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China-Hollywood Venture Fizzles; Huayi Brothers Media’s Plan to Fund New Film Studio Hits the Pause Button

China-Hollywood Venture Fizzles

Huayi Brothers Media’s Plan to Fund New Film Studio Hits the Pause Button

BEN FRITZ

June 19, 2014 3:56 p.m. ET

Huayi Brothers Media Corp.’s 300027.SZ +1.29% plan to fund a new Hollywood studio is on hold.

The Chinese entertainment conglomerate announced in March that it intended to invest between $120 million and $150 million in Studio 8, a new company run by former Warner Bros. film chief Jeff Robinov. But those negotiations have fallen apart, people close to the venture said Thursday.

Another knowledgeable person said the Chinese company remains in talks with Mr. Robinov and may still become an investor, though the planned amount and structure of the deal would likely change.

The reasons for the breakup weren’t immediately apparent. Mr. Robinov, who hasn’t publicly commented on his plans, is lining up new financing that he hopes will bring Studio 8 about $250 million in equity and another $250 million to $300 million of debt, one of the people added.

“There are ongoing discussions with multiple parties interested in making significant investments,” said a person close to Studio 8. Studio 8 is expected to finance and produce about five movies a year, at least some of which will be big-budget “event” pictures.

Huayi’s planned investment would have been the largest to date by a Chinese company in American film production. The Beijing-based movie and television company has been seeking a partner in Hollywood for several years.

In 2012, a planned deal between Huayi and Legendary Pictures LLC to produce movies in China also fell apart.

Mr. Robinov, who left Time Warner Inc. TWX +0.12% ‘s Warner Bros. last year after losing an internal competition to become its chief executive, is nearing a deal for his movies to be distributed by Sony Corp.’s 6758.TO +0.18% Sony Pictures Entertainment, said people familiar with the matter. Sony may also invest in some of Mr. Robinov’s productions.

 

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KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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