A Study On The IPO Financing Strategies Of China’s Culture Media Industry

A general survey on the distribution of the developed countries’national industrial structures shows that the culture industry has been developing into one of the pillar industries of the global economy. A typical example is the emerging culture industry (represented by the network information service), which is becoming the new impetus of the global economy. The rule that the international economic development observes is that when the per capita GDP reaches1000to3000U.S. dollars, the Engel’s coefficient will reduce to30%to40%and meanwhile the consumption demand on cultural products quickly increases. In2009when China’s per capita GDP exceeds3000U.S. dollars, the demand for cultural products is in great growth.In order to satisfy the rapid growth of the people’s demand for spiritual and cultural products, China released its first special planning for cultural products, which symbolizes that the culture industry has become the nation’s strategic industry. Later, China’s government released a series of policies concerning the culture industry’s finance, tax and credit financing, which greatly encourage and promote the development of China’s culture industry. The increase in the output value of culture industry and the proportion it occupies in GDP suggest that China’s culture media industry has entered the era of rapid progress. China’s culture industry output value in2010was1,110billion, which was2.78%of the GDP that year. The industry’s output value was more than3,900billion in2011, which saw the first time when the industry’s output value proportion in GDP exceeded3%. And in2012, the total output value of China’s culture industry was more than4,000billion, and its proportion in GDP also increased. If the output value of the culture industry continues to increase at such a speed, the proportion of the increased value of China’s culture industry in GDP will also increase to an estimated5%in2016. At that time, the strategic goal will be realized that the culture industry becomes the pillar industry of China’s national economy.The rising status of the culture industry and the resulting development in culture media industry have made the industry a magnet for the investors in the capital market.Because of the desire for profit and the support from the national policies, IPO financing has become the strategy which is a must in the development of the culture media industry. However, in view of the national and the foreign economic development, the environment for the IPO financing of our nation’s culture industry is not that satisfactory-the global capital market is still in the shadow of the European debt crisis; the power for economic progress is weak; the IPO market has come to a standstill; the trust crisis in U.S. market is especially a heavy blow for China’s listed companies in the overseas market. All these factors influence China’s national capital market. Moreover, due to the new round of reform on the policy of the issuance of new shares, the national IPO market has been in the "window period" since the issuance of Zhejiang Shibao in October,2012, which led to the "barrier lake" situation of A shares. In addition, that the financial audit of the planning listed companies starts at the beginning of2013has sent many companies in China in a dilemma which are waiting to be listed. Based on the above, this study tries to answer the questions which China’s culture media industry needs to consider before their shares are listed-Is IPO model suitable for the culture media industry? Is2013a good time for companies to be listed? Which place should be chosen for the companies to come into the market? How to choose a proper underwriter so as to ensure the company’s successful listing?Based on the characteristics of China’s culture media industry and the features of the industry’s financing, the thesis theoretically concludes that IPO is so far the best solution to the bottleneck of China’s culture media industry development and offers statistics and related analyses concerning the status quo of the IPO financing of China’s culture media industry both at home and abroad. Besides, according to the Institutional Change Theory and Transaction Cost Theory, the thesis introduces the necessity of the IPO financing strategies for China’s culture media industry.The thesis conducts analysis via the combination of theoretical and empirical analyses as well as that of qualitative and quantitative analyses. Based on the samples collected from43culture media companies which came to be listed at home and abroad during1994to2012, the thesis analyzes the IPO financing strategies the companies chose in terms of the place where the companies became listed, the major underwriter the companies chose and the time when the companies were listed, aiming to shed light on the strategies of listing for those culture media companies which are still at a loss. Finally, the thesis follows the logic obtained in the above analysis and continues to analyze the IPO financing of Huayi Brothers Media Corporation, the "top share of entertainment media in China", and tries to get implications which might be the feasible strategies for China’s culture media companies’financing at home and abroad. The implications are as follows. Firstly, the companies should be good at capital operation so as to grow at leaps and bounds. In an era of growing competitions for cultural entertainment enterprise, the successful cases in this industry such as Time Warner, Sony and Universal, which succeeded in becoming the leading companies, are partly due to their expansion in the production scale and the improvement of the industry chain. Secondly, the companies should dare to innovate and create financing models that suit them most. The culture media companies which are in need of a large amount of capital have to actively explore the financing models and channels that suit them before they are listed. This is the pre-condition ensuring the right attitude of the companies when they become listed. Thirdly, the companies should introduce private equity capital and realize the dream of being listed. Because of the quick growth of the culture media industry and the flexibility of its operation, the industry is especially an attraction of the venture investment and the private equity investment, which greatly cancels out the credit difficulties brought by the "asset-light" characteristic of the industry. Fourthly, the companies should adopt a combination of financing strategies so as to maximize the profits. That is to say, when the culture media companies plan to be listed, they should make a optimal combination of the three factors:the location where the companies are to be listed, the choice of the major underwriters, and the time to be listed; because only in this way, the companies can maximize the amount of the capital raised with the lowest costs and thus can prepare a sufficient capital base for their future production and operation.