Edited by Tianfeng Securities: "interpretation of Film Bureau documents: the tone of encouraging prosperity and development exceeds expectations, and the specific effect depends on implementation."

On December 11, the State Film Administration issued the "opinions on speeding up the Construction of Cinemas and promoting the Prosperity and Development of the Film Market" to the film departments in charge of the provinces, autonomous regions and municipalities directly under the Central Government and the cinema line companies.

1. Sort out the main points of the document

Tianfeng Securities combs that the "opinion" has been put forward.Four major goals：

1) encourage enterprises to actively invest in the construction of cinemas. By 2020, the total number of cinemas joining the urban cinema chain will reach more than 80,000 screens, but the distribution of cinemas and screens should be more reasonable and better match the level of urbanization and population distribution.

2) encourage cinemas in large and medium-sized cities to upgrade their projection environment, equipment and facilities so as to improve their projection quality and comfort.

3) the number of urban cinemas at the county level is growing steadily, and the number of township cinemas joining the urban cinema chain in qualified areas is growing rapidly.

4) deepen the reform of cinema line system, encourage mergers and acquisitions of cinema line companies to form large-scale backbone cinema lines, and at the same time speed up the development of characteristic cinema lines to form differentiation advantages.

还Relevant subsidies will be given to some policies.：

1) subsidize cinemas to install giant screen systems, laser projectors and other advanced technology and equipment through the national special funds for film development, the amount of funding shall not exceed 20% of the equipment purchase expenditure, and each cinema shall not exceed 500000 yuan

2) subsidize the construction (renovation and expansion) of cinemas in county towns (county-level cities) in the central and western regions, with a subsidy of no more than 300000 yuan for each new cinema and no more than 200000 yuan for each cinema. The operation and development of county-level urban cinemas located in "concentrated areas with special difficulties" will be subsidized by 10 to 150000 yuan per family.

3) subsidize township cinemas that are newly built, renovated, expanded and joined the urban cinema chain, each of which shall not exceed 300000 yuan.

At the same timeDeepen the reform of cinema departments：

1) encourage the development of cinema line companies, and companies that meet the relevant conditions may apply for the establishment of cinema line companies, including: the number of holding cinemas is not less than 50 or the number of screens is not less than 300, and the total box office revenue of the holding cinema in the previous year is not less than 500 million yuan, etc.

2) encourage mergers and acquisitions of cinema companies to promote the large-scale and intensive development of cinema chains.

3) implement the annual inspection system of cinema lines and improve the reward and punishment mechanism and withdrawal mechanism of cinema lines.

Speed up the development of characteristic cinema chains:

We will develop characteristic cinema lines such as the people's cinema line, the art film projection alliance and the campus cinema line.

2. Event comment

Tianfeng Securities believes that the document reflects the country's overall affirmation and encouragement of the film industry.Encourage the sinking of channels, which is expected to have a limited impact on the pattern of existing urban cinemas.. The "opinion" mainly supports the construction and renovation of county-level cinemas in the central and western regions, so as to make the distribution of cinemas and screens more reasonable, and better match the level of urbanization and population distribution.

Tianfeng Securities believes that on the face of it, the market may be worried about the increase in supply brought about by policy support, but it is particularly noted in the document that the supported county towns and township cinemas in the central and western regions have not been the core of market competition for a long time, and the latter two may have greater social benefits than market benefits.

"opinions" alsoEncourage the development of cinema companies, encourage mergers and acquisitions, and long-term benefit the leaders of cinemas with strong operational capacity. Companies that meet the relevant conditions can apply for the establishment of cinema line companies, and in similar or neighboring areas, there may be film projects to jointly set up new cinema lines in the short term; at the same time, the "opinion" also points out that the annual inspection system of cinema lines should be implemented. implement market withdrawal for cinema companies with long-term poor management and weak operation. This measure will still accelerate market clearing and concentration in the long run.

In addition, the "opinion" also proposes to develop characteristic cinema lines such as the people's Cinema Line, the Art Film projection Alliance and the campus cinema line, so as to benefit the main theme content and excellent art films. thisFor state-owned enterprises, such as Chinese films, there are more advantages.。

3. Summary

To sum up, Tianfeng Securities believes that:

1）Overall tone encouragementTo reflect the attitude of the policy to encourage the development and prosperity of films

2) forCinema chains encourage mergers and acquisitionsThis must be the direction of marketization

3) speeding up the construction of channels in the central and western regions and villages and towns is expected to increase the screen audience.Benefit the upstream content side, especially the related companies with the production ability of theme content and artistic content.；

4) follow-up attention support, especiallyHow does the subsidy fall to the groundIt is very important to consider the financial capacity of local governments and the details of the handling of state-owned enterprises and private enterprises in specific distribution.

Tianfeng Securities believes that, on the whole, film channel competition has been highly market-oriented, especially in the context of Sino-US negotiations, government subsidies put more emphasis on the expansion of public welfare areas, without changing the general trend of channel concentration; in terms of specific targets, the background of state-owned enterprises [Chinese movies, Shanghai films, Wentou Holdings, Happy Blue Ocean], etc.Logically, it is relatively likely to benefit., the leader of private cinema [Wanda Movie, Hengdian Movie], etc.Expected to benefit from encouraging mergers and acquisitions, as well as possible subsidies。