China's Huayi Bros. to partner with Robert Simonds' STX Entertainment

China's Huayi Bros. studios is close to a deal with Robert Simonds' STX Entertainment

Chinese film production company Huayi Bros. Media Corp. is close to a deal with producer Robert Simonds' new movie and TV studio STX Entertainment to finance, produce and release movies, according to two people familiar with the matter.

Beijing-based Huayi Bros., one of China’s largest film companies, said late Monday that it had reached a deal with an American partner for 18 films before the end of 2017. It did not disclose the name of that company. The announcement led to a wave of speculation around Hollywood about which U.S. firm was involved.

The partnership between Huayi and Burbank-based STX would be the latest in a series of deals between Chinese companies and U.S. film business as China becomes an increasingly important source of revenue for Hollywood. The world's most populous nation saw its box-office revenue jump 34% to $4.8 billion last year, helping the industry set a global box-office record in 2014, according to the Motion Picture Assn. of America.

STX plans to make and distribute up to 10 movies a year with budgets of roughly $20 million to $60 million, considered mid-range in Hollywood. The film company has financial backers that include the Chinese private-equity firm Hony Capital, as well as San Francisco’s TPG Growth, a division of private-equity giant TPG Capital,

Officially launched about a year ago, STX has a number of movies on its slate including “The Free State of Jones,” a Civil War drama starring Matthew McConaughey, and a remake of “The Secret in Their Eyes,” with Nicole Kidman and Julia Roberts.

STX has made a number of high-profile hires since launching. It brought on former Universal Pictures Chairman Adam Fogelson to run its movies division in September, and hired Oren Aviv, 20th Century Fox’s former chief marketing officer, that same month.

As part of the film deal, Huayi would share in the copyrights of films and enjoy distribution rights in mainland China, Hong Kong, Macao, Singapore and Taiwan, the company said in a statement. Huayi would also share in revenue from the global distribution of films.

The Chinese company said the agreement was key to “improving the company's influence in the international market.”

Steve Elzer, a spokesman for STX, said the company does not “comment on rumors.”

It’s not the first time that Huayi has become intertwined with the U.S. movie industry.

Last year, Huayi was involved with the Brad Pitt-Shia LaBeouf production “Fury,” from Sony’s Columbia Pictures, and in October announced that its new U.S. subsidiary was financing a Chinese-language remake of “Only You,” a 1994 romance from Sony’s TriStar label starring Robert Downey Jr. and Marisa Tomei.

A person familiar with the 18-picture deal, who spoke on condition of anonymity so as not to damage business relationships, said Huayi’s total investment would be in the vicinity of $50 million.

Huayi has also invested in Keanu Reeves’ “John Wick” and Johnny Depp’s “Mordecai,” both of which were distributed by Santa Monica studio Lionsgate.

The company was mentioned as a possible backer of former Warner Bros. chief Jeff Robinov’s Studio 8, but those negotiations reportedly fell apart and Robinov later secured funding from the Chinese conglomerate Fosun International.

In another recent deal, China's Hunan TV & Broadcast Intermediary Co. will provide $375 million to Lionsgate, an investment representing about 25% of the production costs from Lionsgate films over the next three years. That agreement does not cover the blockbuster “Hunger Games,” “Divergent” and “Twilight” franchises.

Hunan and Lionsgate will co-produce films as part of the pact, which marks the largest such investment by a Chinese company in Hollywood film.

In 2012, China's Dalian Wanda Group Co. bought the U.S. theater chain AMC in a deal valued at $2.6 billion. Wanda Chairman Wang Jianlin just last year expressed interest in buying Lionsgate or MGM, though such a deal has not materialized.

For more entertainment business coverage, follow Ryan Faughnder on Twitter @rfaughnder.

Copyright © 2016, Los Angeles Times

UPDATE

3:28 p.m.: This story has been updated with more details and context throughout. 

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