Hollywood's Lionsgate seals reported S$2 billion film financing deal with China's Hunan TV

SHANGHAI (AFP) - United States movie studio Lionsgate has agreed to a Chinese company co-financing its films, it said, in a deal the Hunger Games franchise maker hopes will give it greater access to the key Asian market.

A subsidiary of Hunan TV & Broadcast Intermediary Co, TIK Films, will help fund "qualifying" films for the next three years, Lionsgate said in a statement.

It gave no value, but China's official Xinhua news agency said the agreement was worth US$1.5 billion (S$2.08 billion), describing it as "the biggest overseas deal in China's movie-making history."

It reported late Wednesday that the deal covers "at least 50 Lionsgate films", with the Chinese firm paying 25 per cent of production costs and receiving 25 per cent "of all returns".

Hollywood studios are keen to expand into China's fast-growing cinema market, now the second-largest in the world.

China's box office revenue reached US$4.8 billion last year, making it the first market outside North America to exceed US$4 billion in revenue, according to the Motion Picture Association of America.

"We're delighted to expand our relationship with one of the pre-eminent entertainment brands in China to build our film and television presence in that territory," Lionsgate chief executive officer Jon Feltheimer said in the statement.

TIK Films will have an option to distribute four of the co-financed films annually in China, the statement said, adding that the partners are planning to co-produce films in the Asian country.

The partnership will also extend into theme parks, it said, without giving details.

Investors cheered the news, with Hunan TV and Broadcast shares up 4.51 per cent in Shenzhen trading at midday on Thursday.

Lionsgate has reportedly been shopping for a Chinese partner since last year, holding talks with tycoon Wang Jianlin's Wanda Group and Jack Ma, founder of Chinese e-commerce giant Alibaba, the Wall Street Journal said last December.

Another Chinese company, Huayi Brothers Media Corp, said on Monday it is planning to jointly produce at least 18 films with a US company but gave no name.

US media reports said the partner is STX Entertainment, a film and television studio led by industry veteran Robert Simonds.

In June last year, Chinese conglomerate Fosun International announced it was taking a stake in US media company Studio 8, and in 2012, Wanda Group bought US cinema chain AMC Entertainment for US$2.6 billion.