CASBAA: China Media Capital to Pay $1.25 Billion in Chinese Soccer Deal

Leading Chinese private equity fund, China Media Capital is poised to snap up a long term deal for rights to the Chinese Super League, the country’s main soccer championship.

The company, which recently partnered with Warner Bros. to launch a Chinese language film production venture, is expected to pay close to US$1.25 billion (RMB8 billion) for rights over a five year period.

The deal is expected to be formally announced Wednesday in Beijing.

CMC chairman, Li Ruigang revealed an outline of the deal Tuesday, while speaking at the Cable & Satellite Broadcasting Association of Asia convention in in Hong Kong.

“It is a really high price, but we are really looking for something that changes behaviour,” Li said.

The company to date has largely focused on film, TV and technology ventures. And the move is by far CMC’s biggest to date in the sports arena, which Li says is one of four key segments that CMC will be backing.

Other Chinese media companies are also rushing to invest in sports businesses and to bid up rights. Wanda last year acquired a stake in Spanish soccer club Atletico Madrid, and this year bought European sports rights and marketing leader Infront. In the last months Wanda announced the purchase of the Ironman triathlon competition.

Li said that the joint venture with Warner and Hong Kong’s TVB to launch Flagship Entertainment will help develop the Chinese film industry. “Box office in China is booming, growing by more than 30%. But we are still lacking experience in story-telling,” said Li. “We want to build a sustainable system to create premium content.”

Flagship will be headquartered in Hong Kong, and will also have offices in Beijing and Hong Kong.

Without going into specifics, Li said that other parts of CMC will “produce also more and more local content.” Some will likely be made available through its recently-revealed smart TV platform.

CMC is a founder investor in the $2.4 billion Dream Center theme park being built with DreamWorks Animation and is a partner in Oriental DreamWorks, which is currently in production on the “Kung Fu Panda 3” animated feature. Earlier this week CMC announced a deal with the U.K.’s Merlin Entertainments to opne a Legoland theme park near Shanghai.

Li said that Chinese government regulations on foreign ownership of Chinese media are unlikely to be rolled back any time soon, though there will be a continuous, perhaps bumpy, process of opening up. “The Chinese government will continue to protect the local industry, but it is testing the water, and wants more foreign expertise [in Chinese media],” Li said.

That means that companies have to jump through sometimes perplexing hoops in order to comply with foreign media ownership rules. Li revealed that Oriental DreamWorks is not classified as a production company, but instead is designated as a technology company that has to seek government permission to produce content.

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