10 to 15 times of similar enterprises in Hong Kong and US markets. At its peak in 2015, its market value was close to 90 billion yuan.
The high concentration of resources made it "omnipotent" for a long time, and it was almost synonymous with Chinese commercial films: *Cell Phone*, *A World Without Thieves*, *Assembly*, the *If You Are the One* series, the *Detective Dee* series, *The Eight Hundred*, the *Ex-Files* series and many other classic works were all produced by it.
The obvious decline started in 2018. That year, Huayi Brothers recorded its first loss since listing, with a net loss of about 1.1 billion yuan. Since then, it has suffered losses for 8 consecutive years, losing more than 8.5 billion yuan in total.
But the actual "decline" may have started with a systematic error in strategic judgment in 2014. When the company was at its peak, Wang Zhongjun proposed "de-filmization", planning to transform into a "Disney-style comprehensive entertainment group". After that, the company began to build film towns in Suzhou, Changsha, Haikou and many other cities. In hindsight, this was a fatal "arrogance". At that time, many media also raised questions: Why would a company with irreplaceable competitiveness in the content industry propose a new strategy during the cycle when China's film box office was exploding at an accelerated pace?
The heavy-asset, long-cycle real-scene entertainment business completely changed Huayi Brothers' core competitiveness — light assets, high turnover, and high gross profit margin. The result was naturally ugly financial figures, with projects in many places suffering huge losses or being suspended. The pace of Huayi Brothers was completely out of sync from then on: during the period from 2014 to 2016 when content value was the highest, it turned to the real estate industry, but was forced to return to the content industry after the real estate bubble burst.
More critically, its cash flow completely lost control. From 2014 to 2017, it acquired game and real-scene entertainment companies through high-leverage M&A, generating hundreds of millions of yuan in huge goodwill. The goodwill impairment caused by the underperformance of the acquired companies eroded the net assets like a flood in the following years.
In order to maintain expansion and investment, the Wang brothers began to pledge their shares frantically for financing, and the pledge rate even exceeded 99%. As the share price kept falling, their shares were judicially frozen to varying degrees, and they completely lost control of the company. Their self-rescue process was completely public. Selling houses and collections was the norm. Wang Zhongjun once said publicly: For the safety of the company, everything can be sold, and there is nothing shameful about it.
At the end of 2024, Huayi Brothers made its last "struggle". It first disclosed a Stock Option Incentive Plan, granting stock options accounting for 3.29% of the company's total share capital, setting two performance assessment targets for the vesting period: based on the 2024 operating revenue, the revenue in 2025 will increase by no less than 10%, and the revenue in 2026 will increase by no less than 21%. Disclosed on the same day as the stock option incentive plan was a loan announcement — Huayi Brothers borrowed 30 million yuan from Tianjin Hero Entertainment for a period of 1 year. The parent company of the latter, Hero Entertainment, was once an invested company of Huayi Brothers, and in November 2015, Huayi Brothers spent 1.9 billion yuan to participate in the C-round financing of Hero Entertainment.