Through these partnerships, Chinese companies are getting two birds with one stone: while on one hand they are quickly learning the tricks of the trade of great film making, these investments also make business sense in terms of return on investment, generate intellectual property rights, and the likes. On the hand, the deal also enables Paramount Pictures to tap the huge potential of the Chinese market.
Viacom Inc’s Paramount Pictures is set to receive a $1 billion investment in cash from two Chinese film companies, Huahua Media and Shanghai Film Group.
The move could provide Paramount Pictures with stability as it attempts further growth.
According to a source who is familiar with the situation at hand, the agreement allows the Chinese companies to finance a combined total of upto 25% of all Paramount’s films for the next three years, with the option to extend it the financing terms to a fourth year.
The deal comes midst a turnaround plan under a new management. Bob Bakish, CEO of Paramount Pictures’ parent company, explained the deal as a form of foot in the door in the Chinese film industry. The partnership could be used as a point of entry for Paramount to produce films in China.
“Certainly Paramount would love to produce films (in China) and we think that should be a win for us,” said Brad Grey CEO of Paramount Pictures.
This agreement marks the first major move by Grey since he has replaced Viacom’s former CEO, Philippe Dauman who tried to sell a 49% stake to the Dalian Wanda Group, a Chinese real estate conglomerate.
“This will give Paramount the wherewithal to build the slate and produce as a major studio should 15-17 movies a year,” said Grey. In the recent past, Paramount Picture’s film production fell to just 8 movies a year.
“You really can’t operate a major studio with that,” said Grey said, in reference to the low film production figures.
Of late, the Chinese have shown increased interest in investing in Hollywood.
In 2016, Dalian Wanda invested $3.5 billion to acquire a controlling stake in Legendary Entertainment, a U.S. film studio. Chinese companies, including Fosun International, have also sunk in money into Studio 8 – a film production company that was started by former Warner Brothers executive, Jeff Robinov.
In the past, on several occasions, Huahua has partnered with Paramount including in movies such as “Star Trek Beyond” and “Transformers: the Age of Extinction”.