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Paramount Partner Huahua Media Sold to Oriental Times

China’s Oriental Times Media has bought a majority stake in Huahua Culture Media, one of the pair of Chinese companies that is co-financing a slate of movies at Paramount Pictures.

The all-cash deal was completed for $40.6 million (RMB280 million) and sees Huahua sell a 51% stake, according to regulatory filings made by the Shenzhen stock market-listed Oriental Times.

It may also coincide with a rethink of the Paramount slate financing deal.

The Huahua takeover deal had been signaled many months earlier, but marks another curious twist in the corporate development of China’s film and entertainment sector.

For Oriental Times, previously known as Guanglu Measuring Instrument, the move is a further diversification from a core business in manufacturing precision digital measuring equipment. Entertainment is a business sector that is growing faster and attracts higher ratings from investors and Guanglu began expansion in 2015, at the height of the Chinese box office boom.

For Huahua, which has been one of the most forward Chinese investors in individual Hollywood movie titles, the share sale provides the founders with profits for building the business to its current scale. Huahua is involved in film distribution in China and film investment in China and the U.S. Its Hollywood investments include movies including “Transformers: Age of Extinction,” “Allied,” “Star Trek: Beyond,” and “xXx: Return of Xander Cage.” Huahua made nearly $6 million of profit in 2016-17, according to another filing by Oriental Times.

Earlier this year Huahua and Shanghai Film Group agreed to bankroll a slate of movies at Paramount. While that deal appeared to be delayed by Chinese regulatory limits on capital exports, it was eventually concluded in April as a three-year agreement to finance 30% of the production cost, up from an originally announced 25%.

The agreement, which also gives Huahua and SFG a presence on the Paramount lot, includes an option for the Chinese companies to extend the deal to a fourth year. But after the disappointing performance of a succession of Paramount titles – including “Ghost in the Shell,” “Transformers: The Last Knight,” and “Baywatch” – the slate financing deal could be in jeopardy.

An exit could be complicated. While the slate deal does not provide objective performance benchmarks that would allow Huahua and SFG to exit, it is understood that that Chinese investors could cite other reasons.

Oriental Times simultaneously announced another diversification. It announced that it would be buying a significant minority stake of 40% in TV producer Yuan Chun Media for $38.3 million (RMB264 million).

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