U.K.'s Pinewood Shepperton, China's Seven Stars Ink Joint Venture Deal
U.K. studio facilities operator Pinewood Shepperton and Chinese media group Seven Stars Media Ltd. on Wednesday unveiled a joint venture that will look to take advantage of opportunities in the fast-growing Chinese market.
The venture, dubbed "Song Lin," which translates to "Pinewood" in Chinese, will assess "a number of business proposals in the growing entertainment market in China," the partners said.
While financial details weren't disclosed, Pinewood, known as the British home of the James Bond franchise, said it would provide its expertise under the arrangement and make a "limited" capital investment.
The venture comes amid a slew of recent collaborations between Hollywood studios and Chinese partners as foreign entertainment companies look to break into China. In 2012, Rupert Murdoch's News Corp. took a 19.9 percent stake in Bona Film Group, China's largest private film concern, which has a vertically integrated business spanning talent management, movie production and exhibition. DreamWorks Animation also announced a partnership last year with Chinese companies China Media Capital, Shanghai Media Group and Shanghai Alliance Investment to establish Oriental DreamWorks, which is investing $3.1 billion in an animation studio, entertainment complex and theme park, called the Dream Center, in Shanghai. The partners plan to co-produce Kung-Fun Panda 3 at the facility.
The upside for Western entertainment companies that manage to get a foothold in China are manifold. In 2012, Chinese box-office revenue grew by 37 percent to reach $2.7 billion, becoming the second largest film market in the world behind North America. Most analysts expect China to become the world's largest movie market in less than a decade.
The deal also is latest proof of Chinese companies' hopes to become bigger players in the global film business -- an ambition that has the Chinese government's explicit support, as the country works to enhance its soft power and cultural influence around the world. Seven Stars’ move follows the ambitious acquisitions made last year by Wanda Group, which purchased the AMC cinema chain in May for $2.6 billion, and Beijing Galloping Horse, which teamed up with India’s Reliance Media Works to buy the ailing Digital Domain for $30.2 million in September.
Seven Stars focuses on content creation and distribution, media services and events. Last April, it announced plans to build Chinawood, a sprawling film hub near the city of Tianjin that was to cost $1.27 billion. Its Seven Stars Movies arm has also invested in Low Life, starring Joaquin Phoenix, Marion Cotillard and Jeremy Renner, and Nicole Kidman's Grace Kelly biopic Grace of Monaco.
Pinewood, which is also about to open a joint venture production facility in Malaysia, says it is the largest provider of film and TV studio space in Europe. Its recent productions have included Skyfall, Maleficent and Les Miserables.
Under the venture agreement, Pinewood and Seven Stars are looking to develop and provide co-production opportunities for film and TV producers, financing and related services for Chinese productions, "a series of film-themed entertainment venues in Shanghai and regionally," film-themed projects in Beijing, Shanghai and Wuhan, as well as film and TV diploma courses to be delivered by U.K. educational institutions.
Chinese co-productions have long been an alluring proposition to Hollywood studios, as they are classified as domestic Chinese productions, rather than foreign imports, meaning they aren't included under the country's strict import quota, and are granted a larger percentage of box-office receipts (as much as 45 percent, rather than 25 percent -- but, of course, these receipts must also be shared with the Chinese partner). But in order to get official government approval as a co-production, the film must also include Chinese casting, settings and storytelling elements.
At the start of April, Paramount announced that it plans to co-produce Transformers 4 with China Movie Channel and Jiaflix Enterprises in the country. The partners are set to unveil a new set of Chinese characters for the franchise at a press conference in Beijing on Thursday.
This follows the Marvel-DMG joint production of Iron Man 3, which feature scenes shot in Beijing, a character played by veteran Chinese actor Wang Xueqi, and a special Chinese cut of the film that will feature more China-set sequences and an appearance by local star Fan Bingbing.
The co-production process isn't without its pitfalls, however. Chinese partner DMG originally claimed Iron Man 3 would be granted official co-production status, but according to the latest reports, the film wasn't extended such approval, and will be classified as an import. How well the film performs in China will nonetheless serve as an interesting test case for the business benefits of extensive Chinese inclusion and domestic marketing.
"The Chinese market for content is the fastest growing in the world, and taking Pinewood’s experience and skills to that market in partnership with such an established and successful local partner is a truly exciting prospect," said Pinewood CEO Ivan Dunleavy. "The partnership with Seven Stars, under [chairman and CEO] Bruno Wu’s direction, represents a strategic step forward for Pinewood's international development. If successful, the joint venture could provide significant opportunities for U.K. film and television producers."
"Together with Pinewood, we have identified a significant number of business opportunities for the short, medium and long term," said Wu. "The joint venture will aim to improve the standard of media production, create co-production opportunities for Chinese producers and export Chinese film and television content overseas. Our local knowledge and scale combined with Pinewood's unique operational skills and international reputation will enable our joint venture to participate in China's content explosion."
Wu also previously announced collaborations with Fast and Furious director Justin Lin, who will make films using the Harvest Seven Stars Media Fund, and Amazing Spider-Man producer Avi Arad, who is developing potential superhero projects based on Chinese mythology with Seven Stars.
Said British Prime Minister David Cameron: "The creative industries are a rapidly growing area of China’s economy and will increasingly provide huge opportunities for U.K. companies competing in the global race. Pinewood is leading the way, taking advantage of China’s thriving entertainment and media sector and building on Britain and China’s growing trade relationship."
Patrick Brzeski contributed to this report.