Enlight Media takes steps to "cut down the vassal states": TV division disbands and reorganizes

As a first-tier film company in China, Enlight Media (300251.SZ) first made its fortune from its TV business department. However, as time goes by, as its film business is booming, the company's original TV business is shrinking. Just recently, Enlight Media finally made an important decision: disband the TV business department for reorganization.

Rumors of the dissolution of the TV division of Light Media began on June 30, when an industry insider said on Weibo that after the division was disbanded, the staff would be assigned to other departments, and Light Media would no longer produce TV programs in the future.

In a short time, the rumor was responded to by Enlight Media. Zhang Hang, former president of the TV division of Enlight Media, published an article titled "Only Youth Never Fares," confirming that he had indeed been appointed president of "Youth Enlight."

Before this, Qingchun Guangguang had hardly entered the public eye. An insider of Guangguang Media told the 21st Century Business Herald reporter that Qingchun Guangguang is a wholly-owned subsidiary of Guangguang Media, a new type of content management company responsible for literature, film and IP development, with publishing, film and television production, and artist management as its core. The organizational structure of the subsidiary includes four core departments, namely book publishing, film promotion, film production, and artist management.

Although Zhang Hang emphasized in the article that the television division was "reorganized" rather than "disbanded", and was "starting afresh" rather than "exiting in disgrace", the wording cannot conceal the real situation of the decline of Guangguang Media's television business.

Under the call for adjustment, the outside world can't help but ask: What are the reasons behind the withdrawal of Guangguang Media's television business that prompted it to abandon its old business?

Strategic business divestiture

By observing the current business structure of Light Media, we can judge the necessity of the existence of television business based on data alone.

According to the 2014 financial statements of Light Media, the listed company's film business revenue was approximately 650 million yuan during the reporting period, a year-on-year increase of 29.05%, accounting for 53.09% of total revenue; the gross profit margin was as high as 56.22%, and this business accounted for 75.9% of Light Media's total profit, but the operating cost of the film business was only 280 million yuan, accounting for only 38.31% of the total cost.

In sharp contrast, its television products, whose TV drama revenue and gross profit only contributed 4.88% of the company's profits, a year-on-year decline of about 6.5%.

Peng Kan, director and R&D consulting director of Lezheng Media, told the 21st Century Business Herald reporter: "The decision to dissolve and reorganize the TV division is the result of a strategic adjustment by Enlight Media. Enlight Media's logic must be to cut off unprofitable departments and focus on profitable businesses. Because with the same capital investment, the returns from investing in TV products are far less than those from movies and online dramas, and this industry situation will not change fundamentally in the short term."

It is understood that the original team members of the TV division of Light Media have been split into three parts. One part was transferred to Light Media's Light Pictures, another part was transferred to the online video company jointly established by Light Media and 360, and the rest continued to produce the two TV programs "China Is Listening" and "Young China Strong" in cooperation with CCTV.

This adjustment path was also confirmed by Zhang Hang. "Guangguang TV program production will not be completely stopped, and a new program format is being prepared."

However, after completing the contract with CCTV for two TV programs, whether the TV department of Enlight Media will completely cease operations is currently judged by the outside world as "quite possible". Peng Kan said that the problems faced by Enlight Media in the TV field are very common in the industry, which has a lot to do with the lagging reform of the domestic TV system and the lack of marketization.

"After the rise of the film market and video website channels, TV stations are becoming less and less attractive. Their long-term accumulated disadvantage is that TV stations have extremely slow payment collection and a long cycle. Not only that, due to incomplete marketization, many purchases are not entirely based on products, but involve some gray areas, which also increases many costs for production companies." Peng Kan said bluntly.

According to insiders at Guangguang, Wang Changtian, the company's chairman , has always stressed the principle of "not taking backdoors," which may have had an impact on Guangguang's TV products to a certain extent. However, it is also because of this that Guangguang Media has always remained unscathed in the anti-corruption storm within the radio and television system that was launched at the end of 2014, and has not been implicated.

The Conservatives’ Exit

In addition to the universal problems brought about by the industry's ills, Guangguang Media's own conservative investment philosophy for television products may also be the driving force behind its missed development opportunities and declining fate.

Looking back at Guangguang Media's TV history, we can find that Guangguang started out with "China Entertainment Report" (now renamed "Entertainment Live") and became the leading domestic variety show production company. At that time, Guangguang used small-scale entertainment reports to exchange for some TV stations' non-prime time advertising space at low prices or even for free, thereby operating and making a lot of money.

However, with the popularity of reality shows in recent years, a large number of high-quality phenomenal works have emerged. Behind the explosion of ratings, these shows have a common feature, that is, they spend a lot of money on production costs.

This is completely different from the investment style of Enlight Media. Peng Kan believes that Enlight Media's investment style has always been "small for big", which is not only reflected in television but also in movies. Fortunately, the youth movies that Wang Changtian bet on (such as "Youth" and "Chinese Partners") have achieved huge box office returns, but unfortunately, the success in the film field cannot be directly replicated in the television field.

"Cost control runs in the genes of Guangguang Media, and the idea of ​​seeking development through steady progress is deeply rooted in the company. Therefore, in an era where TV variety shows that rely on large productions, large investments, high costs and high returns are popular, Guangguang Media's TV strategy seems somewhat out of date."

In fact, Guangguang also began to try to transform into producing "variety blockbusters" in 2011, such as "Passionate Singing" on Liaoning TV, "Dream Choir", "Dream Star Partner", "Super Fat Loss King", "China is Listening" on CCTV, etc. However, Guangguang's approach in these collaborations is still slightly conservative, mostly operating in the form of collecting production fees. In order to obtain more profits nowadays, more and more production companies must accept the ratings betting agreements of TV stations. In these decisions, Guangguang chose to be conservative.

The TV program "China is Listening" operated by him may be the last straw that broke the camel's back for Guangguang TV. It is reported that the program cost tens of millions of yuan, but after it was launched at the end of 2014, the ratings were mediocre, far from the phenomenal effect of variety shows of the same level.

"The industry knows that in the early days, Guangguang Media was traditionally good at entertainment information and studio programs, but now the mainstream trend of TV programs is outdoor reality shows. Guangguang Media has not grasped the changes in these trends very accurately," said Peng Kan.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.