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Relativity, Huaxia pact for China coprod

Studio also partners to launch Sky Land Sino-American distributor

Recognizing the increasing importance of the Chinese entertainment market, Relativity Media has inked a strategic partnership with Huaxia Film Distribution Co. and SkyLand (Beijing) Film-Television Culture Development and, separately, is teaming with SAIF Partners and IDG China Media to launch the first Chinese-American distribution company, SkyLand Entertainment.

Producer/distributor Huaxia is one of the two main conduits for U.S. theatrical releases in China, while SkyLand is a prominent Chinese production, financing and distribution shingle.

SkyLand will distribute all of Relativity’s future films in China, including “Immortals,” “Haywire,” “The Raven,” the Navy SEAL pic “Act of Valor” and its untitled Snow White project starring Julia Roberts.

Noting that China is the fastest-growing film market in the world, with more than 6,000 screens and better than $1.5 billion in box office revenue last year — an increase of more than 60% last year alone — Relativity CEO Ryan Kavanaugh said, “We’re excited to be entering into this booming market with such great partners in SAIF, IDG and our new strategic partnership with Huaxia. Given the substantial platform created by SAIF and IDG in SkyLand, we believe together we can grow a distribution business in China which brings global product to China, and brings Chinese product to the global market.”

Though co-productions are exempt from China’s quotas on foreign films, they are subject to a strict censorship process, which has made the market a tough nut to crack for Hollywood. It’s not clear if this new partnership will be exempt from the quota system or get around it in some way.

Relativity will work with SAIF and IDG to develop, produce, distribute and acquire Chinese material that possesses worldwide appeal.

SkyLand is jointly owned by Relativity Media, SAIF Partners and IDG China Media. Company is also partnered with a China-based RMB fund to co-invest in local film and TV content and production, with the deal valued at $100 million. The trio are already working on several projects that will bring Chinese folklore to theaters in the U.S. and worldwide.

Formed by SAIF and IDG more than two years ago, SkyLand recently co-produced Wayne Wang’s “Snow Flower and the Secret Fan.”

Kavanaugh attended the Beijing press conference along with Huaxia Film’s exec chairman Guoqing Gu, SAIF Partners’ managing partner Andy Yan and IDG China Media’s founding partner Hugo Shong.

Joint venture aims to accelerate the pace of co-production between the U.S. studio and its Chinese counterparts. Relativity, SAIF and IDG are working on big-budget titles based on famed events from China’s past. Purpose is to create movies that will appeal to Chinese and Western auds and solidify a more fluid film partnership between the U.S. and China while creating strong returns for those investing in the new business.

“This partnership will broaden the cooperation platform, introducing significant resource for the co-production of future movies and allowing us to build on valuable movie production experiences from overseas,” Gu said. “Meanwhile, such a partnership will also open the channels for Chinese movies to air globally and offer international audiences a better understanding of Chinese culture.”

Yan, managing partner of SAIF and a large investor in SkyLand and Relativity said: “Until now, there has been a major void in bridging the two worlds of the American and Chinese film industries. After spending significant time learning about Relativity’s business and how they approach the international markets, we couldn’t be more pleased to have entered into what will undoubtedly be a revolutionary shift in the China film business as we know it.”

Shong, founding general Partner of IDG China Media and a co-financier of SkyLand, said: “We couldn’t be more excited about creating this revolutionary partnership, and simultaneously entering into a strategic partnership with Huaxia.” Huaxia has handled Chinese distribution of pics including “Kung Fu Panda,” “Fast Five” “Prince of Persia: The Sands of Time,” “Alice in Wonderland” and the “Harry Potter” and “Transformers” franchises.

In May 2010, Relativity pacted with Fuse Capital to form Relativity Media India.

(Clifford Coonan in China contributed to this report.)

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