Gehua Cable TV will be the next Wasu Media

On March 7, 2015, the number of shares issued in this non-public offering shall not exceed 220,735,782 shares, and the issuing targets are nine specific targets, namely Beijing Beiguang Media Investment and Development Center, Beijing Broadcasting Corporation, BRICS Silk Road Investment (Shenzhen) Partnership (Limited Partnership), China Film Co., Ltd., BesTV New Media Co., Ltd., CITIC Construction Investment Securities Co., Ltd., CITIC Securities Co., Ltd., Xinhu Zhongbao Co., Ltd., and Jiangxi Radio and Television Network Transmission Co., Ltd., and their respective subscription quantities and amounts are as follows:

Prior to this issuance, the company's total share capital was 1,063,793,491 shares. Based on the issuance of 220,735,782 shares this time, after the completion of this issuance, excluding the conversion of Gehua Cable's existing unconverted convertible bonds, Beijing Radio and Television Media Investment Center will hold 40.00% of the company's shares, and Beijing Radio and Television will indirectly hold 41.32% of the company's shares through Beijing Radio and Television Media Investment Center, Beijing Cable All-Day TV Shopping Co., Ltd. and Beijing Broadcasting Corporation. Beijing Radio and Television Media Investment Center will still be the company's controlling shareholder, and Beijing Radio and Television will still be the company's actual controller. This issuance will not lead to changes in the company's control.

As for the shareholding ratios of several other "outsiders", the results obtained after a simple calculation are as follows: it can be said that the shares they hold are not large, and they have a stronger flavor of strategic investment.

What will the 3.3 billion yuan be used for?

According to the announcement, the total amount of funds raised by the company's non-public offering is no more than RMB 3.3 billion, which will be used for the following projects after deducting the issuance expenses:

Among them, the 1.9 billion yuan high-quality copyright content platform construction project is to accelerate the company's strategic transformation from a single cable TV transmission provider to a full-service integrated service provider, from traditional media to new media, enhance the core competitiveness of the company's high-quality copyright content products, establish differentiated content service features, and expand new media users. It will be used for the integration and purchase of high-quality domestic and foreign content copyrights such as movies, TV series, animation, online dramas, variety shows, and new media short films to support the development of high-definition interactive digital TV platforms, TV theaters, Internet TV, mobile TV and other new media businesses and the distribution of all-media copyrights, provide users with higher quality products and services, and enhance customer experience and loyalty.

According to Gehua, the necessity of this project lies in: 1) In order to cope with the impact brought by the development of new media, the company needs to increase its investment in the copyright of high-quality video content, realize differentiated content service features, expand the user scale and expand value-added services through the construction of high-quality copyright content platforms, and enhance the company's long-term profitability.

2) With the development of various businesses centered on high-definition interactive digital TV new media, the continued rapid growth of the user scale will undoubtedly put forward higher requirements on the quantity and quality of the company's content copyright resources. Therefore, the establishment of a multi-terminal, cross-media high-quality copyright content platform will be of great significance for the company to cope with market competition, consolidate the user market, increase the average consumption value per household, and achieve sustained, healthy and rapid development.

3) In order to consolidate the company's user base and maintain user stickiness, the company needs to increase its resource reserves of high-quality program content in an environment where video copyright costs are constantly increasing and market competition in the same industry is becoming increasingly fierce.

Gehua describes the use of these massive amounts of copyrighted content as "In addition to direct copyright distribution, the cost recovery method for the high-quality copyrighted content platform construction project is to share costs and recover investments through the company's high-definition interactive digital TV platform, TV theaters, Internet TV, mobile TV and other new media businesses." It can be seen that the use of the content is not limited to Gehua's existing cable high-definition interactive platform.

In fact, if we do a simple calculation, Gehua has about 5 million users. Even if we calculate the content investment level per user of video websites, the 1.9 billion yuan will be enough for Gehua to use for more than ten years. This is obviously illogical.

The most likely possibility is that Gehua's "National TV Theater Alliance" will become one of the main channels for content copyrights, which is actually similar to the earlier promotion of cable VOD on-demand by Wasu across the country. The second is the new media business such as Internet TV and mobile TV facing the whole country. There is uncertainty about this. After all, the new media license of Beijing TV is limited to the Beijing area, unless the license can be upgraded to a national license. But strangely, Gehua is very vague about the geographical use of content. The possible reason is to avoid stimulating existing competitors such as Wasu and Tianhua and keep a low profile.

As for the other cloud service platform upgrade and application expansion project, it includes the full media application aggregation cloud service platform upgrade sub-project, Gehua cloud game platform upgrade and application expansion sub-project, and big data analysis system upgrade sub-project. If it is only used by Gehua's own users, there is no place for research, after all, other operators are now building cloud platforms.

In the context of the national cable TV network integration, does Gehua Cable have the ambition to export its business and services to the whole country through the cloud platform? At least from the big data project, it can be seen that there is a possibility. If this is true, then Gehua's story may be even bigger.

The rise of another Wasu Media?

As we all know, Wasu Media's current status is not achieved by relying on the Hangzhou Cable TV Network. Instead, it expanded into the content field at the beginning of cable TV digitization, laid out cable VOD on-demand business, gradually gained the strength of content operation, and became a new media licensee and content operator under the right time, place and people. Today, Wasu Media's media resource library and understanding of content are far beyond ordinary cable TV operators.

More importantly, after obtaining access points to national cable TV, Wasu Media has come up with the idea of ​​"national cable TV network integration". Content drives the network, and the network drives the content. This is the most benign business layout. Whether it is the cloud service industry alliance or the establishment of the Southern Branch of the China Academy of Sciences, Wasu has considered this aspect.

We can see that the market value of Wasu Media is about 45 billion yuan, of which content and new media business account for more than 80%, and cable TV accounts for less than 20%. For comparison, even though the share price of Gehua Cable TV rose from 8 yuan to 20 yuan in one year, its total market value just exceeded 20 billion yuan, which is almost half of Wasu Media.

This shows from another perspective that the market value of Gehua Cable still has huge room for growth, but the prerequisite is to tell a good "story" about content and new media. The operator is doing something similar. From high-definition interactive platforms to obtaining Internet TV and mobile TV licenses, from launching its own "TV theaters" to establishing the "National TV Theater Alliance", these are all about content and new media.

Gehua Cable is obviously no stranger to the "national cable TV network integration" line. From the earliest acquisition of Zhuozhou Cable to the participation in Guizhou Radio and Television Network, and then to the cooperation between Beijing, Tianjin and Hebei, Gehua Cable has its own ideas. Money means appeal, and it can be the leader and call on brothers to follow its lead.

This capital increase and share expansion introduced two major content powerhouses, China Film Group and BesTV, which can be said to be another move by Gehua. Needless to say, China Film Group seems to have a close relationship with Gehua, and has had many ideas on TV screens in the past two years. Gehua is a good partner, especially for TV theaters. As for BesTV, it has long formed a relatively close cooperation with Gehua through DVB+OTT, and this can be regarded as an upgrade of the friendship.

The more interesting one is Wasu Media. Some people say that Wasu Media's competitors in OTT, from BesTV to Future TV, to Mango TV, and then to CNR Galaxy, the market leaders change every year, but Wasu is the only one who will always be the "second place for a thousand years". In fact, the cable industry is no exception. From competing with Shaanxi Radio and Television Network for the "cable leader", to competing with BesTV and Tongzhou for the "DVB+OTT" leader, it finally found that another tough opponent "Gehua Cable" had arrived.

This is the world of martial arts, the best is yet to come!

And Gehua still has enough motivation to do it. This is closely related to the regional politics that has been passed down in China for thousands of years. You see, BesTV in Shanghai is doing well in the country, and the Hunan TV Xiangjun is also invincible in the country. Even Wasu in Hangzhou has come out to grab territory. CATV is not strong enough, and Gehua happens to be a good implementing entity in the capital, so it can be turned into a decent media giant.

The last question is, will Gehua completely get rid of its "cable" identity card and replace it with a "media" title? Who knows!

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.