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Paramount-China Deal: What's Going Yuan?
By Anita Busch, Nancy Tartaglione
It was a $1 billion, three-year deal from two China companies that was supposed to pump money in the Paramount Pictures coffers. The pair at the center of that deal are Huahua Media and Shanghai Film Group, which has been in business with not only Paramount but producers around Hollywood. As reports fly about the lack of money coming into Paramount so far from the deal, the question is what is actually going on?
We're told that Huahua came into Paramount through Jian-hua "Kenny" Huang's relationship with Rob Moore, the since-ousted vice chairman of the studio. Huang was the middleman who was said to have introduced Moore to his Chinese fiancée. He was involved in lawsuits surrounding the Transformers movies and a scuttled deal to acquire England's Liverpool soccer club and has somewhat of a questionable resume.
With Moore gone, the relationship is not entirely off, however. The CEO of Huahua is Kefei Wang. Although Huang was a facilitator for Wang, the company itself has had a strong relationship with Paramount. Huahua had an investment in other Paramount films including Star Trek Beyond, Jack Reacher: Never Go Back and Allied (the third film it invested in). It was also a marketing partner on the studio's tentpole Transformers: Age Of Extinction, which was the first non-Chinese film to cross the $300 million mark in the Middle Kingdom. (Paramount did not respond to a request for comment today.)
To make matters more complicated in an already murky atmosphere, we hear that a listed company called Oriental Time Media is moving to acquire Huahua and may have been delayed by local scrutiny. We're told this could prevent Huahua from funding the Paramount slate deal. That, however, has not been confirmed.
But getting money out of China right now — where once it flowed — has grown more difficult. Also, as we've seen happen with Dalian Wanda Group with the Dick Clark Productions deal going upside down, the movement of money into the U.S. has been somewhat stifled by the Chinese government. Deadline alluded that this all might happen earlier this year, with the new Donald Trump presidency.
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"Every company in China is having a hard time getting money offshore right now," agreed one China-based film industry executive. "A tightening of controls has definitely happened." Said one Chinese businessman: "China blocked the Overseas Direct Investment RMB conversion into foreign currency for dubious deals across the board."
The Huahua/Shanghai Media deal at the studio, which was announced at the tail end of the run of former Paramount head Brad Grey, was supposed to help Paramount with the release and marketing of its films in China. It was supposed to involve Shanghai United, the country's second-largest distributor, and it was seen as laying down the groundwork for Chinese co-productions. One source surmised that the outgoing executives may be stirring the pot a bit with the China firms.
The two companies are not strangers to the studio. They had both been involved in other films at Paramount including xXx: The Return of Xander Cage which was the first movie under the 2-year deal with an option to extend for 3 years. Ghost In The Shell was next which gets its release on March 31. And next up is Transformers this summer.
According to a high level source with knowledge of the Chinese deal, "The way they do it in China is that they announce the deal, then try to syndicate it out. It's that simple. They won't tell you this, but they couldn't syndicate the deal."
One insider at one of the Chinese companies involved in the deal brushed off any financial problems or issues to Deadline, saying, "We're in the middle of the deal and working through everything and trying different avenues. For us, it's business as usual. We haven't seen any real example of a road bump. We've been dealing with banks and just done everything typically since last year. It doesn't seem to be very clear where the rumors are coming out from. We're just working through the financing as per usual."
That could be welcome news to other films on the Shanghai Film Group/Huahua Media slate deal which includes other Paramount's franchises — Mission: Impossible, Transformers, a new Top Gun and a World War Z sequel that's expected to reunite Brad Pitt with director David Fincher. Stay tuned.
Huahua Media