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 The joint venture, Flagship Entertainment Group Ltd, is being
launched ahead of Chinese President Xi Jinping's official visit
to the United States next week and underscores the growing
influence of Chinese movies around the world.
China's box office takings, set to hit $8.9 billion in 2019 from
$5 billion this year, according to PwC, are fast catching up
with the United States, but global studios have a tough time
keeping on the right side of the censors and getting around a
strict quota system for imported films.
"The subtext is all these studios are looking at how they can
get better access to the China market," said Ben Cavender,
Shanghai-based principal of China Market Research Group, adding
it also opened up channels to Chinese facilities and funding.
Studios such as Paramount Pictures, DreamWorks Animation SKG
Inc, Lions Gate Entertainment Corp and Walt Disney Co have all
hooked up with local groups.
Films that qualify as co-productions and meet various criteria
are exempt from China's current quota of 34 imported films each
year, and have an easier time navigating censorship issues with
notoriously picky industry watchdogs.
"The country's incredibly rich history and culture provide a
huge trove of great stories, and we want to help tell those
stories for new generations of filmgoers, in China and around
the world," Kevin Tsujihara, chairman and chief executive of
Warner Bros, said in a statement announcing the venture.
Warner Bros is part of Time Warner Inc.
THE CHINA ATTRACTION
For Hollywood studios, the allure of the Chinese box office has
become increasingly difficult to resist, which has at times led
to concerns about self-censorship to gain access to the market.
While box office receipts in the United States and Canada
combined fell 5 percent last year to $10.4 billion, box office
receipts in China jumped around a third to $4.8 billion,
according to the Motion Picture Association of America Inc.
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China is on course to set a new record this year with box office
receipts having already overtaken last year's total. Warner and CMC
said the Chinese box office could surpass $10 billion annually in
the next four years.
A boom of online platforms is also driving a home video market for
digital content.
"With the proliferation of platforms available to consumers, premium
content is more valuable than ever," CMC founder and Chairman
Ruigang Li said, adding the deal would mix Warner Bros' storytelling
expertise with CMC's on-the-ground savvy.
Hollywood movies typically top China's box office charts, but local
films are gaining strength. Part-animation "Monster Hunt" recently
toppled Hollywood blockbuster "Furious 7" as the country's
biggest-ever grossing film.
Flagship will be owned 51 percent by CMC and 49 percent by Warner
Bros. Hong Kong broadcaster TVB, as part of the CMC-led consortium,
will have a 10 percent stake in the venture.
The JV plans to develop and produce films for distribution
throughout China and around the world, utilising Warner Bros' global
film distribution network. The first titles could be released as
early as 2016.
Raine Group was a financial adviser to Warner Bros on the deal.
(Reporting by Denny Thomas and Adam Jourdan; Editing by Leslie Adler
and Will Waterman)
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