Lionsgate finalizes deal with China’s Hunan TV

The studio will get as much as $375 million in film financing over the next three years.

China’s Hunan TV & Broadcast Intermediary Co. will give film studio Lionsgate as much as $375 million in production financing over the next three years, the largest investment to date by a Chinese company in Hollywood film.

Under the deal, Hunan would finance a quarter of the $1.5 billion of the studio’s production costs over the next three years, a person familiar with the situation said Thursday. The agreement covers most of the films on Lionsgate’s slate except for the blockbuster “Hunger Games,” “Divergent” and “Twilight” franchises.

A spokesman for Lionsgate declined to comment.

The Santa Monica-based studio and Chinese broadcaster will also will explore opportunities in TV production and format development. Lionsgate will also help distribute Chinese films in other countries.

The agreement was widely expected and comes just two months after talks between the companies were confirmed. Hunan TV, the second-largest broadcaster in China after China Central Television, and Lionsgate are expected to formally announce the deal at a press conference Changsha next Wednesday.

Such partnerships between Chinese and American entertainment companies reflect Beijing’s broader strategy to project so-called soft power by promoting Chinese films and culture around the world.

For their part, Hollywood studios such as Lionsgate have been scrambling to grab a larger slice of the world’s second-largest film market, which has become an increasingly valuable source of revenue.

The world’s most populous nation saw its box-office revenue jump 34% to $4.8 billion last year. The surge helped the industry set a global box-office record in 2014, according to a report released Thursday by the Motion Picture Assn. of America.

Lionsgate has made aggressive moves to expand into China. Last summer, the e-commerce giant Alibaba Group and Lionsgate launched a subscription video-streaming service for mainland China called Lionsgate Entertainment World.

The Hunan TV-Lionsgate pact is just the latest example of Chinese businesses strengthening their ties to Hollywood.

Last year, Shanghai investment company, Fosun International Ltd., made a deal to invest in Studio 8, a film company started by former Warner Bros. Pictures Group President Jeff Robinov.

In 2012, China’s Dalian Wanda Group Co. bought the U.S. theater chain AMC in a deal valued at $2.6 billion.

Wanda Chairman Wang Jianlin made headlines last year when he expressed interest in buying Lionsgate.

Jack Ma, the founder of Alibaba Group, also was said to be considering an investment in Lionsgate during a trip to Hollywood last year.

Shares of Lionsgate rose 83 cents, or 2.6%, to $33.32 on Thursday.