After announcing multiple deals with Chinese cinema exhibitors last year, Beverly Hills’ RealD Inc. reported a surprise profit Feb. 1, suggesting there was more than just hype to the overseas agreements.
The company reported net income of $2.8 million (5 cents a share) for the quarter ended Dec. 23 on $47 million in revenue, beating analysts’ average estimate of a $3 million loss (-6 cents) on $42 million in revenue.
The better-than-expected earnings caused shares to pop 16 percent and close at $11.31 the following day on the New York Stock Exchange. Brett Harriss, an analyst who follows the company at Gabelli & Co. in Rye, N.Y., said it all came down to the number of 3-D movies being shown in the country. Among the releases during the quarter were “The Immortals,” a Universal release based on Greek mythology.
“China was particularly strong,” said Harriss, who has a “buy” rating on the stock.
Since China’s box office data is considered unreliable, RealD deviates from its normal 50 cents-a-ticketholder charge to theaters for installing its projection technology. The company instead charges an undisclosed flat fee for every 3-D movie showing in one of its equipped theaters.
The business model seems to be paying off, given the country’s box office growth; proven appetite for 3-D; and construction of theaters, which often are anchor tenants of new shopping centers. China’s State Administration of Radio, Film & TV placed last year’s box office revenue at slightly more than $2 billion, about 29 percent higher than the previous year.
RealD most recently signed with cinema chain Mei Ah Entertainment Group Ltd. of Hong Kong in December. At the time, RealD had 460 screens installed in China, with future commitments to install 1,200 more.
A Hollywood production company has also stepped into China – to duke it out for TV audiences in that country.
Mandt Bros. Productions, known for producing ESPN talk show “Jim Rome Is Burning,” was brought in last month by the Shanghai company that owns the exclusive rights to professional mixed martial arts broadcasts in China.
The deal with Ranik Ultimate Fighting Federation gives Mandt Bros., run by actual siblings Michael and Neil Mandt, creative control on upcoming broadcasts of fights.
As the sport quickly catches on in the world’s most populous country, the Mandts said they’re hoping for 60 million TV viewers for their first Chinese broadcast, a March 24 fight in the southwestern city of Chongqing.
“The viewership will exceed any show we can do here in the U.S.,” said Neil Mandt, who added he and his brother are focused on developing storylines for fighters to get fans hooked on the sport.
After four years of appeals, Ranik obtained Chinese government approval to televise professional mixed martial arts matches in late 2010. The federation aired two fights last year that each brought in more than 20 million viewers.
Ranik also has secured sponsorship deals with the likes of Nike Inc. and is hoping to bring in more sponsorship and step up its broadcast presence by airing six fights this year.
The Mandts will take the tape of fights back to its Hollywood offices, where the footage will be edited and sent back to China for broadcast the following week.
Saban in China
Billionaire Haim Saban’s media and entertainment investment firm, Saban Capital Group Inc., also wants a bigger piece of the action in China.
The firm will open its first Asian office in Hong Kong to take advantage of what Saban sees as a growing opportunity to invest in media and entertainment companies across Asia.
The firm has already invested in Chinese companies such as Taomee Holdings Ltd., a children’s online entertainment company. The firm is best known for its stake in Spanish-language broadcaster Univision Communications Inc.
The Hong Kong office, called Saban Capital Group (Asia), will be led by Sumeet Jaisinghani, who is from the firm’s L.A.’s headquarters.
“The opening of Saban Capital Group (Asia)’s office in Hong Kong is a strong sign of our commitment to the region,” Haim Saban said in a statement.
Staff Reporter Jonathan Polakoff can be reached at firstname.lastname@example.org or at (323)549-5225, ext. 226.
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