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Paramount Loses Slate Financing Deal With China’s Huahua

Paramount Pictures and Huahua Media are ending their sprawling slate financing agreement, the film studio announced on Tuesday. The deal, once valued at $1 billion, was intended to finance a quarter of the films that Paramount produced over a three-year period.

Paramount cited recent changes to Chinese foreign investment policies as the reason for the dissolution. In recent months, China has applied greater scrutiny to foreign investments, and has worked to limit the outflow of capital in order to bolster its currency.

Paramount said it will fill the gap in financing through deals with Hasbro, Skydance Media, and SEGA. The pact has been on shaky ground for some time. Huahua had been unhappy with the financial performance of Paramount releases such as “Transformers: The Last Knight” and “Ghost in the Shell.” Last spring, executives at Viacom jetted to China to try to convince Huahua brass that their future films would be more successful. As the financing grew increasingly wobbly, Paramount and Viacom executives admitted at various points that Huahua had missed payments.

Jim Gianopulos, Paramount’s chairman and CEO, attempted to put a positive spin on the news, saying in a statement that the new deals give the studio a better opportunity to capture more of the profits from the films it makes. He noted that deals with the likes of Skydance will help finance the bigger budgeted releases, while Paramount will not enlist third party investors on its more modestly budgeted productions.

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“The actions we are announcing today establish a financing model that is better aligned to Paramount’s new strategic approach to film production,” Gianopulos said in a statement. “Our focus on a more balanced slate — a mix of big, broad-audience films and more targeted and co-branded films made with greater fiscal discipline — demands a more flexible and tailored financing model going forward.”

The Huahua pact was forged roughly a year ago under Brad Grey, Gianopulos’ predecessor as studio chief. Gianopulos took over at Paramount in March. The studio has suffered a series of flops in recent months — a list of misses that includes “Suburbicon,” “Baywatch,” and “Mother!”

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