The sensitive moment of the music vision

Tencent Science and Technology Fan Xiaodong November 10 Report

One kilometer east of Chaoyang Park Bridge outside the four ring of Beijing city the 17-storey grey building, known as Hongcheng, is about to be renamed The Lego Mansion, which has seen a surge in the number of employees who have worked here over the past year as a result of the expansion of its business, and if it was not a few months before the construction of the replacement building logo was accidentally caught fire, They would have had their own positions of work earlier.

For months, the company has been put at the forefront by rumours of radio and television policy regulation and political background, but wear walk in the Lok View Building Compact office area, but will not feel with the recent external public opinion match the tense atmosphere, the company chairman of the Jia Yue Pavilion stranded overseas delay, it seems not yet in the music as ordinary staff set off too many waves.

"The business is legal and the boss doesn't have much to do with us." "A number of employees of the Lok-Vision network in the Tencent Technology interview expressed a similar view, according to them, the number of their team's staff is still growing."

However, compared to the average staff, the top of the Lego bear more difficult to tell the pressure, the business sector management needs to use better performance to reassure investors and the market worries, the group's PR is tired of dealing with the rumors.

"Some people think that the fate of music is precarious, but outside doubt can not erase the company's growth and staff to pay the effort, everyone is holding their breath to prove themselves." "A music-viewing executive who declined to be named said so to Tencent technology.

People who have worked with Jia Yue Pavilion have a controversial assessment some broke up a lot of complaints, to serve his people are extremely loyal, overall, pull the grassroots team entrepreneurial Jia Yue Pavilion for more than a year to attract more outside talent, the business has established a relatively independent management team, although at the strategic level Jia Yue Pavilion is quite arbitrary, But he has not had much impact on the company's short-term operations far offshore.

According to music insiders said previously, Jia Yue Pavilion is currently in the company's micro-credit group arrangements. The above executives told Tencent Science and technology, in addition to the music network COO Liu, the current Jia Yue Pavilion in the internal comparison of trust music network business group operating president Goofy and other people. In addition to goofy, le-View core executive team also includes music video TV senior vice President Liang, responsible for independent operation of the music film Zhang, music, depending on the cloud, the head of Dr Yeoh Eng-Lei Zhenjian.

But for the media, investors and partners, the mentality of the past few months has experienced roller-coaster ups and downs, it will be difficult to dispel the truth about the prospects for the development of the Lok vision. The investment manager of a long-term tracking music company said to Tencent that the value of the eco-model is not denied, and that it is now watching whether the financial progress and the performance of the quarter were adversely affected.

Lok sees urgent need to 4.5 billion financing

Earnings showed that, as of this September, Lok see holding cash and cash equivalent of 372 million yuan, a reduction of more than 200 million yuan at the beginning of the year, is obviously not enough to support the continuous investment of super TV and other businesses, for the long-term cash flow of music, the most urgent challenge is perhaps to get the early preparation of the 4.5 billion yuan financing.

According to Tencent Science and technology, the investment in a large part of the music and sports are also seeking external investment, and the recent rumors of the financing negotiations has brought trouble.

Le video network issued a notice in August this year, the proposed private equity financing of 4.5 billion yuan, if the financing finally passed, will hit the gem financing records. Among them, Lok see holding will contribute 1 billion yuan, Citic Securities capital of 500 million yuan, blue giant investment 1.5 billion yuan, Ningbo long Yuan capital investment 1 billion yuan, Kim Thai public and investment 500 million yuan.

However, the private issue of the price benchmark 34.7 yuan per share has been higher than the close of the Lok video network before the close of 33.51 yuan per share, at present, Lok View Total market value of 28.2 billion, compared with the early 2014 peak has fallen by 30%.

Throughout the 2014, in order not to dilute the shares under the premise of the financing of the business development of the funds, Jia Yue Pavilion Total pledged holding a total of about 10% of the company's equity stake. September 30, Le Video network issued a notice, Jia Yue Pavilion once again pledged its holdings of 13 million shares, financing for the purchase of music group Beijing headquarters building, and for its control of the Lok see holding company to participate in refinancing matters to raise funds. At present, Jia Yue Pavilion holds the 44.21% shares of Lok Vision Network, has accumulated pledged shares of 289 million shares, accounting for the company's total equity of 34.31%.

Tencent Science and technology according to the music network since 2011 to all relevant bulletin data statistics show that, as of press, the number of Jia Yue Pavilion pledged shares in the first six of the securities companies to master the general share of the total capital shares: Citic Securities 5.49%, the National Open securities 3.86%, Shanxi Securities 3.49%, Ping an securities 3.26%, Qilu Securities 2.69%, National Letter Securities 2.51%.

It is noteworthy that the Jia Yue Pavilion to Citic Securities Total pledged 5.49% shares have been higher than the second largest shareholder of the Jia Yue-Fong 4.28%.

The top five shareholders of the video network (Tencent Science and Technology map)

In addition, by the radio and television policy and political rumors of multiple factors, Lok optic network price is facing downside risks, in addition to financing to provide music to see the development of funds, Jia Yue Pavilion must also prepare the stock pledge to touch the security cordon risk, otherwise it will need to collateral or additional pledged stock.

Whether the business can be pressurized

Over the past few years, the development of the video network is full of unpredictable drama, after the listing of its performance authenticity encountered many questions when the stock price is constantly rising, and just as the eco-mode of music to build momentum, radio and television regulatory and political gossip for its growth prospects cast a shadow.

"There is no government-related help behind the success of the music vision." October 23, the Chairman Jia Yue Pavilion in the acceptance of Tencent Technology interview, the first time to respond to all kinds of rumors.

Prior to this, Tencent technology after several months of investigation confirmed the disclosure, the early one of the important investment in the network of Huijin cubic background complex, its pseudonym Wang Cheng actual control of a Shanxi province, the relatives of the senior officials. The Huijin Cubic was a normal investment and there was no real help in the development of the music vision. Jia Yue Pavilion to Tencent Science and technology to argue.

However, the market and investors are still worried about whether the music and Jia Yue Pavilion can successfully survive the difficult times, depending on the ecological system of the business can withstand the impact of various adverse factors?

From the point of view of revenue and business focus, the music view in a few years time has undergone several major changes. According to Tencent Science and technology of data and information collation analysis, can be divided into three periods.

The first period of 2007 ~2009 years, paid revenue accounted for the main source of revenue, the total revenue of 86%, 72%, 50%; In the second period of 2010 ~2012 years, copyright distribution gradually became the core source of income, advertising revenue increased, the proportion of member paid income to 16% The third period is 2013 to present, from music to see new hardware terminal revenue quickly become the most major revenue, the first half of this year's revenue accounted for 58%, while the copyright distribution and membership revenue combined, can not know the specific individual growth and change, is that advertising revenue has exceeded the sum of both. Refer to the following table:

Le Vision Network 2007-2014 years of business revenue changes statistics (Tencent Science and Technology collation)

Jia Yue Pavilion This year in the continuous strengthening of the Lok see Holding and video network of the integration of several companies, including music as a new, music video network, music and video sports, music video, music and wine industry, music, depending on agriculture, music, as the cloud computing and music overseas business. In the eco-layout of the music, video, music and video film and music as a new field of relatively mature, other businesses are in the initial stage, the overall development of the company's current impact is limited.

The capital market's bullish on household digital consumption is the main reason for the previous stimulus to the rise in share prices. In the music-vision ecological model, both the music and the video are facing the competition of mature competitors, Jia Yue Pavilion is the largest investment in the hardware sector, hoping to establish a vertical ecological model, and envisaged a variety of profit models, including television and box terminal video on-demand, TV-side advertising revenue, the application of market share and so on.

But in the second half of the SARFT on the Internet television issued by the strict regulation of the policy, let Le view ecological model of the prospect of a negative shadow. Sarft stipulates that TV box products may not be set up video site zones, in the Internet television business, video sites may not set up their own content platform, only to broadcast control platform and content platform to provide content, and music as the SARFT has suspended and all the licensing party's cooperation.

"Strict policy supervision in the long run on the development of Lok-vision is positive." "Jia Yue Pavilion earlier in the acceptance of Tencent Technology interview, said to the licensing side, music with genuine content, transmission capabilities and the advantages of the entrance, these advantages and radio and television very complementary."

"Le vision behind the system and technology platform can be opened to the television station and the entire industry, and even the music of the control system can be given to radio and television broadcasting licensing side, so that the global deployment of the CDN system to become the video field and radio and television in the field of the underlying transmission platform." "Jia Yue Pavilion revealed that music and radio are active communication, when the box and TV as soon as possible through the radio and television rectification program, explore the possibility of deep cooperation between the two sides."

But there is not much to choose from, in addition to Sohu, other companies have video business has been binding with the licensing side, Youku Potato has been to the broadcast control platform licensing country, Guangdong province to invest in the latter 16.67% stake; music and CNTV (China Network TV) 's future television relations with the same fire and fire Alibaba has a stake in the number of Chinese media, the popular network is a subsidiary of the Hundred-Vision, Archie Art with the China Radio, Jiangsu Television set up the Galaxy Internet Television Co., Ltd., the southern media and the business depth of peer-music binding; Mango TV is also integrating its own video media and internet TV business.

Le see previously announced that the strategy shares Chongqing radio and television holdings Chongqing Cable, and by the music network and Chongqing cable jointly set up a new subsidiary, from Chongqing Radio and television curve to apply for Internet television related licences. It is noteworthy that SARFT has said that it has ceased to issue a broadcasting platform licence, allowing only the application of a content licence, which means that it will receive up to a maximum of Internet television content licences.

Therefore, whether the content-sharing mode is authorized by radio and television and license, it is very important to set up a feasible business model for the video website in the living room TV terminal. In accordance with the idea of music, video box New C1s in the purchase 6 months after the user will need to pay music video TV version of 290 yuan service fee, le view box C1s in 12 months after the payment of 490 yuan annual service charge, Super TV is similar, in accordance with the music planning, users buy 24 months after 9,802 years of service charge, A new value-added revenue will be generated after a year or two of television sales--if Le sees no way to charge a service fee in the mode allowed by SARFT, it will have a hundreds of millions of-level impact on the potential earnings of the future.

However, in an interview with the media, Jia Yue said that with the rise of TV sales to millions of, the scale effect would be enormous, and the hardware itself would contribute considerable revenue. According to the announcement, the forecast for the first quarter of the video super TV sales of about 200,000 units, according to the New Year's loss in the first quarter of the calculation, the single television now brings about 440 yuan, which is also the urgent need to finance supplementary cash flow is an important reason.

Jia Yue Pavilion finally can completely skim the rumors involved, a great impact on the current capital market confidence, the confidence of the capital market determines Jia's music vision of the imperial ambitions can be successful. Obviously, this is the most sensitive moment since the establishment of Le vision.

Appendix 1: Jia Yue Pavilion Nearly three years of stock pledge statistics:

Statistics on stock Pledge of Jia Yue Pavilion in recent three years

Appendix 2: The development of the business of the eco-system:

(1), music as a new: Le Vision network subsidiary music to the new production of the terminal includes Super TV and box, including TV product line including Max70, x60s, X50air, S50air, S40air, S40airl, the box due to radio and television policy suspended sales. 2014 1-June video Super TV sales volume (including orders) about 700,000 units, set-top box sales (including orders) about 1.25 million units. The first half of the terminal business revenue reached 1.71 billion yuan, but the cost is as high as 1.69 billion yuan, accounted for the total cost of music 68%.

(2), music video network: music video content to film and television dramas mainly, the acquisition of flowers and film, strengthen the upstream content production, self-control and distribution, and increased the sports and animation and other vertical areas of investment. Compared to the market before the traffic in the video network in the past two years has been a significant increase, the bulletin shows that the first half of the 2014 report at the end of the year, Le Visual total station of the daily average of UV 45 million, peak 65 million, daily average PV 220 million times, Peak 270 million times, daily VV2.3 billion, peak 300 million, and at the end of 2009, Le View Day independent access to about 5.8 million users, daily PV about 46 million. However, compared with other major video sites, there is a certain gap between the installation and use of the mobile client, which is also an important reason for the introduction of mobile hardware.

(3), music and video sports: Video network in the vertical integration of the channel industrialization, and Lok see Holdings set up an independent sports culture company, around the tournament operation, content platform, intelligent terminals and value-added services to build a vertical ecological chain based on sports, currently, le See has invested heavily in the NBA, F1, Including the Premier League, 18 regional football leagues and other domestic and foreign top competitions copyright. In addition, Le Vision will also include music, animation, including a number of vertical channels for industrial integration, has tried to live in the music field Online Feng concert, official data, said that the final implementation of more than 75,000 live tickets to buy, according to the 30 yuan ticket calculated to contribute more than 2.2 million income.

(4), music video: Since the completion of 200 million heads of State round financing, Lok-View holding under the Lok-vision Pictures This year to complete the 340 million-yuan B-round financing, the official said the valuation amounted to 4.8 billion yuan. 2013, music video production, the release of the film 9, the box office 1.05 billion yuan, ranked third in private companies. Among them "small time" and "Small time 2 Aoki time" obtains nearly 800 million yuan box office. 2014 music video production, distribution of film 15.

(5), music as the wine industry: Lok See holding its wine industry network wine Network positioning is around the wine industry through the cultivation, cultivation, brewing, processing, circulation, sales, service and derivative products of the entire industrial chain of its own closed-loop operation.

(6), music-depending on agriculture: LOK-Vision Holdings officially announced this year to enter agriculture, the establishment of the Internet eco-Agriculture (Beijing) Co., Ltd., its food electric business platform "Le Life" was launched in August. According to Le View, its agricultural project will follow the industry's consistent vertical integration of the operation of the development of ideas, to create a modern agricultural production and processing, fresh agricultural products electric platform and cold chain logistics system, agricultural brand operation, agricultural products financial investment in one of the agricultural eco-industrial chain.

(7), music, depending on cloud computing: Lok Vision Network and the joint establishment of Lok Vision Cloud Computing Co., Ltd., the main business is the cloud video open platform business, for Third-party websites and registered users to provide video solutions and CDN Business support. Recently, the news that the music will see cloud computing and Microsoft to achieve business cooperation.

(8), Overseas business: Music in July this year to open up outside the mainland overseas business, in China, Hong Kong, Los Angeles, Silicon Valley and other locations set up branches. In October 2014, when the Super TV officially landed in Hong Kong, the official said, le-hong-video pictures of the 200 million-dollar strategic fund in Los Angeles to set up a subsidiary to open up the Hollywood market.