Fosun In Hollywood, ‘Transformers’ Clears China Way
A day after I wrote about a conflict that threatened to delay the premier of the new “Transformers” movie in China, media are reporting the commercial dispute in the matter has been resolved. Meantime, leading Chinese private equity investor Fosun International (HKEx: 656) is also catching the Hollywood fever that has been infecting Chinese media companies lately, announcing a major new investment in a start-up production house led by a former Warner Bros (NYSE: TWX) chief. Both of these stories show that the through train connecting China and Hollywood continues to gain momentum, and even Beijing is getting on board to help solve business disputes that could otherwise cost millions of dollars in lost sales.
Let’s start quickly with the sequel to a story I wrote about yesterday, which had the owner of a Beijing shopping mall trying to delay the China release this week of “Transformers 4: Age of Extinction”. (previous post) The dispute involved disagreement about a product placement deal involving a Beijing shopping mall called Pangu Plaza. Pangu’s owners petitioned the Chinese film regulator for a delay of the movie’s release in China until the matter was resolved.
I wrote yesterday that the dispute was unlikely to derail the film’s China debut because there was too much at stake, including landmark participation in the film by Chinese actors and investors. Sure enough, commercial pressure was almost certainly a major force behind a quick settlement of the matter, which was announced by US studio Paramount, the film’s creator. (English article) There’s no further detail on the settlement, but the quick resolution shows that China won’t let local companies work some of their usual mischief when it comes to blockbuster films that can cost up to hundreds of millions of dollars.
That kind of reassurance, coupled with rapid growth of China’s domestic box office, was almost surely behind Fosun’s newly announced plan to invest an undisclosed sum in Studio 8, the new production house being set up by former Warner Bros president Jeff Robinov. (English article) Fosun’s announcement is long on generalities and short on specifics, but Fosun says it will use its connections to help bring more Chinese elements to Studio 8’s films to boost their appeal in China.
Fosun’s investment comes just 3 months after Huayi Bros (Shenzhen: 300027), one of China’s most successful independent production houses, was reportedly in its own talks to invest $120-$150 million in Studio 8. (previous post) The latest reports are a bit unclear on the fate of the Huayi talks, with some saying that deal is “on hold” while others say it is still moving ahead and will give Huaiyi a larger stake than Fosun in Studio 8.
In an interesting twist, Fosun says in its announcement that it will play a “significant” role in the distribution of Studio 8’s future films in China. Reports when the earlier talks were first disclosed had indicated that Huayi would be the China distributor for Studio 8’s films. Thus Fosun’s announcement could indicate that the original Huayi deal has either collapsed or changed somewhat from earlier discussions.
The latest tie-up shows that Fosun is becoming one of China’s leading overseas investors, with a strong ability to close major deals in a wide variety of sectors. In the media space, Fosun has previously invested in outdoor advertising firm Focus Media and local production house Bona Film (Nasdaq: BONA), and was reportedly in talks last year to buy US giant Forbes Media. Look for more such media tie-ups in the next 2 years by not only Fosun and Huayi, but also a growing number of Chinese media firms aiming to capitalizing on the nation’s booming film market.
Bottom line: The quick settlement of a dispute surrounding the “Transfomers 4” movie in China and a big investment by Fosun highlight the growing cooperation between Chinese investors and Hollywood.
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