(Yicai Global) Nov. 18 -- A recent TV series ‘The Deer and the Cauldron,’ which is a remake of a famous swashbuckling novel of the same name, has received many stinking reviews, making it more difficult for its producer New Classics Media to fulfill its performance commitments per the valuation adjustment mechanism it made when acquired by the country’s largest e-book platformChina Literature, China Securities Journal reported today. The unit has always been an albatross to its parent, falling short of its quotas in 2018 and again last year.

The remake scored only 2.6 out of 10 on China's leading TV drama rating platform Douban as of yesterday. More than 24,600 viewers ranked the drama, with 82 percent giving it a derisory 1, the report said. Based on the novel of the same name by legendary Hong Kong fantasy author Jin Yong, this tale of derring-do has been adapted into a TV series several times before.

Beijing-based New Classics planned to list in 2014, 2015 and 2017, but all these assays came to naught. China Literature, a subsidiary of tech titan Tencent Holdings, bought the firm for up to CNY15.5 billion (USD2.4 billion) in 2018. New Classics pledged at the time to ring up annual net profits of at least CNY500 million (USD76.4 million), CNY700 million and CNY900 million, respectively, from 2018 to this year, with the price Shanghai-based China Literature paid to be deducted in proportion to the shortfall if these targets went unmet.

New Classics logged net profits of CNY324 million and CNY549 million in 2018 and last year, falling short of these performance goals for two straight years, according to China Literature’s financial report. The firm lost CNY97.1 million in the first half, per New Classic’s interim report this year, meaning it must rake in nearly CNY1 billion net profit in the second half to achieve its CNY900 million performance goal.

New Classics’performance will again be sub-par this year, and this will trigger the corresponding deduction, per China Literature’s earlier projections.

China Literature shares [HK: 0772] reported 0.17 percent up at HKD60.55 (USD7.90) in mid afternoon.

Editor: Ben Armour, Xiao Yi