Performance Analysis Of Vertical Mergers And Acquisitions In The Film And Television Industry

Competition is becoming more and more intense in the film and television industry.In order to avoid vicious competition,It is more frequently that companies in the film and television media industry choose to implement corporate strategy and enhance the industry status through mergers and acquisitions.my country’s film and television media industry has gone through five stages of development and has become increasingly prosperous.However,affected by the epidemic and industry rectification,the film and television media industry has entered a period of cold winter;The wave of mergers and acquisitions began to fade.The period from 2011 to 2015 was the period of rapid development and peak of my country’s film and television media industry.During this period,not only film and television works,movie attendance and box office,but also the number of mergers and acquisitions also increased rapidly,from one in 2011 to 2016.61 cases,the corresponding M&A amount increased from 320 million yuan in 2011 to 103.768 billion yuan in 2016.The main reason is that due to the rapid development of the film and television industry,the rapid increase in market consumption demand has brought huge profit margins,which has also attracted a large amount of capital into the film and television industry and has spawned more and more mergers and acquisitions.However,since 2016,my country’s film and television media industry has started to decline from its peak,and the corresponding merger and acquisition cases and numbers have also declined.In 2019,there were 26 cases and 80.312 billion yuan.First,the film and television media industry has been dominated by major Internet giants at this time.Segmentation,the market has stabilized,and the frequent mergers and acquisitions have begun to subside.As a wholly-owned subsidiary of Tencent and a giant enterprise in content operation in the media industry,China Literature Limited acquired New Classic Media in 2018,which is a typical case of vertical M&A and strategic M&A.The "ups and downs" financial changes of China Literature Limited after this acquisition have attracted extensive attention in the market.This article will also take the case of China Literature Limited acquired New Classic Media as the research object,and analyze the performance of Chinese media industry companies after mergers and acquisitions,in order to provide experience and reference for future mergers and acquisitions of Chinese media industry companies.First,the research background,significance,content and research methods of this thesis are introduced,the basic concepts and important theoretical foundations are explained,and the literature related to this research is sorted out,including financial performance evaluation,financial performance evaluation of mergers and acquisitions,mergers and acquisitions risks and media.M&A performance of industry companies,etc.Secondly,it analyzes and summarizes the basic situation,operation and motive of merger and acquisition of both parties in this case,as well as the M&A process and results of this case.Then,Du Pont analysis is used to compare and analyze the changes before and after M&A form the perspective of financial indicators,and then analyze the impact of this M&A on financial performance from the perspective of stock price fluctuation,punishment and other nonfinancial indicators.Studies indicate: The M&A motivation of China Literature Limited is to find new business models and performance growth points,extend the IP value chain,build an IP ecosystem,reduce costs,enhance control over the industrial chain,quickly expand and strengthen,consolidate the leading position in the industry etc.Through the analysis of the financial indicators before and after the merger and acquisition of China Literature Limited,it is considered that after the merger and acquisition of New Classic Media,the financial performance of China Literature Limited has declined in the short term,mainly from 2018 to June 2020,but after June 2020,the overall financial performance of New Classic Media has recovered and improved.But,the acquisition did not bring significant improvement to China Literature Group’s financial performance.In terms of China Literature Limited’s expansion of scale and business,the acquisition of New Class Media has indeed expanded China Literature Limited’s scale,extended its business chain,and improved and optimized its business model.China Literature Limited’s should further strengthen the supervision of the upstream and downstream of the industrial chain.Establish a complete IP industry chain operation process system,implement refined management and reasonable cost allocation system for the key nodes of each business process,efficiently use the market resources of both parties to the merger and acquisition,and enhance the smoothness of the upstream and downstream docking processes of the industry chain.Reduce intermediate costs and improve profitability.