Time Warner Forms Partnership With Chinese Investment Fund6 Jun, 2013 By: Erik Gruenwedel
Pact seeks to explore media and entertainment opportunities in the communist country, which happens to have a huge appetite for American movies
Time Warner June 6 said it has entered into a partnership with China Media Capital (CMC), one of the country’s top investment funds focused on media and entertainment.
The goal of the partnership — which links Warner Bros., HBO and Turner Broadcasting to a major investment source — is to capitalize on China’s rapidly expanding media sector as digital devices proliferate and China’s demand for American content across multiple platforms rises.
The Chinese box office in 2012 generated revenue of $2.75 billion, according to the Motion Picture Association of America. That's a significant tally, considering the Beijing government’s tight control on content and the number of Hollywood movies allowed into Chinese theaters — currently about 25 to 30 per year.
With flat packaged media sales and tapped box office in the United States, China’s burgeoning theatrical market and investment dollars represent an attractive option despite the country’s infamous link to movie piracy and DVD black market.
“This partnership with CMC will give us a unique window into one of the world’s largest and fastest growing media and entertainment markets,” Time Warner Chairman and CEO Jeff Bewkes said in a statement. “Increasing our global presence is one of Time Warner’s strategic priorities and China is one of the most attractive territories in which we operate, but it is complex.”
Hollywood studios are so eager to get their movies into Chinese theaters, physical and online distribution channels, they will put up with government censorship and related demands to enter the market, Los Angeles Times reporter John Horn told National Public Radio.
Horn cited an ongoing reality TV show in China to find assorted extras to appear in Michael Bay’s upcoming Transformers 4, which Paramount Pictures is filming in China and has partnered with several companies in the country to distribute in secondary markets.
"Would Michael Bay prefer not to have to go through that kind of ritual for Transformers 4? Absolutely. But if that means that his film will be exhibited in China and that it will make tens, if not maybe more than $100 million there, he's probably willing to take that just for the benefit of the revenues it will generate,” Horn said.
Indeed, Chinese box office revenue is projected to reach $4.4 billion in 2013, and with an estimated 45% compound annual growth rate (CAGR) between 2009 and 2013. Animation revenue is projected to reach $7.1 billion in 2013, with a 27% CAGR during the same period, and online video revenue is projected to reach $2 billion in 2013 with a 64% CAGR between 2009 and 2013.
That's good enough for Bewkes.
“This alliance will give all our businesses a savvy and accomplished partner as we strive to bring our leading brands and storytelling to people everywhere, across a wide range of devices,” he said.