Paramount Loses China's Huahua Media Financing Deal

Jim Gianopulos - Getty - H 2017
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The partnership would have financed 25 percent of the studio's film slate through 2019.

Paramount Pictures and Huahua Media have agreed to end their slate financing agreement, which would have financed 25 percent of the studio's film slate through 2019. The studio points to "changes to Chinese foreign investment policies" as the reason for the dissolution of the agreement.

Paramount first announced the three-year slate financing agreement, valued at $1 billion, with China's Huahua and Shanghai Film Group in January. The pact, which reportedly would have helped with the production of 15 to 17 releases per year, was made under the purview of then-chairman and CEO Brad Grey.

When Grey stepped down at Paramount in February, there was question as to what would happen with the financing agreement. (Grey died of cancer in May.) In March, former 20th Century Fox Film chairman Jim Gianopulos was announced as Grey's replacement. Gianopulos soon traveled to China with executives from Paramount parent company Viacom to help shore up the deal, which never came to fruition. Viacom CFO Wade Davis made several subsequent visits.

At an investor conference in early September, Gianopulos said that Viacom and Paramount were still waiting for their first payment. “The Chinese government has imposed a number of different regulatory hurdles in terms of investment by Chinese companies in sectors, particularly entertainment,” he said. “Part of it got caught up in that. So we haven’t received the money we are entitled to under the deal.”

Paramount says it plans on filling the gap left by Huahua with partners including David Elison's Skydance Media, Hasbro and SEGA, which the studio says will cover financing for its 2018 and 2019 event films. Last week, the studio announced a five-year deal with Hasbro’s Allspark Pictures and Allspark Animation for live-action and animated films. Gianopulos will also look for financiers on a film-by-film basis.

“The actions we are announcing today establish a financing model that is better aligned to Paramount's new strategic approach to film production," Gianopulos said Tuesday in a statement. "Our focus on a more balanced slate — a mix of big, broad-audience films and more targeted and co-branded films made with greater fiscal discipline — demands a more flexible and tailored financing model going forward. This structure positions us to capture more upside beyond 2019 as the new slate takes full effect.”

Paramount and Huahua struck marketing partnerships on a number of the studio's biggest blockbusters, including Transformers: Age of Extinction, Star Trek Beyond and Mission: Impossible – Rogue Nation.