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 As part of the agreement, SFG and Huahua Media will finance a
combined 25 percent of all of Paramount's films for the next
three years, with the option to extend to a fourth year, a
source familiar with the situation said.
The deal comes as parent company Viacom focuses on a turnaround
plan under new Chief Executive Officer Bob Bakish.
It also follows a spate of tie-ups between China and U.S.
producers, with Chinese investors increasingly keen to lend
their financial muscle to boost their stake in Hollywood.
U.S. studios such as Warner Bros, Walt Disney Co, Dreamworks,
Lionsgate and STX Entertainment have all made tie-ups with
Chinese firms to fund productions or help boost their presence
in China's fast-growing film market.
Last year, Chinese real estate conglomerate Dalian Wanda Group
spent $3.5 billion to buy a controlling stake in U.S. film
studio Legendary Entertainment, while Paramount worked with
Alibaba Pictures Group Ltd in 2015 to promote "Mission:
Impossible - Rogue Nation" in China.
The studio could now use the latest partnership as an entry
point into China, Paramount CEO Brad Grey told Reuters in an
interview, adding that the studio would someday be interested in
producing films in the country.
"Certainly Paramount would love to produce films (in China) and
we think that should be a win for us," Grey said.
The agreement marks the first major move by Grey since Viacom's
former CEO, Philippe Dauman, tried to sell a 49 percent stake in
the movie studio to Dalian Wanda last year.
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"This will give Paramount the wherewithal to build the slate and
produce, as a major studio should, 15-17 movies a year," Grey said.
Over the past few years, under Dauman, Paramount's production fell
as low as eight films in a given year.
"You really can't operate a major studio with that," Grey said,
referring to the lower figure.
Shanghai Film Group and Huahua Media said in a joint statement with
Paramount that they were keen to deepen their cooperation on film
projects through the deal. Both firms declined to comment further
when contacted by Reuters on Friday.
Huahua has partnered with Paramount on several films, including
"Transformers: the Age of Extinction" and "Star Trek Beyond".
State-linked Shanghai Film Group was an investor in "Jack Reacher:
Never Go Back".
Viacom shares moved higher in Thursday afternoon trading but pared
gains to close at $39.80.
(Reporting by Jessica Toonkel; Additional reporting by Tim Baysinger
and Adam Jourdan; Editing by Bernard Orr and Christopher Cushing)
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