Chinese firms to invest $1 billion in Paramount Pictures

The Dollar Business Bureau 

Paramount Pictures, one of the 'big six' in Hollywood, has inked a $1 billion investment deal with two Chinese movie enterprises, Shanghai Film Group (SFG) and Huahua Media. 

According to the deal, 25% of all films produced by Paramount in the next three years will be financed by these Chinese film making companies. An extension to the fourth year is also a possibility. 

The deal gives Paramount Pictures an entry point to China's movie screens. Paramount CEO Brad Grey said that the company might also make movies in the country someday. 

The infusion of such large capital will help Paramount regain some of its lost sheen. It can now produce 15-17 movies a year, which a studio as big must, to stay afloat. Under previous leadership, the production of Paramount had fallen to a dismal eight movies a year. 

"You really can't operate a major studio with that," Brad Grey said. 

During the last year, all major Hollywood studios have seen some form of collaboration with the Chinese, including Warner Brothers, Lions Gate Entertainment, Imagine Entertainment, Studio 8 and STX Entertainment. 

These Chinese strategic investments in American content may be more selfish than one might think. Coupled with a slowdown in box-office growth, China is projected to soon overtake US in the number of movie screens, making it the largest in this regard. Apart from financial returns, such investments also feed content to China's growing chain of cinemas. The US film-makers are happy to get access to Chinese audiences in return. 

Another notable venture into Hollywood made by a Chinese media house was the $3.5 billion acquisition of Legendary Entertainment by Dalian Wanda Group in January 2016. Owned by the wealthiest man in China (Wang Jianlin), the Wanda Group has had many such billion dollar associations with Hollywood production houses and cinema chains in the past. The Chinese conglomerate also strives to culturally influence the big-budget movies it finances. So, it would be no surprise if we find the 'Chinese element' in Hollywood productions rising. 

Chinese investments worth $51 billion in the US economy in 2016 reflect more than a 300% increase from 2015. This exponential growth trend may be troubling for the new Trump administration, a staunch condemner of free trade practices. For the continued growth of such cross border investment  between US and China, policies routed in protectionism would be an impediment. 

While Chinese investments in Hollywood become more audacious by the day, the same can't be said for India. India's maiden $325 million investment in Steven Spielberg's DreamWorks Studios by Reliance Big Entertainment in 2008 didn't particularly give mind boggling returns. Attempts continue with recent collaborations such as the one for Bollywood movie ABCD 2 with Disney. Making money in the Hollywood business has got its own hacks after all. The Chinese might have got it all figured out.