Chinese state-owned provincial broadcaster Hunan TV is to enter a film and TV production deal with Hollywood mini-studio Lionsgate. Under the deal, Hunan TV will be funding 25% of Lionsgate’s $1.5 billion film and TV production slate, excluding The Hunger Games and Divergent franchises, over a three-year period. In addition, Lionsgate will help Hunan TV to distribute some of their Chinese-language films outside the US market and the two companies will also work on co-productions aimed at the Chinese market.
Chinese companies have been active in seeking investment opportunities in the US entertainment market in recent years. The $375 million Hunan TV deal marks the third major investment by a Chinese company after Wanda Group and Fosun International. Dalian-based Wanda invested $2.6 billion in the acquisition of US exhibitor AMC Entertainment in 2012, while Shanghai-based Fosun invested $200 million in Studio 8 in 2014. Supported by the government, Chinese companies are keen to learn from Hollywood’s advanced skills and techniques. They also want to export their productions and culture worldwide which a Hollywood studio could help them achieve.
On the flip side, the US film and entertainment sector is also looking for opportunities and partners in the Chinese market driven by its rapid growing entertainment market, film industry especially. The majority of film revenues in China come from the cinema. In 2013, Chinese consumers spent $3.7 billion on films, of which 95% can be attributed to box office revenues. Hence, co-production aimed at theatrical release is still a lure to Hollywood studios. DreamWorks is a prime example and who recently opened a joint venture company in Shanghai, Oriental DreamWorks, working on productions mainly aimed at the Chinese market. The deal with Hunan TV is a significant move. Not only based on the money it will invest, but also linked to its role as one of the most influential broadcasters in China. Although Hunan TV is not specialized in film production and distribution, its strong tie with the government and its powerful entertainment influence could provide Lionsgate with a larger overall presence in China.
Lionsgate has a growing interest in China and recently became very active. In 2014, Lionsgate signed a landmark partnership with Chinese e-commerce company Alibaba to launch Lionsgate Entertainment World, an online streaming service in China on Alibaba’s set-top box. It is also an investor in Celestial Tiger Entertainment, a cluster of Asian-focused thematic TV stations managed from Hong Kong.