China's Bona Film Group Swings to Fourth-Quarter Profit
Chinese film producer and distributor Bona Film Group, in which Rupert Murdoch's 21st Century Fox owns a 19.9 percent stake, reported a five percent increase in net revenues last year, boosted by higher theater sales and strong box office performance of the 14 films it released.
Net revenues for the full year 2013 rose to $149.3 million. Fourth-quarter earnings of $400,000 compared with a year-ago loss of $5.4 million. Full-year 2013 earnings of $5.7 million compared with a loss of $1.3 million in 2012.
“We delivered solid results in 2013, driven by the theatrical release of 14 films domestically that generated an approximately 10 percent market share in domestic box office receipts, making us one of the top three domestic non-state-owned film distributors," said Bona founder, chairman and CEO Yu Dong.
Yu said he expected the Chinese film industry to generate strong box office returns again in 2014, and he believed that Bona's solid slate of films and vertically integrated business model meant the group was well positioned to capitalize on this growth in the market.
"We have a robust slate of films scheduled for release in 2014, and our business segments are on track to demonstrate progressive growth throughout the year. Our first two film releases, The Mortal Instruments: City of Bones and The Man From Macau, have kicked-off the year in top form, generating strong box office results, particularly during the Chinese New Year season,” he said.
Distribution contributed $76.6 million last year, compared with $64.1 million in 2012. During 2013, Bona distributed a total of 18 new films domestically.
The increase in net revenues from the distribution segment was mainly due to the strong box office performance of the films released in 2013.
In all, the company's top-five films in 2013 contributed $54.1 million, which includes all revenue streams from Bona's theatrical and non-theatrical releases, or 36.3 percent of full-year 2013 revenues, compared to the top-five films in 2012, which accounted for 37.4 percent of full-year revenues.
The group’s top five films last year included The White Storm, which took $36.76 million, Bring Happiness Home, which took $25.08 million, My Lucky Star ($22 million), Out of Inferno ($21.4 million) and Unbeatable ($19.25 million).
Net revenues from the movie theater segment increased to $61.5 million in 2013, compared with $41.7 million in 2012. The increase was primarily a result of the increase in the number of theaters and screens from Bona's strategic expansion efforts.
"We are also pleased with the progress we made in our theater segment in 2013, as our greenfield theaters matured and delivered solid results. We opened new movie theaters in 2013, signed contracts to construct seven new theater projects and reached a few preliminary agreements with first-tier property developers on exciting future projects," said Yu.
On the film investment and production side, net revenues fell to $41 million in 2013 from $73.7 million a year earlier. The group said the decrease was mainly due to the absence of revenue generated from investing in TV series in 2013.
During the year, Bona launched the $165 million Bona Film Investment Fund in partnership with Sequoia Capital Management and Noah Holdings, and it also saw a strategic investment by the Fosun Group.
“These initiatives will help fortify our position in the market and create opportunities for us to leverage in the future," said Yu.
Bona’s film fund’s first investment was in The Man From Macau, with Chow Yun-fat, and the film has already generated roughly $81.6 million (500 million yuan) in domestic box office receipts.
Among major films in post in the first quarter are Horseplay, The White Haired Witch and Overheard 3, while the group is involved on the production side in Tsui Hark’s The Taking of Tiger Mountain (formerly referred to as Tracks in the Snowy Forest) and Daydream Believer.
Bona is also pursuing the quota application process for two foreign films: Nonstop and Pompeii.
Revenues were down 19.7 percent year-on-year in the fourth quarter of 2013 at $42.8 million, because the quarter did not have any TV series during the period. In the comparable quarter in 2012, the company said, it generated strong sales from the Bona TV series The King's Battle.