STX Entertainment to Get Financing From China's Tencent
Hong Kong telecom company PCCW also is among a group of investors involved in the new financing round for Bob Simonds' film and TV studio.
Bob Simonds' STX Entertainment is set to receive a fresh round of financing, with a chunk of it coming from China.
Chinese tech giant Tencent and PCCW, a Hong Kong telecom and media company, will join a new group of investors in the Los Angeles-based film and TV studio, a Beijing-based source with knowledge of the situation tells The Hollywood Reporter.
"The transactions are in process and details should be made public soon," the source adds. The U.K.'s Sky New was the first to report a possible deal, which was officially announced Aug. 11. PCCW and Tencent will take equity stakes in STX, which is also receiving new investments from East West Bank's Dominic Ng, who will join STX's board of directors, as well as existing investors TPG Growth, Hony Capital, Gigi Pritzker, Michael Pucker and William Wrigley Jr.
Tencent and PCCW will deepen STX's connections to Asian financing. Beijing-based private equity firm Hony Capital was one of the studio's early investors, and STX has an ongoing 18-film co-financing and distribution agreement with Chinese movie studio Huayi Brothers Media.
Under the new agreement, STX will provide first-run Hollywood content as well as co-creating regionally tailor programming for PCCW to distribute across its television, digital and OTT services in Hong Kong, Southeast Asia and Inia. STX also has a content partnership with Tencent.
Tencent has been on a dealmaking spree this summer. In June, it joined Los Angeles-based Tang Media Partners in the establishment of a new TV production joint venture with IM Global. Days later, it partnered with Hollywood power agency WME-IMG and Sequoia Capital China to create a new China joint venture, WME-IMG China. Near the end of the month, it bought Finnish mobile gaming hitmaker Supercell, developer of Clash of Clans, for $8.6 billion. And the company also is among the Chinese suitors contending for a long-shot minority stake in Paramount Pictures.
The U.S. entertainment companies that have taken investment from Tencent in the past have emphasized the potential strategic upside of having a partner so deeply embedded in the Chinese internet. Tencent runs WeChat, China's most popular chat app and social media network. It also is a leading force in mobile gaming, digital music, online video and internet media.
One of Hong Kong's leading telecom companies, PCCW sells bundled cable, broadband, fixed phone and cellphone services, and also operates its own IPTV and OTT services.
STX has had a mixed run at the box office this year, with commercial successes including Bad Moms ($58.5 million on a production budget of $20 million) and The Boy ($64.2 million) and disappointments such as Matthew McConaughey's Free State of Jones. Upcoming releases include The Edge of Seventeen starring Hailee Steinfeld, Jonás Cuarón's Desierto, horror flick The Bye Bye Man and romantic sci-fi adventure The Space Between Us.
STX will use the new investments, it said, to accelerate its expansion into television, international operations, music and digital.
“We conceived STX for the new media landscape to meet the changing needs of talent, industry partners and audiences. We’ve broken down the traditional silos of the entertainment business to become the best home for stars and creators to tell their stories anywhere and through any format,” Simonds said. “Whether it’s through television, apps, video games, social media, film or any other medium, we’ve created the only company with the infrastructure, reach and industry expertise to incubate, generate and distribute content for all platforms, on a global scale.”
STX’s general counsel Noah Fogelson led the deal on behalf of his company. Kirkland & Ellis LLP acted as legal advisor and The Raine Group LLC acted as financial advisor to STX regarding the investments.
Aug. 11, 1:25 p.m.: Updated to include details from the official announcement.