Relativity Media Launches Strategic Partnership in China

Universal Pictures
"Immortals" could be one of Relativity's first films distributed in China under the new deal.

Relativity will also distribute all its movies in China through SkyLand Entertainment.

Relativity Media is joining with China’s Huaxia Film Distribution Co. and SkyLand (Beijing) Film-Television Culture Development to launch a strategic partnership to create the first  joint venture that will handle distribution along with film production and financing in both China and the U.S.

SkyLand, a film and multimedia production, distribution and financing company, which was jointly owned and controlled by Asian private-equity firm SAIF Partners and IDG China Media, the China-focused investment arm of Boston’s International Data Group, is now also owned by Relativity.

SkyLand is also partnered with a China-based renminbi fund to co-invest in local film and television content and production, with a budget equivalent to $100 million. Specific ownership percentages were not provided, although Relativity as a foreign partner would be prohibited from owning an equal or majority stake.

Relativity, SAIF and IDG China plan to develop, produce, acquire and distribute Chinese material with worldwide appeal.

"The very idea of Skyline is to have a fully functioning studio … other studios would be able to walk in and feel like they are operating in the U.S.," said Relativity founder and CEO Ryan Kavanaugh in a telephone conference.

Relativity will distribute all of its future films in China, including ImmortalsHaywireAct of Valor, its Untitled Snow White Project, and The Raven, through SkyLand. Kavanaugh, said that while all those films would be distributed in China by the joint venture's partner Huaxia, they would still pass through Chinese censorship and adhere to its revenue-share quota system of 20 foreign films per year.

"We don't want to deal with the quota system in the future, we want to make global films," Kavanaugh said, specifically co-productions that would be classified as a Chinese production under local distribution rules.

"There will still be censorship, but because our partner is part of that process, they can sit in a room and listen to what [the censors] want and why," Kavanaugh said. Only Huaxia and China Film Group, both of which are state-owned, are authorized to import and distribute foreign films in China.
Kavanaugh drew a line between his company's new venture and a June co-production agreement between Legendary Entertainment and China's Huayi Brothers, stating that the Monday deal included an "unprecedented" distribution component.
He said the deal was worked out with SAIF Partners' managing partner Andy Yan in a 10-hour session in Beijing, after the two spent significant time together at this year's Cannes Film Festival.

SkyLand has functioned as SAIF and IDG's entertainment arm, and most recently co-produced Snow Flower and the Secret Fan, inspired by the novel by Lisa See, directed by Wayne Wang, which was released stateside by Fox Searchlight.

“China is the fastest-growing film market in the world, with over 6,000 screens and over $1.5 billion in box office revenue last year, an increase of over 60% last year alone," Kavanaugh said. "We’re excited to be entering into this booming market with such great partners in SAIF, IDG and our new strategic partnership with Huaxia. Given the substantial platform created by SAIF and IDG in SkyLand, we believe together we can grow a distribution business in China which brings global product to China, and brings Chinese product to the global market.”  

Kavanaugh, Huaxia Film’s executive chairman Guoqin Gu, SAIF's Yan and IDG China Media’s founding partner Hugo Shong announced the initiatives Monday at a press conference in Beijing.

"This partnership will broaden the cooperation platform introducing significant resource for the co-production of future movies while allowing us to build on valuable movie production experiences from overseas," Gu said. "Meanwhile, such partnership will also open the channels for Chinese movies to air globally and offer international audiences a better understanding of Chinese culture.”