Warner seeks deal to make films in China
Studio remains bullish on nation despite stock dive
China’s economy may be stalling, but at least one big Hollywood player remains bullish on the country.
Warner Bros., the studio behind the “Harry Potter” and “Batman” films, is in talks to produce local language movies in China through a joint venture with China Media Capital, a state- backed investment fund, said a person familiar with the talks who asked not to be identified because the discussions were confidential.
Although other studios have signed deals to produce local language movies and TV shows in China, the proposed Warner Bros. joint venture is among the most ambitious to date for a Hollywood studio. Warner Bros. has invested $ 50 million in the partnership, according to the person with knowledge of the matter.
A spokesman for Warner Bros., owned by New York media giant Time Warner Inc., declined to comment.
Major studios have been eager to expand in China to capitalize on the rapid growth of the country’s box office, which is up more than 40% this year and is expected to surpass that of the U. S. in a few years.
Much of the growth has been driv- en by Hollywood blockbusters such as “Jurassic World” and “Furious 7.” Locally produced movies such as this summer’s hybrid animation- live action film “Monster Hunt” — which set a box- office record for a domestic release with $ 364 million in ticket sales — also have generated big returns in China.
But studios also have been frustrated by a quota system, set to expire in 2017, that limits their box office take. The country allows only 34 foreign films into the country each year under a revenue- sharing agreement. Studios collect only about 25% of ticket sales.
Locally produced films made with Chinese partners are not subject to such quotas and collect 43% of ticket sales.
“China happens to have the biggest local market in the world, and it makes a lot of sense for Hollywood studios to partner with Chinese companies to make films for the Chinese market,” said Lindsay Conner, a partner in the law firm Manatt, Phelps & Phillips. “It’s a huge market and, as quickly as it has grown, it is still very underserved.”
China Media Capital also is a partner in a joint venture with DreamWorks Animation SKG, which operates a studio in Shanghai that is producing “Kung Fu Panda 3” and other movies.
Although studios are eager to capitalize on China’s vast film market, Chinese media companies want to tap Hollywood know- how to produce their own movies that can compete globally. That has led to a f lurry of deal- making on both sides of the Pacific.
In March, China’s Hunan TV closed an agreement to invest $ 375 million in Lionsgate’s movie slate over three years, and Huayi Bros. of Beijing announced that it was investing in a slate of at least 18 films with Robert Simond’s Burbank company STX Entertainment.
And Alibaba Pictures, the film and TV production arm of the Chinese ecommerce giant, in June said it was investing in its first Hollywood film, Paramount Pictures’ “Mission: Impossible — Rogue Nation.”
The talks between Warner Bros. and China Media Capital were first reported by the Wall Street Journal.
It wouldn’t be the first joint venture in China for Warner Bros. In 2004, the studio partnered with China Film Group and studios operator Hengdian Group to form the first Sino- foreign joint venture film company. The partnership, however, didn’t last.