News Corp. to Take Stake in China's Bona Film Group

News Corporation Headquarters - H 2011
Mario Tama/Getty Images

News Corporation Headquarters - H 2011

Amid the country's fast-growing film market, the company becomes the latest entertainment conglomerate to strike a deal in China.

Rupert Murdoch's News Corp. is the latest entertainment conglomerate to strike a deal with a Chinese film company, announcing Monday that it has agreed to buy a 19.9 percent stake in Bona Film Group.

The agreement will help the Chinese film producer and distributor reach a more global audience with its films. Meanwhile, News Corp. gets a chance to play a bigger role in a fast-growing market.

Bona said News Corp. is acquiring the stake directly from its founder, chairman and CEO Dong Yu. Financial details weren't disclosed.

"One of Bona's unique advantages is its vertically-integrated business model, which differentiates the company from other film distributors in China," said Jack Gao, senior vp, News Corp. and CEO, News Corp. China Investments. "China's film market is growing at a rapid pace, positioning the country to be the second largest film market following the United States, and Bona's market leadership, compelling value proposition and tremendous growth potential make this an attractive opportunity for News Corporation."

Said Yu: "As one of the leading film distributors in China, we are committed to bringing the best quality Chinese films to broad audiences around the world. News Corporation's extensive global reach, investment and distribution will help accelerate our strategy to expand our global footprint."

Separately, Yu has agreed to acquire 1 million shares of Bona stock from SIG China Investments, the same amount from  Matrix Partners China Funds and 1.5 million shares from the Sequoia Funds. Those deals came at an average price of $11.40 per share, or a total of $39.9 million. His overall stake in Bona will decline to 27 percent after all the transactions.

"Since our IPO in 2010, we have developed our business significantly, and we believe now is the time to diversify our ownership structure by introducing select strategic investors," said Yu. "This is an exciting period of growth for China's film industry, and we look forward to exploring the international commercial opportunities for Chinese films with our new partner."

Bona produces movies across genres and owns and operates 13 movie theaters. I also manages a range of Chinese artists.