News Corp to take stake in domestic film distributor

Media conglomerate aims to gain stronger foothold in local market with Bona Film

Bona Film Group Ltd, one of China's largest film distributors, will sell nearly a 20 percent stake in itself to News Corp, the world's second-largest media conglomerate by revenue last year, to expand its global business and gain further advantage in the burgeoning domestic film market.

News Corp will acquire a 19.9 percent stake in Bona directly from the company's founder, Chairman and CEO Yu Dong, according to a statement on Bona's website.

"We are thrilled to receive this strategic investment from News Corp News Corp's extensive global reach, investment and distribution will help accelerate our strategy to expand our global footprint," said Yu in the statement.

Bona, listed on Nasdaq in 2010, is developing its business to cover the full spectrum of the film industry. It distributes films throughout China, South Korea, Southeast Asia, the US and Europe. It owns and operates 13 movie theaters at home.

The company's net revenue reached $43.7 million in the first quarter, up 126.8 percent year-on-year, and its net income rose 35.3 percent to $3.3 million.

During the first quarter, it took in more than 450 million yuan ($71.33 million) in box office receipts through the distribution of five films, including the 3D production The Flying Swords of Dragon Gate.

"The deal will help Bona gain greater advantages in expanding its distribution overseas because News Corp enjoys a wide media network," said Zhang Yanan, a senior analyst of media and entertainment at Zero2IPO Research Center.

"Bona has always intended to distribute its products at home and abroad at the same time."

She also said that the cooperation offers Bona an opportunity to learn about the mature investment and financing mechanisms of the movie sector that are shared among overseas financial institutions and entertainment entities.

"Surely, Bona will become more competitive in the domestic and global markets with the completion of the deal," Zhang said.

"China's film market is growing at a rapid pace, positioning the country to be the second-largest film market following the United States, and Bona's market leadership, compelling value proposition and tremendous growth potential make this an attractive opportunity for News Corporation," said Jack Gao, senior vice-president of News Corp and CEO of News Corp China Investments.

News Corp, the owner of 20th Century Fox film studio and The Wall Street Journal, wants to tap the second-largest economy's huge market.

Last year, CEO Rupert Murdoch called for China to open its film market and approve the release of more foreign films, according to The Wall Street Journal.

In February, China agreed to increase the country's annual quota of film imports from 20 to 34, as well as increase US studios' share of earnings from between 13 and 17.5 percent to 25 percent.

huangying@chinadaily.com.cn