Hong Kong-based Media Asia is on course for a stockmarket flotation at the end of the year following last week's cash injection from hotels to internet group eSun. The new finance will underwrite expansion of the group's distribution and production operations.
"We wanted a strategic investor, not just a financial one," Media Asia chief Thomas Chung told Screendaily. "With eSun we will jointly develop a portfolio of investments, spanning the bricks and mortar world and the new click economy."
ESun, formerly known as Lai Sun Hotels, is paying $12.8m (HK$100m) for 25% of the company - with 20% coming from existing management and a further 5% made up of new shares. It is also paying a further $2.56m for a 50% stake in Media Asia's Coolala.com internet operation, which delivers multimedia content and operates a bilingual film and entertainment cyberstore. Of the $15.4m total, $10.3m will be in cash, the balance paid in eSun shares. At the agreed price, Media Asia as a whole is valued at $51.3m (Screendaily, July 21).
Chung, who took a controlling interest in Media Asia in 1997, says the eSun investment will also allow him to streamline the share ownership structure, a necessary precursor to the flotation. Following the eSun investment Chung will hold just less than 50%, eSun 25% and superstar actor Jackie Chan a small, but significant, minority. "The move will add to the group and I fully expect it to help our listing value," said Chung. "The synergies will show through very quickly."
For all that Media Asia has major on-line ambitions, the next steps will be to increase film distribution capacity in the Asian region. The company sees Thailand as its next target and expects to open a Bangkok office by the end of the year that will develop into a full service theatrical and video distributor covering new and library content. Also on the cards is expansion of the Taipei theatrical and video operation and development of the Kuala Lumpur beachhead, which was opened in May 1999 and which now has the task of handling the Malaysian release of Korean smash hit Shiri.
With a stable of modernised and big-budget Hong Kong action movies, the company is also keen to build out its DVD releasing operations into a worldwide network. It recently struck a deal with the UK's Medusa and is poised to sign with a Japanese partner. "Only when we have securely built a strong platform in the real world, backed by premium product will we migrate to broadband," said Chung.
Chung added: "Broadband will take us back to a territorial model. With film we are not dealing with generic products. There will still be different languages, different cultures and tastes. Just because Latin America gets cabled up does not mean that everyone will be watching Tempting Heart."
A Los Angeles outpost is also on the cards, but not before the flotation. Set for 2001-2002, Chung sees this as having a dual function; sourcing production resources - script development, post-production capacity and digital production - and possibly video distribution. "Our ambition is to increase budgets and put more on screen. Quality rather than quantity is a formula that seems to works for us."