Paramount Pictures‘ $1 billion slate deal with two Chinese media companies is back on track after nearly being derailed earlier this year, Viacom executives told analysts and investors on Thursday.
On an earnings call, Viacom CEO Bob Bakish said the financing was “moving forward,” while Viacom CFO Wade Davis said that Shanghai Film Group and Huahua Media have increased their financial commitment. Instead of funding a planned 25% of the studio’s entire film slate for the next three years, they will back 30% of the lineup.
“The slate financing agreement remains on track and is in operation,” said Davis.
The pact is for three years with an option for a fourth year. It begins in the company’s fiscal 2017.
Variety reported last month that Paramount’s new chairman and CEO Jim Gianopulos recently traveled to Beijing to resurrect the deal with Shanghai Film Group and Huahua Media. Apparently his entreaties were successful.
The Chinese financing deal was first announced in January, but it hit a roadblock in March as China continued to apply greater scrutiny to overseas investments. Shanghai Film Group remains majority state-owned. The Chinese government has been curbing overseas investments in certain sectors as it looks to bolster its currency. Huahua Media has significant operations offshore, and was able to provide its share of the payments under the agreement, but Shanghai Film Group struggled to deliver the capital.
On Thursday, Davis downplayed reports that the deal was in jeopardy.
“We never really had concern about payments,” said Davis. “There’s a payment schedule in the agreement. We received cash this quater per the schedule that was always in the agreement.”
In addition to Paramount, Viacom’s portfolio of media brands includes MTV, Nickelodeon, and Comedy Central. It was a rough quarter for the company. Profit at Viacom fell 60% after the company reported $280 million in restructuring charges and was forced to contend with a drop in advertising revenue. Revenue for the period increased 8% to $3.26 billion.
The deal with the Chinese investors was originally brokered by Brad Grey, who was then Paramount’s chairman and CEO. Grey departed in February, leaving a question as to whether the companies would choose to stay in the deal under Paramount’s new leadership.
Gianopulos was hired in March and has been tasked with reviving the studio’s creative culture and financial underpinnings after a wave of film flops such as “Ghost in the Shell,” “Zoolander 2,” and “Ben-Hur” have rattled investors’ confidence. He previously oversaw Fox’s film operations, where he was known for his deep knowledge of international finance.
In an interview with Variety last month, Viacom Vice-Chairwoman Shari Redstone praised Gianopulos’ hire, saying, “Jim is going to be a great leader in working with the creative community and in working with Paramount to bring us back to where we deserve to be and will be.”