On the morning of September 19, Tianshen Entertainment (002354.SZ) announced that it would terminate its 192.5 million yuan investment plan in Xiaodu Interactive Entertainment due to policy impact. This means that 5 months after the spin-off and independence, Baidu Video’s 192.5 million yuan financing failed. On April 20 this year, after Baidu Video announced its spin-off and independent development, Tianshen Entertainment announced that it would invest 192.5 million yuan in Baidu Video, accounting for 10% of the shares.

On April 20 this year, Baidu announced that its subsidiary Baidu Video will operate independently and has completed 1 billion yuan in external financing. Investors include domestic film and television media company New Culture (300336.SZ) and SAIF Fund, of which New Culture is the leading investor, accounting for 21.28% of the shares. Hu Hao, the former general manager of Baidu Video Division, serves as the company's CEO. However, so far, industrial and commercial information shows that there are no investors other than "Baidu" in Baidu Video's shareholder list.

The reason why Tianshen Entertainment terminated its investment in Baidu Video was due to policy. Due to the country's policies on the Internet video industry and Tianshen Entertainment's status as a "foreign capital", the investment was blocked.

According to the Tianshen Entertainment announcement, Xiaodu Interactive Entertainment needs to apply for a separate "Information Network Broadcast Audiovisual Program License" (hereinafter referred to as the "License"). According to the "Internet Audiovisual Program Service Management Regulations" and other industry-related policies, the units that can apply for the license do not include companies with foreign investment. The company is a joint stock company jointly owned by Taiwan, Hong Kong, Macao and China, with foreign investment components. Considering that the company will have an impact on Xiaodu Interactive Entertainment’s processing of the above-mentioned certificates, after careful analysis and demonstration and friendly negotiation between the parties to the agreement, it was decided to terminate the investment.

After the investment fell through, it also means that Baidu Video’s first round of financing after its spin-off and independence has not all been received. There is no news yet on whether new investors will be introduced in the future.

However, it is worth noting that a Baidu Video share transfer plan has recently been circulated in the market. This information shows that Baidu Video is seeking a new round of financing. According to the information disclosed in it, Baidu Video made a profit of 45 million yuan last year and is trying to achieve listing within three years. However, the news was not confirmed by Baidu Video. (Li Gen)

Attached is the announcement on the progress of Dalian Tianshen Entertainment Co., Ltd.’s foreign investment:

The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete, and that there are no false records, misleading statements or major omissions.

1. Overview of foreign investment

In April 2016, Dalian Tianshen Entertainment Co., Ltd. (hereinafter referred to as the "Company") entered into an agreement with Beijing Baidu Netcom Technology Co., Ltd. and Beijing Xiaodu Interactive Entertainment Technology Co., Ltd. (hereinafter referred to as "Xiaodu Interactive Entertainment") ) and other investors signed the "Equity Transfer and Capital Increase Agreement". Tianshen Entertainment plans to transfer RMB 326,430 of registered capital held by existing shareholders of Xiaodu Interactive Entertainment for RMB 118,461,538, and subscribe for RMB 204,019 of new registered capital of Xiaodu Interactive Entertainment for RMB 74,038,462. After this investment is completed, the company will hold 10% of the equity of Xiaodu Interactive Entertainment.

For details, please refer to the "Announcement on Proposed Foreign Investment" and "Announcement on Progress of Foreign Investment" disclosed by the company on April 21, 2016 and April 27, 2016 on cninfo.com (Announcement No.: 2016-055, 2016-059).

2. Progress of foreign investment

Currently, Xiaodu Interactive Entertainment needs to apply for a separate "Information Network Broadcast Audiovisual Program License" (hereinafter referred to as the "License"). According to the "Internet Audiovisual Program Service Management Regulations" and other industry-related policies, the units that can apply for the license do not include companies with foreign investment. The company is a joint-stock company jointly owned by Taiwan, Hong Kong, Macao and China, with foreign investment components. Considering that the company will have an impact on Xiaodu Interactive Entertainment’s processing of the above-mentioned certificates, after careful analysis and demonstration and friendly negotiation between the parties to the agreement, it was decided to terminate the investment.

3. Impact of termination of foreign investment agreement on the company

The above-mentioned investment matters have not yet been implemented, and the termination of the agreement will have no significant impact on the company's operating results and financial status.

This is an announcement.

Board of Directors of Dalian Tianshen Entertainment Co., Ltd.