As Deadline exclusively reported back on October 5, STX Entertainment has allowed its application on the Hong Kong Stock exchange to lapse. Originally the motion picture television entertainment studio was seeking to raise a half billion.
STX blamed rocky market conditions. The Hang Seng Index is down 24% since April, and tech, media and telecommunications stocks have been particularly hard hit amid a changing regulatory environment. Even with the backing of local investors and production partners such as Tencent and Alibaba, the money-losing studio’s IPO may have appeared a risky bet.
If the studio succeeded in being listed, STX would have been the first U.S. entertainment company to appear on the Hong Kong exchange.
“Given that we have a strong balance sheet, we have the benefit of time to wait out the volatility and unpredictability, and accordingly, have allowed our application on the HKEX to lapse,” said STX Chairman and CEO Robert Simonds told the studio’s 150-person staff in a memo.
Even though STX had a lackluster summer with misses such as The Happytime Murders ($40M production cost, over $26M WW to date) and Mile 22 ($50M production cost, $64.7M WW to date), Simonds emphasized what he saw as positive underlying business trends — that the company doubled its revenue across all lines of business, with positive cash flow of $160M-plus on the balance sheet.
Simonds said the company is pursuing other opportunities.
“Through this process we met with and received strong institutional support from investors around the world, who approached us with two very compelling opportunities that we frankly find more attractive and value-creating than listing in Hong Kong,” Simonds wrote, without providing details.
Earlier in the month, Deadline reported that STX was considering a listing on a U.S. stock exchange.
Simonds praised the STX staff for doubling revenues in 2018, making seven out of 10 pics on the slate profitable, landing three scripted TV production commitments and one show on NatGeo worldwide and launching a slate of original VR short films.
Up next for STX is the Jennifer Lopez romantic comedy feature Second Act on Dec. 21 and the Kevin Hart-Bryan Cranston remake of French hit Intouchables, The Upside on Jan. 11. One particular film they’re banking on next year is the animated feature UglyDolls based on the popular toy line, opening May 10. Pic features the voices of Emma Roberts, Nick Jonas, Wanda Sykes, Janelle Monae, Pitbull and Kelly Clarkson. STX’s highest grossing movie YTD was the Amy Schumer romantic comedy I Feel Pretty which made close to $95M WW. It was a Voltage financed movie, but STX handled domestic which made $48.8M.
Reuters broke the news tonight about STX officially allowing its IPO application on the Hong Kong exchange to lapse.