Despite the weaker growth of box-office results in China in 2016, interest in entertainment assets, whether in or out of the country, run high. Within the same week that the Dalian Wanda Group said it would buy the top movie chain in Scandinavia, Orange Sky Golden Harvest was sold for $492.4 million.
Dadi Digital Cinema Corp. purchased Orange Sky Golden Harvest, the country’s second-largest theater chain. The China chain is made up of 76 theaters with 531 screens spread in 36 cities across China. Outside China, Orange Sky operates moviehouses in Taiwan, Singapore and Hong Kong, China Film Insider reported.
Linked To Box Office Slowdown
For its China operations, Orange Sky had box-office sales of $117.4 million, or 808 million yuan from 24.6 million moviegoers. The sale of its China operations apparently is linked to the recent slowdown in ticket sales as Chinese audience stayed away from bad films.
As a result of the weaker box office, Orange Sky dropped its expansion plans in China and proposed investments from Beijing Weiyang and Beijing Qing Zhong Tong Chuang Asset Management. But for DADI Cinema, which operates theaters in second- and third-tier cities in China, the buy-in is a good business decision because it would give the cinema operator screens in first- and second-tier cities.
Dadi Digital’s Numbers
Dadi Digital owns 350 theaters with 1,911 screen in 164 cities as of the end of 2016. Dadi’s box-office sales in that year was $348 million earned from 73.25 million moviegoers. With the acquisition, Dadi would own 426 cinemas with 2.442 screens.
Nan Hai, an investment company listed in Hong Kong, is the parent company of Dadi Digital. In 2016, Alibaba Pictures bought $154 million of Dadi Digital’s convertible bonds and in early January, the Huayi Brothers Media paid $11.5 million to acquire a 4.6 percent stake in Dadi Digital, Variety reported.