Warner Bros. is set to join the wave of US companies taking up residency in China after it was confirmed that it is in talks to form a joint venture with a state-backed investment fund to produce local language films.
The Time Warner Inc. owned company will branch out from Hollywood and become part of the world’s fastest-growing major film market with the help of a state-backed investment fund focused on the entertainment industry, China Media Capital.
While the deal is still to be finalised, it is understood that it will consist of numerous films annually and is the largest and most expansive of its kind. Warner Bros. is expected to be a minority shareholder in the deal however its executives are expected to play important roles in getting film production off the ground.
Time Warner invested $50 million into China Media Capital two years ago, a partnership that paved the way for the current discussions by Warner Bros. Chief Executive Kevin Tsujihara’s team. Negotiations have been ongoing for months now and while the recent decline in Chinese stocks may hold proceedings up, the delays have been a result of complications in getting government approvals in China.
In terms of the health of the Chinese film industry, the timing and structure of the deal appears ideal for Warner Bros. The Chinese box office is already up 43 per cent in 2015 to $4.3bn and ticket sales for Chinese productions have far outpaced Hollywood’s own films. The decision to produce local language films avoids any unnecessary risks given that local language film grosses have risen 63 per cent to $2.6 bn.
Hollywood has yet to break through the Chinese box office in a big way, with only four of the top ten films in China this year coming from the US; although “Furious 7” grossed $379.1 million and now stands as the most successful movie ever in the country.
