Entertainment Industry

Category: China

AMC Entertainment in talks to sell to China's Wanda Group

AMC IPO

AMC Entertainment, the United States' second-largest movie theater chain, is negotiating a deal to sell all or part of itself to Wanda Group, owner of China's largest theater company, two people familiar with the talks said.

The deal, if concluded, would make Wanda the first Chinese company to establish a major foothold in the North American theatrical business. AMC operates 5,048 screens in 347 theaters in the U.S. and Canada. It would also give AMC access to China's burgeoning market, which is in the midst of a multiplex building boom and was No. 2 at the international box office last year behind Japan, accounting for $2 billion in ticket sales, according to the Motion Picture Assn. of America.

The talks between AMC and Wanda have intensified in recent weeks in the wake of AMC's move to pull the plug on a planned stock offering to raise up to $450 million and use the proceeds to pay down debt, according to sources who asked not to be identified because the negotiations were confidential. Top shareholders in AMC include JPMorgan, Apollo Investment Fund and Bain Capital Investors.

AMC withdrew the offer because of concerns that market conditions weren't ripe for a stock offering, and possibly to position the company for a sale, people close to the transaction said.

A spokesman for AMC declined to comment, as did a representative for Wanda. News of the talks with Wanda was first reported by the New York Times.

Wanda Cinema Line Corp. Limited is the largest cinema chain in China. The parent company, Wanda Group, is a major player in real estate development including department stores and hotels.

The company has been in the news of late because its chairman, Wang Jianlin, is reportedly under investigation for ties to disgraced Chongqing party chief Bo Xilai. Bo was sacked, accused of corruption, and his wife charged with the murder of a British businessman. Wanda's headquarters are in the northeastern city of Dalian, where Bo was once a senior official.

AMC posted a loss of $82.7 million on revenue of $1.93 billion in the 39 weeks ended Dec. 29, 2011, compared to a profit of $36.88 million on revenue of $1.9 billion during the same period in 2010, according a filing with the Securities and Exchange Commission. The company cited higher interest expenses, investment losses in Beverly Hills-based 3-D technology company RealD and costs related to its acquisition of Kerasotes.

In May 2011, AMC closed a deal to acquire 92 theaters and 928 screens from Chicago-based Kerasotes Showplace Theatres, the nation's sixth-largest movie chain.

China has been heavily expanding its own entertainment industry, both to boost the country's global influence or "soft power" and to feed the demands of a surging middle class. Several Hollywood studios have been maneuvering to take advantage of the opportunity to grow business in China.

Burbank-based Walt Disney Co. recently said it would partner with the animation arm of China's Ministry of Culture and China's largest Internet company to help develop China's animation industry. Glendale-based DreamWorks Animation has announced a joint venture with Shanghai Media Group, China's second-largest media company, to build a family entertainment company to produce animated and live action movies and TV shows for the Chinese market. That deal was unveiled in February when Chinese Vice President Xi Jinping visited Los Angeles.

China is also rapidly expanding its theater industry. Although no major U.S. theater chain has expanded into China, Beverly Hills-based Real Inc. also has partnered with Beijing SAGA Luxury Cinema Management Co. to equip the Chinese theater chain with 3-D technology. Imax Corp., the Canadian big-screen theater company, also formed a joint venture with Wanda  to open 75 theaters by 2014.

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Photo: An AMC theater in Burbank. Credit: Ringo H.W. Chiu / For The Times

Seven Stars Entertainment, city of Tianjin launch 'Chinawood'

Beijing-based Seven Stars Entertainment announced the building of "Chinawood," and a partnership with the Chinese government, to open a new "entertainment and media hub" in the world's most populous countryIn another sign of China's growing appetite for the entertainment industry, Beijing-based Seven Stars Entertainment has announced a partnership with the Chinese government to open a new "entertainment and media hub" in the world's most populous country.

Seven Stars Entertainment, a production company owned by media entrepreneur Bruno Wu, and the city of Tianjin said they would invest more than $1.27 billion to build a new entertainment and media complex outside of Beijing. To be called "Chinawood," the facility is to serve as a base for Chinese co-productions with filmmakers from the U.S., European nations and other foreign countries.

The complex is to include a 114,000-square-foot facility, scheduled to open in October, and house a film studio and private equity group controlled by Wu, who said the new center will "dramatically benefit" U.S. production partners. Co-productions are exempt from China's quota system on foreign films allowed into the country.

"With the East Asia film market on course to be worth $10 billion by 2015, of which China will account for 50%, and rapidly catching up to North America, it is crucial, as well as inevitable, that we offer the products and services to facilitate substantial cooperation between the two territories," Wu said in a statement. "This project is a significant step towards closing that gap by providing expertise and facilities in all areas of financing, legal, co-production, distribution, marketing, sales and infrastructure."

-- Richard Verrier

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Photo: Bruno Wu. Credit: Seven Stars Entertainment

 

SEC-China letter sent to all Hollywood studios

BeijingFilmFestival

A letter from the Securities and Exchange Commission was sent to all six major Hollywood studios and DreamWorks Animation probing potential violations of the Foreign Corrupt Practices Act in their dealings with China, knowledgeable people not authorized to speak publicly confirmed.

In earlier reports, it was not clear how many studios had received the letter.

The fact that all did indicates that the SEC is looking into general industry practices and not the actions of any specific company.

Twentieth Century Fox, Paramount Pictures, Sony Pictures, Universal Pictures, Walt Disney Studios, Warner Bros., and DreamWorks Animation all regularly export their movies into the fast-growing Chinese market, which generated more than $2 billion in box-office revenue last year.

Additionally, as members of the Motion Picture Assn. of America, the six majors were supporters of trade negotiations that earlier this year led to China allowing more foreign movies into the country on a revenue-sharing basis and increasing the percentage of box office that the American studios could receive.

Sony co-produced its 2010 film "The Karate Kid" with China Film Group, and Disney is producing "Iron Man 3" in partnership with Beijing firm DMG Entertainment.

DreamWorks Animation is building a new studio in Shanghai along with two state-owned firms. 

People who have been briefed on the content of the letters said they contain a broad array of questions and don't indicate that the SEC is currently focused on a specific element of studios' dealings with China, be it possibly bribes related to the selection of films for import, producing partnerships, or other interactions.

The letters are in most cases being handled by the legal departments of studios' parent companies: Time Warner Inc. for Warner Bros., for instance, and Viacom Inc. for Paramount Pictures.

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Photo: Chinese film director Feng Xiaogang, center, actress Fan Bingbing and Chinese-U.S. singer Wang Leehom arrive for the opening of the Beijing International Film Festival in Beijing on April 23. Credit: How Hwee Young / European Pressphoto Agency.

Studios' dealings in China said to be subject of SEC questions

BeijingFilmFest

The Securities and Exchange Commission has sent letters to at least four major Hollywood studios, including Walt Disney Studios and DreamWorks Animation, over dealings in China, a person familiar with the matter but not authorized to speak publicly confirmed Tuesday.

The letters center on the studios' dealings with China Film Group, the state-run company whose responsibilities include determining which foreign movies get access to a limited number of slots each year for revenue-sharing deals in the red hot Chinese movie market, now the second-largest movie market in the world behind the United States.

The SEC letters were confidential, meaning the studios are not supposed to discuss them publicly or disclose their existence to investors, another knowledgeable person said. Both the SEC and the Motion Picture Assn. of America declined to comment.

China has until recently permitted the import of only 20 foreign movies each year, most from Hollywood, under terms that allowed the studios to collect up to 17.5% of the box-office revenue. In February, China agreed to start letting in an additional 14 foreign movies per year, and increase their box-office revenue share to a maximum of 25%.

Foreign films that don't land one of the quota spots either receive a small fee to play in China -- typically less than $1 million -- or aren't seen in the country at all. As a result, getting into China under the quota can translate into tens of millions of dollars more in revenue.

The SEC letters may be related to the Foreign Corrupt Practices Act, which makes it a violation of U.S. law to make improper payments to foreign officials for business purposes. The letters’ existence was first reported by Reuters.

Despite widespread piracy, China last year generated more than $2 billion in box-office revenue. Among the top performing movies there in the last few years have been “Avatar,” which grossed $207 million, and “Transformers: Dark of the Moon,” which generated $159 million. This year, the current re-release “Titanic 3-D” has taken in $105 million.

The number of Chinese screens doubled in five years to 10,700 at the end of last year, and is expected to rise to 13,000 by the end of 2012, according to the MPAA.

China Film Group's chairman, Han Sanping, recently visited Los Angeles and met with several prominent Hollywood executives, including top officials at Universal and Sony. Han was accompanied in some of the meetings by Dan Mintz, chief executive of Beijing-based DMG Entertainment, a Chinese-American media company involved in film co-productions and distribution in China.

A spokeswoman for DreamWorks Animation declined to comment on the SEC letter. The Glendale studio has had great success in China with movies such as “Kung Fu Panda 2,” which grossed more than $100 million in the country. In February it unveiled plans to build a studio in Shanghai under a joint venture with two state-owned firms.

A spokeswoman for Disney did not respond to a request for comment. The Burbank entertainment giant recently signed a partnership with a Chinese firm to co-finance the super-hero sequel “Iron Man 3” and film part of the movie in the Communist country. Disney is building a $4.4-billion theme park in Shanghai, and has a smaller one already open in Hong Kong.

Spokespeople for other studios, including Warner Bros., Universal Pictures, 20th Century Fox and Sony Pictures, declined to comment.

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Photo: Dancers perform "A Dream in the Forbidden City" during the opening of the Beijing International Film Festival in Beijing on Monday. Credit: How Hwee Young / EPA.

'Titanic' ticket sales in China set $7 million record for Imax

Kate Winslet in "Titanic"

Imax Corp., the big-screen theater company, this week sank its previous box office record in China with the 3-D release of "Titanic."

Since its release April 10, the 3-D version of director James Cameron's 1997 epic drama starring Kate Winslet and Leonardo DiCaprio has grossed an estimated $74 million in overall ticket sales in China -- breaking previous box office records in that country.

That was a windfall for the studio that released the film, 20th Century Fox, and also for Imax, which accounted for a record-breaking $7 million in opening week ticket sales from 64 of its theaters in China, the company said in a statement. (The re-release of "Titanic" has so far produced $210 million in ticket sales globally, with Imax theaters accounting for $15 million.) 

"As the record-breaking results demonstrate, Chinese moviegoers have a huge appetite for 'Titanic 3D,'  Jim Cameron's one-of-a-kind filmmaking, and are passionate about seeing it in the most immersive way,'' said Greg Foster, chairman and president of filmed entertainment for Imax.

The Canadian-based company, which has a large operation in Santa Monica, has been expanding its business in China. Last year, Imax formed a joint venture with China's largest cinema operator, Wanda Cinema Line Corp., to open 75 theaters in 25 locations by 2014.

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Photo: Kate Winslet in "Titanic." Credit: Paramount Pictures

Disney, DMG team up to make 'Iron Man 3' a Chinese co-production

Iron man 2

The Walt Disney Co. and its Marvel Studios subsidiary said Monday that "Iron Man 3" will be a co-production with China, as the Burbank company teamed with DMG Entertainment of Beijing to co-finance and distribute the film.

Robert Downey, Jr., Gwynneth Paltrow and Don Cheadle will return for the third movie in the hit franchise, whose two films grossed more than $1 billion worldwide and $42.8 million between them in China. The third installment of the movie will be directed by Shane Black unlike the first two installments which were directed by Jon Favreau. Filming in the U.S. is to start in May, and in China in late summer; the movie is slated for release in May 2013.

Foreign films co-produced in China have an easier time getting cleared by Chinese censors and do not fall under the country's annual import cap. 

“The popularity of the Marvel franchise globally creates a huge opportunity to deliver fans yet another action packed film,” Stanley Cheung, Disney’s greater China managing director, said in a statement.

DMG and Disney did not reveal how much DMG would invest in the production, nor did they give specifics about what plot elements would be shot in China. Last week, DMG's chief executive Dan Mintz told the Los Angeles Times that the film's budget was $200 million.  A Disney spokeswoman said she had not heard what the budget was to be.

DMG is a 19-year-old private Beijing advertising firm-turned-film producer and aspiring distributor. It is a partnership between two Chinese and Mintz, an American. 

DMG will manage the Chinese production elements of “Iron Man 3’’ and keep the China distribution rights.

“Our collaboration with Disney and Marvel marks a milestone in the global entertainment landscape, as this signifies the first multi-billion dollar franchise to be produced between Hollywood and China,” Mintz said in the statement.

DMG boasts close working ties with the state-run China Film Group, the country’s biggest studio and monopoly importer. DMG helped CFG with the production and marketing of two recent major propaganda films, one made to mark the 60th anniversary of the People’s Republic in 2009 and the other the 90th anniversary of the Chinese Communist Party. Both films were hits but were still out-earned by Hollywood imports.

Last spring at a black-tie party, Mintz emceed the announcement of DMG’s partnership with Endgame Entertainment to make Rian Johnson's film “Looper.” DMG added little-known Chinese actress Xu Qing to the time-travel action film starring Joseph Gordon-Levitt, Bruce Willis and Emily Blunt, which will arrive in U.S. theaters this fall.

In an interview with The Times last week, Mintz said DMG was going to “talk to the whole world but try to infuse Chinese elements.”

The announcement on "Iron Man 3" comes just days after Disney said it would join an initiative with an animation arm of China's Ministry of Culture and China's largest Internet company, Tencent Holdings Ltd., to develop China's animation industry. Disney said it would offer its expertise in areas such as story writing and market research to help develop local Chinese talent.

In the first quarter, China overtook Japan as the world’s second biggest box office market after the U.S. Last year, China's box office posted its 10th consecutive year of double-digit growth to gross $2.08 billion, up 31% from 2010.

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Photo: Gwyneth Paltrow as Pepper Potts and Robert Downey Jr. as billionaire industrialist Tony Stark in the movie "Iron Man 2." Credit: Francois Duhamel / Marvel Entertainment 

China getting its own 'Gossip Girl'

China is getting its own version of Gossip Girl 

China is about to get gossipy.

Warner Bros.' international television unit is teaming up with two Chinese production companies to create a Chinese teen drama series inspired by "Gossip Girl," which airs in the United States on the CW Network. "Gossip Girl," about a group of wealthy back-stabbing Manhattanites, has been a cult hit for the cable channel for the last five years and launched the careers of actresses Blake Lively and Leighton Meester.

Tentatively called "China Girl," the show will be in Mandarin and launch in November on satellite television, with "Gossip Girl" creators Josh Schwartz and Stephanie Savage consulting.

Selling reruns of American movies and television shows to Chinese media outlets is commonplace, however creating new versions of American TV series -- particularly comedies and dramas -- is more unusual. There is a Chinese version of "Ugly Betty," which originated in Colombia and later became a hit on ABC here. Typically though, game shows and reality shows from the U.S. are more likely to be remade for China.

"This is a big event," said Martin Pompadur, a partner of Metan Development Group, a consulting firm that is working with Warner Bros. on the new series. Mei Tian Mei Yu, a Chinese sister company of Metan, is one of the producers of "China Girl," as is Chinese-based H&R Century TV.

"Gossip Girl" is a fairly racy show that doesn't shy away from sexual content. One episode famously saw three characters share the same bed. The Chinese government often has a heavy hand when it comes to content and scripts. 

The scripts for "China Girl" had to be approved in advance by the State Administration of Radio, Film, and Television before production could start.

Among the changes, according to Pompadur, is that unlike the American series that originally focused on high school kids, the characters in the Chinese version will already be in college. The initial production order is for 30 episodes.

For Warner Bros., producing a version of "Gossip Girl" for China is part of its push to boost its production output around the globe. The studio produces versions of its U.S. shows -- including the popular reality series "The Bachelor" -- around the globe as well as licenses the formats to its programs to other producers.

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Photo: The CW's "Gossip Girl." Credit: Giovanni Rufino/CW.

Disney strikes deal to distribute movies to Chinese cable viewers

The Muppets
The Walt Disney Co. has reached an agreement that would bring Pixar Animation Studios' "Cars 2," Disney's "The Muppets" and other approved films to Chinese cable television viewers, broadening the Burbank entertainment giant's access in the world's most populous market.

An executive from You On Demand said Wednesday that it had struck a licensing deal with Disney to rent current films, as well as classic movies such as "The Lion King" or "Mary Poppins," through its recently launched on-demand service in China. These titles also would be part of a planned Netflix-like movie subscription offering that's expected to begin in June.

"Disney films define quality family entertainment and we're thrilled that You On Demand will be their showcase to the world's largest television audience," said You On Demand Chairman and Chief Executive Shane McMahon.

You On Demand operates under an exclusive joint venture with China Home Cinema, the HBO-like arm of China's broadcast movie channel, CCTV-6. You On Demand provides the video-on-demand service that is available to about 3 million viewers through cable operators in the Shandong, Jilin and Zhejiang provinces. 

Over time, McMahon hopes to expand the service's movie offerings and the availability in a cable TV market that already dwarfs that of the U.S., with some 187 million cable households. Warner Bros., with its library of hundreds of titles approved by the Chinese government's censors, was the first to offer its films through You on Demand. Earlier this month, Lionsgate struck a licensing deal to make available such titles as the Oscar-nominated "Hotel Rwanda," the popular "Saw" franchise and older movies like "Dirty Dancing."

You On Demand charges viewers $1 to $3 to rent a movie through their cable provider — a nominal fee that McMahon hopes will be attractive enough to allow You On Demand to compete with inexpensive pirated DVDs that are widely available in China. He said studio executives hope that services like You On Demand will convince Chinese viewers to pay for a convenient, high-quality movie experience. 

One investor, Neil Danics of SPAC Investments, points to an announcement Wednesday from Youku Inc., an Internet-based on-demand service that licenses movies from Warner Bros., Paramount and 20th Century Fox.  Since launching a year ago, Youku said it has processed more than 1 million pay-per-view and subscription orders.

"That tells us the Chinese people do pay for content," said Danics.

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Photo of Walter, the newest Muppet, getting a pep talk from Kermit the Frog in "The Muppets." Credit: Scott Garfield/Disney.

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Indie filmmakers praise China movie deal

Kung Fu Panda 2 China Xi trade agreement

Indie filmmakers gave two big thumbs up to a trade agreement announced late Friday that would allow more U.S. films into China.

The Independent Film & Television Alliance praised the trade deal, saying it would create "unprecedented opportunities" for the U.S. independent film industry.

"For independents, this agreement is momentous,'' said IFTA President-CEO Jean Prewitt. "Our sector has been unable to benefit fully from the existing revenue-sharing import quotas and has had limited avenues through which to distribute. For the first time, through this agreement, there is a promise of creating a commercial foundation that will allow independent producers to participate more fully in the Chinese marketplace."

The agreement announced Friday by the White House would increase the number of foreign films allowed into China under a revenue-sharing agreement by 14, at least for so-called enhanced films that are shown in IMAX or 3-D. The current quota is limited to about 20 foreign films, mostly American. Additionally, the agreement, which stemmed from a longstanding complaint the U.S. filed with the World Trade Organization, also increases the amount of revenue foreign studios can receive under the quota from 13% to 25%.

But the trade deal also gives independent filmmakers, most of whom distribute their movies in China without any revenue sharing, something they've long coveted: the ability to negotiate license deals on commercial terms comparable with other markets. The pact also includes other provisions that are standard practice elsewhere, including audit rights, consultation on market campaigns and the ability to appeal decisions on movies that are rejected for censorship reasons, Prewitt said.

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Photo: DreamWorks' "Kung Fu Panda 2." On Friday, DreamWorks unveiled plans to build a new studio in Shanghai, China. Credit: DreamWorks Animation

 

U.S. and China reach deal to allow more movies into China

Avatar-china-movies

This post has been corrected. See the note at the bottom for details.

Addressing a long-standing concern among major studios, China has agreed to ease restrictions on the number of foreign movies it allows into China and the amount of revenue that studios can collect from box-office ticket sales there.

Under a deal announced Friday by the White House, China has agreed to allow an additional 14 so-called enhanced format foreign films -- those that are in 3-D or in IMAX -- into the country each year.

The current quota limits the number of foreign films allowed into the country under a revenue-sharing agreement to about 20 a year, most of which are U.S. movies. The agreement also increases the amount of revenue that foreign studios collect from movies distributed in China from about 13% to 25% of ticket sales.

The agreement was finalized on Friday in negotiations between Vice President Joe Biden and Chinese Vice President Xi Jinping, who was visiting Los Angeles on a trip to promote more trade between the countries.

Easing China's restrictions on access to its vast market has been a top priority for the Motion Picture Assn. of America and its chief executive, Chris Dodd, who has been working with U.S. trade officials on a compromise with the Chinese government. During his visit to Los Angeles on Friday, Xi met with studio executives, including Walt Disney Co. Chief Executive Bob Iger and DreamWorks Animation Chief Executive Jeffrey Katzenberg, who just announced a deal to build a new animation studio in Shanghai with two state-owned Chinese media companies.

China has faced heavy pressure to comply with a World Trade Organization ruling in 2009. In a decision hailed as a big victory for the U.S. entertainment industry, the WTO ruled that China had violated international trade rules by restricting imports of foreign movies and other media. But China disagreed with the ruling, which stemmed from a complaint the U.S. filed with the world body in 2007.

The rapid growth of the theater industry in China has made the market that much more appealing to studios, which can generate $20 million to $40 million in ticket sales per film, compared with about $1 million a decade ago. Popular movies released in China include the blockbusters “Avatar,” “Alice in Wonderland” and “Harry Potter and the Deathly Hallows.”

The agreement was quickly praised in the movie industry.

"This is a major step forward in spurring the growth of U.S. exports to China," Dodd said in a statement. "It is tremendous news for the millions of American workers and businesses whose jobs depend on the entertainment industry."

Disney's Iger added: "China is one of the most populous countries in the world, and this agreement represents a significant opportunity to provide Chinese audiences increased access to our films."

For the record, 8:00 a.m. Feb.18: An earlier version of this post incorrectly said that Dodd had met with Xi in Los Angeles on Friday. Dodd met Xi at a luncheon in Washington on Tuesday.

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Photo: A poster for the movie "Avatar" at a Beijing cinema on Jan. 21, 2010. Credit: Liu Jin / AFP / Getty Images

 

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