China blocks Huahua Media-Paramount US$1b funding
BEIJING/SHANGHAI: Viacom Inc’s Paramount Pictures said a US$1 billion (RM4.23 billion) films-funding deal with China’s Huahua Media has been scrapped after the Asian nation tightened foreign investment policies, the latest HollywoodChina tie-up to unravel due to Beijing’s scrutiny.
Under an agreement announced earlier this year, Huahua Media and statelinked Shanghai Film Group were to provide Paramount with a US$1 billion cash investment, giving the United States studio much needed funds for growth.
The investment would have financed 25 per cent of Paramount’s movies in fiscal 2017 through 2019, according to the studio.
But the deal had been rumoured for months to have run into obstacles with Chinese authorities, and in August and September Viacom and Paramount executives confirmed the funds had not been received.
“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 on Tuesday.
China has stepped up scrutiny of what it sees as “irrational overseas spending”, especially in sectors such as entertainment, sports and real estate.
As a result of the crackdown on overseas deals, China’s nonfinancial outbound direct investment fell 41.9 per cent in January-September from a year earlier to US$78.03 billion.
Huahua had partnered with Paramount on several films, including “Transformers: the Age of Extinction” and “Star Trek Beyond”. Shanghai Film Group was an investor in “Jack Reacher: Never Go Back”.
Paramount said the termination of the deal would impact Viacom’s fourth-quarter earnings by US$59 million and that it had secured alternative financing agreements with toymaker Hasbro Inc, Skydance Media and others to finance the production costs for the movies. Reuters