China and Hollywood: Will the love affair last?

Hollywood's blossoming relationship with China could do more to change the entertainment business than past waves of foreign involvement in the film and TV industry.

That was the conclusion of prominent U.S. and Chinese industry leaders who participated in a panel discussion during the recent Committee of 100 annual conference held in Beverly Hills.

"One thing we know is that everything will change," Jack Gao, chief executive of international investments and business developments for the Wanda Cultural Industry Group, said.  "Nobody knows what will happen next, but the challenge of the uncertain future is much more exciting than the story of accomplishments past."

China is expected to become the world's largest film market next year, as measured by movie ticket sales, surpassing the U.S.  Currently, the U.S. has about five times the number of movie theaters per capita than does China, but new theater screens are being added in China almost daily.

A massive theater-building boom in China is fueling much of the growth.  At the same time, Chinese companies are stepping up their investment in entertainment properties.

All the while Hollywood studios, including 20th Century Fox, Warner Bros. and Paramount Pictures, have been aggressively pursuing film co-financing deals with Chinese companies, including Alibaba Pictures.

Dalian Wanda Group purchased the Burbank production company Legendary Entertainment earlier this year. Wanda also owns the AMC movie theater chain, and agreed last month to buy Carmike Cinemas for $1.1 billion.

Viacom Inc., meanwhile, is shopping for an investor in Paramount Pictures with the hope of perhaps attracting a partner from China.

Over the years, major Hollywood studios have been owned by companies from France, Canada and Japan. Hollywood studios more than a decade ago rushed to sign up German investors as film financing partners. 

But those instances of foreign involvement did not fundamentally change the Hollywood culture, the panelists said.

"They all came in with big conviction, and ended with a little bit of a whimper," said Donald Tang, founder of Tang Media Partners, who moderated the panel held last weekend.

To be sure, Sony Corp. bought Columbia Pictures more than 25 years ago, and its presence remains -- despite periods of struggles and some strategic shifts.

"No disrespect to what's happened at Sony, but you could say that it has -- or has not -- worked," said Ari Emanuel, co-chief executive of WME IMG, one of the panel members.

20th Century Fox film studio Chairman Jim Gianopulos argued that companies that have done well in Hollywood have had three things in common: strong capitalization, a strategic view and a long-term vision.  He said Sony qualified on those three counts.

"The company is a major player, it's a major studio," Gianopulos said. "Whether it has been a good investment or not, that's for Sony to say ... It's still a brand. Everyone who looks at a Sony movie is reminded of Sony products."

Hollywood has continued business as usual despite foreign investments, in large part, because the U.S. market has long been so much larger than the home markets of the overseas firms investing in Hollywood.

That gave studio chiefs little incentive to vary from their practice of churning out films that primarily appeal to U.S. consumers because the U.S. market was so big and diverse and because films designed for American audiences also performed well in other territories.

But the extraordinary size of China's burgeoning film market could change the calculus.

"Anyone who says 'this time is different' usually sounds like an idiot," said Robert Simonds, chief executive of STX Entertainment, another panelist.

"But this time, it is different," Simonds said.

"For the first time, a country other than America is about to have a giant domestic market -- and that is China," he said. "The fact that China is going to become a major player in global storytelling is this inflection point that we are living right now."

Gianopulos, the Fox studio head, added:  "It's a massive opportunity."

Tang sounded a cautionary note, saying some past partnerships turned out to be "a treacherous road." Simonds agreed that there is "a lot of friction" because of cultural differences between Chinese and American business executives. 

Americans, the panelists agreed, were trying to adapt. Emanuel noted that he has been busy shuttling to China in order to meet in person with major executives there. His WME IMG also has more than 100 agents in China, hoping to build the Chinese talent market.

China's interest in Hollywood also is rising. Gianopulos summed up the landscape this way:

"It's not the kind of business that you can come and play in for a short time," he said of the entertainment business. "The smarter players don't rush in."

Expect some fits and starts.

"Whenever the market overheats, interest in Hollywood or the excitement of China, you are going to have casualties, but the smart players survive," Gianopulos said.

meg.james@latimes.com

Twitter: @MegJamesLAT

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