After a decade, cable TV network assets may be pursued again

After the announcement of Hubei Cable TV Network assets borrowing the shell of Wuhan Plastic to go public, the stock price in the secondary market surged significantly. Analysts believe that under the large background of the convergence of the three networks, cable TV network assets may welcome a revaluation of their value. The last time the market was enthusiastic about cable TV networks was still ten years ago during the "IT boom."

Listing of provincial networks has a demonstrative effect. Under the large background of the convergence of the three networks, the cable TV network assets owned by the radio and television industry have once again caught the attention of the market. A senior executive of a western provincial network company revealed to China Securities News that since the beginning of this year, many investment institutions have gone to negotiate for investment opportunities, mainly seeking to participate in shares of provincial network companies. "As far as I know, the already completed provincial network integration companies are all the darlings of many investment institutions."

Liao Xiaotong, vice president of CITIC Guoan who has been working in the cable TV network industry for many years, believes that the reason why provincial networks are favored by investors now is mainly because after the completion of the integration, the provincial networks directly control the users, with clearer profit models and more definite revenue expectations. Prior to this, as one of the earliest "prospectors" in the cable TV industry, CITIC Guoan generally participated in shares of municipal-level cable TV network companies, and currently holds shares in 14 municipal-level cable network companies.

Following the requirement of the State Administration of Radio, Film, and Television to complete the national provincial network integration within the year, many provinces have adopted a model where existing equity from various municipal network companies is shared incrementally. In this way, the shareholders of the previous municipal network companies become shareholders of the newly established provincial network company. If the provincial network company goes public in the future, there will be even greater potential for equity appreciation. In the process of Hubei Provincial Network borrowing the shell to go public, CITIC Guoan ultimately held 12% of the listed company's shares due to previously holding 47% of Wuhan Broadcasting & TV.

According to Wuhan Plastic's additional issuance plan, CITIC Guoan participated in the additional issuance at a price of 10.4 yuan per share with its equity in Wuhan Broadcasting & TV, subscribing to 12% of Wuhan Plastic's shares, with a lock-up period of one year. "Wuhan Plastic's current stock price is over 14 yuan, and it can be cashed out after one year, which should be considered a pretty good investment for CITIC Guoan in the cable TV industry," a market person said. "Securitization of cable network assets can maximize shareholder benefits, but the model of Wuhan Plastic borrowing the shell to go public may not be replicable."