While the funding enabled China to projects its ideology onto viewers worldwide, Beijing’s scrutiny on foreign bound investment which it terms as “irrational overseas spending” curtailed the deal.
On Wednesday, in a development that is an outcome of heightened scrutiny by Beijing on foreign investments, Viacom’s Paramount Pictures stated, it has scrapped its $1 billion films-funding deal with China’s Huahua Media.
According to Paramount, the investment would have financed 25% of its movies for fiscal year 2017 through 2019.
According to local grapevine, the deal faced hurdles from Chinese authorities with both Viacom and Paramount Pictures confirming in August and September that they had not received funds for financing movies.
“Paramount Pictures and Huahua Media have mutually agreed to end their slate financing agreement…following recent changes to Chinese foreign investment policies,” said Paramount in a statement.
Huahua Media could not be reached for comment.
In recent months, China has increased its scrutiny over what it sees as “irrational overseas spending” in sectors, including sports, entertainment and real estate.
As a result of the Chinese policies, Dalian Wanda, a Chinese conglomerate, had to scrap a deal to acquire Dick Clark Productions Inc, an American entertainment production, for $1 billion.
Again in June, China’s banking regulators had order a group of lenders to assess their exposure to foreign acquisitions. As a result, a handful of Chinese companies were affected, including Dalian Wanda Group Co, HNA Group, Fosun International Ltd and Anbang Insurance Group.
As a result of the crackdown on its overseas deals, China’s non-financial outbound direct investment (ODI) fell to 41.9% for the period of January to September amounting to $78.03 billion.
Incidentally, Huahua has partnered with Paramount on several films, including “Star Trek Beyond”, “Transformers: the Age of Extinction” and “Jack Reacher: Never Go Back”.
Paramount stated the termination of the deal would impact Viacom’s fourth-quarter earnings by $59 million. It has however secured alternative financing agreements with Hasbro Inc, a toymaker, Skydance Media and others.
Of note, it is not clear whether SFG continues to be involved with Paramount since the latter made no reference to SFG in its statement.
SFG did not respond to requests for comment.