EXCLUSIVE: Paramount Pictures has made its most significant long-term alliance in China since Viacom chief Shari Redstone nixed a 49% stake sale to Dalian Wanda for $4.9 billion last year. The studio has closed deals with Shanghai Film Group Corp and Beijing-based Huahua Media for those companies to fund 25% or more of the studio’s entire film slate for the next three years, with an option for a fourth.
The deal is worth a potential $1 billion in slate funds, which is retroactive to Par’s fourth-quarter films. It extends a relationship between the studio and Chinese companies that already was growing. The deal also will help Paramount with the release and marketing of its films in China. Shanghai United, the country’s second-largest distributor, will be very involved in assisting Paramount with the dating and distribution of its movies in China going forward. The prospect of a team-up in co-productions of Chinese films also is being eyed.
Paramount was hamstrung by poor picture choices and Dauman’s strategy of stock buybacks at the expense of growing Viacom’s core film and television businesses. That left Paramount unable to buy Marvel or DreamWorks Animation, when it released films for both. Markets share has been lower than most rivals, as annual output of films in some years dipped as low as eight titles. The studio experienced the worst performance of Grey’s 11-year tenure in 2016: While year-end films Fences, Arrival and Silence have been in the awards mix, the expensive pictures Allied and Monster Trucks failed to catch on with audiences.
With the Dauman fiscal constraints gone, Grey is moving as fast as possible to build the studio’s output up to 15-17 films per year. Covering the risk of one-quarter or more of that certainly will help that effort, particularly as a deal with its most reliable co-financier, Skydance, moves toward expiration. Paramount will fill the 15-to 17-film slate with mostly homegrown fare, with some pre-buys and acquisition of a festival film.
The funding level makes it different than the pact Sony signed with Wanda in September that calls for China’s largest exhibition company to take minority stakes in some films; that deal was mostly done to facilitate entry into China for Sony’s tentpole fare.