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China Set to Play Key Role in Legendary’s Talks with Studios

Timing of Legendary East's deal with China Film Co. comes as company meets with studios over new distribution deal

Thomas Tull just brought something very enticing to the negotiating table as he shops for a new studio distribution deal: China.

The Legendary Entertainment chief is considering whether to continue a partnership with Warner Bros. that began eight years ago, and produced such enviable blockbusters asChristopher Nolan’s Batman films and “The Hangover” franchise, or move to another studio.

Tull already has begun talking to Universal Pictures, Sony Pictures and 20th Century Fox, although formal negotiations are not yet underway. Legendary is obligated to give Warner the first right of negotiation.

Legendary and Warner became bedfellows in 2005 at a time when Tull needed a sutudio home and the Burbank studio needed money to help bankroll its slate of tentpoles. Tull had a lot of money to offer at the time.

Now Tull has an open door into China, as well.

As studios eagerly look for ways to release their films in the world’s second-largest moviegoing market, connections are key.

And Legendary is now tied to the 800-pound panda in the region: China Film Group.

In announcing Thursday that his Legendary East banner now has a multi-year pact with China Film Co. to co-produce and distribute tentpoles developed for the region and major global territories, Tull has brokered one of the most important deals for any film venture looking to do business in China.

China Film Co. is owned by China Film Group, a state-owned corporation whose tentacles extend into every area of the film biz, from production to distribution, to importing foreign films and exhibition. The deal with Legendary marks the first time China Film Co. has inked a long-term, multi-picture production deal with a Chinese or international partner.

It has the money, it owns the facilities, it reps most of the talent, and it has a big say in deciding what movies get made in China, either as stand-alone pics or as co-productions. It operates seven circuits with 400 theaters, which constitute about half the country’s total B.O. Group was formed in 1999 after the State Council merged several state-owned film companies, including Beijing Film Studio and China Film Equipment Corp., into one entity.

It’s a good friend to have, especially as film producers look to grab a bigger share of the Chinese box office, which last year surpassed $2.7 billion. But in order to do that, films must be viewed as co-productions with an official Chinese partner, otherwise much of a film’s box office haul goes back into the pockets of China’s coffers per current distribution rules.

SEE ALSO: Legendary East Finds Key Partner in China Film Co

Sony and Fox already have a presence in China, but Universal isn’t much of a player there.

And that gives Universal yet another reason to consider pairingup with Legendary over the other majors in the running.

Legendary’s films could easily translate into theme park attractions at Universal Studios’ properties around the world and could be cross promoted across all of NBCUniversal’s media assets, including NBC. And Universal Pictures will need to replace the massive hole that will be left once its outside production funding from hedge fund Elliott Management dries up at the end of the year.

SEE ALSO: Legendary Pictures, Warner Bros. Likely to Split

Either way, the timing of Legendary East’s deal with China Film Co. is curious. Tull tends to keep much of his dealmaking close to the vest. Without a film project to announce through the new relationship, it’s clear the decision to announce the Chinese partnership on Thursday was tied to something else.

And that something else is clearly meant to be the latest power move Legendary is making to land the best distribution deal for its growing slate of tentpoles in production and development, which also includes high-profile projects such as “Godzilla,” lensing now, and “Mass Effect,” based on the hit videogame. Guillermo del Toro’s “Pacific Rim,” three-quarters of which was financed by Legendary, bows July 12.

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