Paramount in $1 Billion Deal with China’s Shanghai Film, Huahua Media

(Beijing) – Hollywood giant Paramount Pictures has signed a $1 billion film co-production agreement with two Chinese movie companies, marking the latest cross-border tie-up aimed at tapping China’s booming box office.

Money from the Chinese pair, Shanghai Film Group and Huahua Media, will be used to finance all of Paramount’s films over the next three years, industry insiders told Caixin on Friday. As part of the arrangement, Shanghai Film Group and Huahua will set up offices on Paramount’s Hollywood studio lot later this year, the sources said.

Huahua and Shanghai Film declined to comment on Western media reports saying their $1 billion would be used to pay for 25% of all of Paramount’s films over the duration of the agreement.

The deal marks the second major co-production tie-up between one of Hollywood’s six largest studios and Chinese partners in recent months. Last year the aggressive Wanda Group formed a similar long-term co-production tie-up with Sony Pictures, though no specific terms were given.

Last year Paramount was looking to sell a strategic stake in itself to an outside partner, and at one point reportedly was talking about such an investment with Wanda. But those talks ultimately failed when Paramount decided not to sell a stake. The latest agreement provides Paramount with cash by offering a stake in individual movies without selling actual equity in the company.

Wanda has been the most aggressive among a growing field of Chinese movie aspirants, as it seeks to build a global entertainment giant that can someday compete with the likes of the Walt Disney Co. Apart from last year’s Paramount talks and Sony Pictures deal, the company also bought smaller Hollywood studio Legendary Entertainment last year for $3.5 billion, and Dick Clark Productions for nearly $1 billion.

Other Chinese companies that have been active in the U.S. include Alibaba Pictures, the filmed entertainment unit of e-commerce giant Alibaba Group Holding Ltd., as well as leading online search engine Baidu Inc. and online video company LeEco.

Contact reporter Yang Ge (geyang@caixin.com)