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China looks to top the bill in Hollywood productions

By Xie Yu (China Daily) Updated: 2015-04-24 07:19

Other suitors are thought to include e-commerce giant Alibaba Group Holding Ltd and property group Dalian Wanda Group Co Ltd, both of which are well-known to have been shopping around for up-and-coming Hollywood studios.

It had been widely reported in the Chinese media that Alibaba and Wanda had separately initiated talks with Lionsgate that could lead to either acquiring a substantial interest in the studio. A Lionsgate's spokesman declined to comment on the reports.

"As Chinese people spend more on leisure and entertainment, the film business is seen by many Chinese entrepreneurs as a very important channel to further diversify their revenue sources," said Alex Wang, an analyst with Beijing-based iResearch Consulting Group.

The PGA's Dell said: "The major studios in Hollywood are what we call the 'Big Five,' but there are many smaller producers. Lionsgate sits in the middle of the ranking.

"Irrespective of its size, the studio has got a library that keeps generating revenue and stabilizing the financing. What's more, Lionsgate isn't so big that makes it hard for potential suitors to buy into."

Past transactions have shown that Chinese buyers are targeting the smaller players just to whet their appetites.

Last year Fosun International Ltd, for instance, acquired an interest in Jeff Robinov's new film company Studio 8 for $200 million. Insiders said Fosun had beaten Huayi Brothers Media Corp, the country's largest privately owned filmmaker, in landing Robinov's signature.

Huayi, meanwhile, has reportedly closed its own deal with producer Robert Simonds' new movie and TV studio STX Entertainment to finance, produce and release movies. The Los Angeles Times quoted a source as saying that its total investment in STX was around $50 million.

Chinese private equity fund Hony Capital is STX's largest single shareholder after making a major capital injection in the studio in February.

"Chinese people are global. They are shopping, going to school, buying properties all over the world. That's where we come in. We can show them around Hollywood," said Renee Hartmann, a producer from Los Angeles-based Hollyluxe Entertainment.

Hartmann is promoting a movie project featuring the life of Chinese students in the US with a modest budget of $3 million to $5 million, and TV shows focusing on Hollywood Lifestyle in the Hong Kong Film Festival. Nicole Beckett, also from Hollyluxe, said it is on the hunt for investors.

"They can invest in our movie or TV shows and can be investment companies, TV stations, or online media operators like Youku Tudou Inc," she said.

Tough nuts to crack

As US film producers and Chinese investors continue to snuggle up to each other, industry insiders said making money from these potential marriages is harder than many think.

The Chinese market, on the one hand, remains partially closed to foreign films. Just 34 movies produced outside of China are allowed to be screened in the Chinese mainland each year.

Some foreign, particularly US, filmmakers are seeking to circumvent the restriction by seeking Chinese partners to jointly produce movies for the Chinese market.

The latest co-productions include Legendary Entertainment's The Great Wall, the Zhang Yimou-helmed epic starring Matt Damon, which will be the largest film ever shot in China for global distribution.

China became the first market outside of North America in 2014 to see gross box-office revenue exceed $4 billion, according to the Motion Picture Association of America's annual report, hitting $4.8 billion, a staggering 34 percent rise on 2013. In contrast, total box-office receipts were down 5 percent in the North American market.

The momentum has continued into 2015, with China's monthly box-office receipts totaling $650 million in February, surpassing that of the US for the first time, according to The Hollywood Reporter.

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