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Paramount Loses Slate Financing Deal With China’s Huahua Media

Studio cites changes to Chinese government policy

Paramount’s $1 billion slate financing deal with China’s Huahua Media is officially dead, the studio announced Tuesday, citing changes to “Chinese foreign investment policies.”

Huahua would have financed 25 percent of Paramount’s film slate over the next three years. The two companies plan to continue to work together in other ways.

To replace Huahua, Paramount announced that it has secured arrangements with partners including Hasbro Inc., Skydance Media and SEGA, among others, that will finance about 25 percent of the production costs of its film slate for fiscal 2018 and 2019.

“The actions we are announcing today establish a financing model that is better aligned to Paramount’s new strategic approach to film production,” Paramount Chairman and CEO Jim Gianopulos said in a statement. “Our focus on a more balanced slate — a mix of big, broad-audience films and more targeted and co-branded films made with greater fiscal discipline — demands a more flexible and tailored financing model going forward. This structure positions us to capture more upside beyond 2019 as the new slate takes full effect.”

The $1 billion financing deal, which initially involved Huahua Media and Shanghai Film Group, was announced in January when China’s push into Hollywood was at its peak. But after a Wild West period where a firehose of Chinese money was flowing into Hollywood, the Middle Kingdom’s regulators reversed course this year, heavily restricting outbound investment, particularly in the entertainment sector.

That led to deals like Dalian Wanda Group’s would-be $1 billion purchase of Dick Clark Productions falling apart, as TheWrap exclusively reported, and has led several entertainment companies to reevaluate their reliance on Chinese finance partners. China codified its crackdown in August, as two regulatory bodies posted documents outlining the country’s plans to “restrict” dealings in “real estate, hotels, studios, entertainment, sports clubs and other overseas investment.”

Huahua Media, which has been an important marketing partner for Paramount and played an integral role in helping “Transformers: Age of Extinction” gross a then-record $320 million at the Chinese box office in 2014, has had a roller-coaster year itself. Huahua became involved in a joint venture with a distressed lender in March, and was acquired by fellow Chinese firm Oriental Times Media in July for just $41 million.