Orange Sky Golden Harvest: A legacy in transition
A storied past and uncertain future
Orange Sky Golden Harvest (OSGH), the company that once dominated East Asia’s film industry and launched the legendary Bruce Lee, is facing turbulent times. The company has issued its fourth profit warning in two years, signaling deepening financial woes. This shift marks a significant departure from its illustrious past, where it played a pivotal role in shaping the cinematic landscape of the region.
From Bruce Lee to cinema chains
OSGH has evolved significantly since its heyday. Moving away from Bruce Lee’s legacy, the company now owns the largest cinema chain in Singapore, along with other chains in Taiwan and Hong Kong. However, this transition has not been without its challenges.
For the first half of the year, management has warned that losses could escalate from HK$25 million ($3.2 million) to as much as HK$100 million. The company attributes these losses to impairment charges and a decline in operating profits. This trend may indicate that the cinema box office is struggling to recover in East Asia’s more mature markets, where OSGH is heavily invested.
Financial struggles and market performance
As of Friday, OSGH’s shares were trading at HK$0.051 each, bringing the company’s market capitalization down to HK$151 million ($19.3 million). This is a stark contrast to its former glory days.
In 1993, during the twilight of Hong Kong’s golden film era and before the territory’s handover to China, Golden Harvest sold its entire film library to a major broadcaster. The following year, the company raised $29 million through an IPO, using the proceeds to build cinema chains across Southeast Asia. This library is now owned by another entity.
Expansion and mergers
Golden Harvest’s expansion was impressive. From Hong Kong, it ventured into Singapore (initially as a joint venture), Malaysia, and Taiwan. In 2004, the company was sold to a mainland Chinese businessman, who merged it with his talent agency to create OSGH.
The decision to build a vast cinema chain in China seemed well-timed, given the rapid growth of the Chinese film industry. The company even operated a pioneering multiplex in Shenzhen. However, consistent profits remained elusive, and the China cinema circuit was sold in 2017 for $575 million.
Strategic moves and setbacks
Since then, OSGH has faced numerous challenges. It fended off a bid for its 50% stake in Singapore’s Golden Village and instead chose to buy out its Singapore partner for $129 million. The company also attempted to re-enter the Chinese market by constructing venues for live entertainment. The first of these venues opened in Suzhou in 2023, during the pandemic. Unfortunately, this segment has been the group’s worst performer, with significant losses.
In March, OSGH had to issue a statement denying rumors of negotiations to sell its cinema chains in Singapore, Hong Kong, or Taiwan. The company clarified that while it continuously evaluates strategic opportunities, there were no current plans to sell any of its businesses.
The road ahead
Despite a 15% growth in revenues as the box office began to recover from the pandemic, OSGH’s losses for 2023 deepened, amounting to HK$90 million ($11.5 million). This situation underscores the ongoing challenges the company faces in navigating a rapidly changing entertainment landscape.
For cinema and TV series enthusiasts, the story of OSGH is a poignant reminder of the industry’s volatility. The company’s journey from a film studio powerhouse to a struggling cinema chain operator highlights the complexities of adapting to new market realities. As the industry continues to evolve, OSGH’s ability to innovate and adapt will be crucial in determining its future trajectory.
Personal reflections
As a lover of cinema and TV series, the story of OSGH resonates deeply. The company’s rich history and its role in shaping the film industry in East Asia are undeniable. However, its current struggles serve as a stark reminder of the challenges that even the most storied institutions can face.
For those interested in exploring the legacy of OSGH, I recommend checking out some of the classic films that helped establish its reputation. These films not only showcase the company’s contributions to the industry but also offer a glimpse into the golden age of Hong Kong cinema.
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In the ever-evolving world of entertainment, staying informed and engaged is key. Whether you’re a fan of classic films or the latest blockbusters, there’s always something new to discover and appreciate.