Lionsgate in talks with China's Hunan TV for film and TV pact

Film studio Lionsgate is in advanced talks with China's Hunan TV & Broadcast Intermediary Co. for what could be the latest Hollywood deal by a Chinese company. 

An agreement has not been finalized, but the discussions involve film financing, movie distribution, local film production in China and television initiatives, a person familiar with the situation said Wednesday. 

As part of the deal, Lionsgate, the Santa Monica-based studio behind the popular "Hunger Games" film series, would help distribute Chinese films in other countries. The company could also co-produce movies with Hunan TV. 

The agreement would provide for the companies to spend a combined $1.5 billion over three years, according to Reuters, which cited a filing by Hunan TV with the Shenzhen stock exchange. Hunan TV, the second-largest broadcaster in China, after China Central Television, plans to set up a unit in the U.S. 

Hunan TV is expected to contribute about 25% of the $1.5-billion in spending. The total figure includes money that Lionsgate had already planned to spend on its movies in the coming years, along with financing that Hunan TV would provide, according to the person familiar with the talks.

Lionsgate declined to comment. 

Chinese companies have shown interest in doing business in Hollywood for years, and U.S. studios are increasingly looking to China for box-office dollars. The country's theatrical film market is the second largest in the world next to the U.S. and is growing rapidly. Total ticket sales surged 36% to $4.8 billion last year.

Last June, a Shanghai investment company, Fosun International Ltd., made a deal to invest in Studio 8, a film company started by former Warner Bros. Pictures Group president Jeff Robinov. 

In 2012, China's Dalian Wanda Group Co. bought the U.S. theater chain AMC in a deal valued at $2.6 billion. The Chinese conglomerate has also recently shown interest in buying a stake in an American movie studio.

Wang Jianlin, the billionaire chairman of Wanda, told Bloomberg News in December that it had held talks to discuss acquiring stakes in companies including Lionsgate and Metro-Goldwyn-Mayer Inc. 

Lionsgate itself is no stranger to China. Last summer, the e-commerce giant Alibaba Group and Lionsgate launched a subscription video streaming service for mainland China called Lionsgate Entertainment World.

Shares of Lionsgate fell 57 cents, or 1.9%, to $28.75 a share in Wednesday trading. 

Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder

Copyright © 2016, Los Angeles Times

UPDATE

1:15 p.m.: This post has been updated with additional detail on financing, and the closing stock price for Lionsgate.

53°