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China’s Huanxi Cancels $50 Million Venture With MUBI

New Chinese media group Huanxi Media has announced the cancellation of its agreement to go into business with MUBI, a curated subscription on demand service from the U.S.- and U.K.

In January, Huanxi announced that it would spend $10 million buying an 8% equity stake in MUBI, and that Huanxi would also invest $40 million for a 70% stake in a joint venture that would launch MUBI’s services into mainland China.

Founded 10 years ago in Silicon Valley by Efe Cakarel, MUBI has backing from Silver Lake Capital and Working Title co-founder Eric Fellner. MUBI operates a business model where movies are added one per day to its platform and play for only a month before being removed.

“The (Huanxi) board wishes to inform the shareholders and potential investors of the company that (Huanxi subsidiary) Graceful and MUBI have agreed to terminate the (January) framework agreement. The company and MUBI are however discussing other possible forms of cooperation,” Huanxi said in a statement to the Hong Kong Stock Exchange today.

It offered no reasons for the cancellation of the deal, nor any explanation of the direction of the ongoing talks with MUBI.

“Huanxi and MUBI have agreed to terminate the existing Framework Agreement, however we are still discussing other possible forms of cooperation for the future and both parties remain committed to a long term partnership,” Cakarel told Variety by email. “The company’s business plans and operations remain the same. We continue to pursue strong acquisitions as we have done in the past year, as well as continuing to develop new markets to grow and focus on forthcoming productions.”

MUBI’s movie selection process is curated by a team of human programmers in the U.S. and U.K. In all other territories selection is by computer algorithm, guided by subscriber usage data and feedback. In April, Cakarel revealed that the company has about 100,000 subscribers worldwide. He said that the company intended to diversify upstream into film production, and that it would seek new funding of over $100 million.

Huanxi is headed by veteran film entrepreneur Dong Ping, as well as film makers Ning Hao (“Breakup Buddies”) and Xu Zheng (“Lost in Hong Kong”.) It recently announced production ventures with leading Asian film makers Wong Kar-wai and Peter Chan Ho Sun. Today it said that conditions for those deals to go ahead had been met and that it would issue new shares worth US$66.2 million (HK$513 million) to the two.

Huanxi recently revealed losses of $12.9 million (HK$99.6 million) for the year to December 2015, most of which related to share-based payments.

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