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Ahead of Chinese president Xi Jingping‘s visit to the United States this week, Warner Bros. announced a major agreement Sunday with China Media Capital (CMC), a giant investment fund backed by the Chinese government, to form a joint venture, Flagship Entertainment Group Limited. The new entity will develop, distribute and produce a slate of Chinese-language films, including global tent poles, for distribution in China and around the world. The first titles from the imprint could be released as soon as 2016.
The announcement clarifies unconfirmed reports from August, which said the two companies had been negotiating for months over a joint venture that would target China’s booming film market, currently number two in the world and on track to surpass North America as the world’s largest in less than three years.
Flagship Entertainment will be owned 51 percent by a consortium of Chinese investors led by CMC, with Hong Kong broadcaster TVB holding 10 percent within the group. Warner Bros. will own the remaining 49 percent. The venture will be headquartered in Hong Kong, with offices in Beijing and Los Angeles. Further financial details were not disclosed.
“Flagship plans to develop, invest in, acquire and produce a wide range of films for distribution throughout China and around the world, utilizing Warner Bros.’ unrivaled global film distribution network,” said the companies in a statement.
Chinese-language films have become an increasingly vital segment of the ballooning Chinese box office. In the face of stiff competition from Hollywood, local Chinese films have pulled in $2.83 billion (18 billion yuan) so far in 2015, 60 percent of total box office in the country. In 2014, Chinese homegrown films accounted for 54.5 percent of the total.
“This creative collaboration between U.S. and China filmmaking partners also allows for the exchange of technical expertise and the development of young Chinese talent for years to come, combining Warner Bros.’ technical and creative knowledge base with CMC and TVB’s access to local talent and market expertise,” said the partners.
“We look forward to working with CMC in this exciting new venture, as we gain additional insight into the Chinese film industry,” said Kevin Tsujihara, chairman and CEO of Warner Bros. “Warner Bros. has a proud legacy of making great movies, and we’re excited to share that expertise with our colleagues in China. The country’s incredibly rich history and culture provide a huge trove of great stories, and we want to help tell those stories for new generations of filmgoers, in China and around the world.”
CMC has invested in such ventures as DreamWorks Animation’s Chinese joint venture. It also acquired 21st Century Fox’s 47 percent stake in Star China TV last year. CMC’s chairman, Ruigang Li, was formerly the CEO of Shanghai Media Group, where he was credited with transforming the regional broadcaster into one of China’s largest media companies.
“CMC has been actively investing and operating throughout the ecosystem around the explosive content market in China and around the world,” said Li. “With the proliferation of platforms available to consumers, premium content is more valuable than ever. This partnership with Hollywood’s most iconic studio will bring Warner Bros.’ deep experience in creative storytelling and unparalleled expertise in producing global titles to China’s film industry. It will also further CMC’s commitment to building a premier platform for making films that resonate with both Chinese and worldwide audiences, helping to enhance the cultural exchange between China and the rest of the world.”
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