News Corp. NWSA -0.40 percent will acquire nearly a 20 percent stake in Bona Film Group Ltd, BONA +7.88 percent one of China’s largest film distributors, in a bid to help the US company gain a stronger foothold in China’s booming film market.
News Corp., the owner of 20th Century Fox film studio, will take a 19.9 percent stake in the Chinese film company, buying directly from the firm’s founder and Chief Executive Yu Dong, Bona Film said Monday.
The deal marks the latest in a recent spate of tie-ups between Hollywood and China, where box-office revenue climbed 29 percent to 13.1 billion yuan ($2.08 billion) last year, according to China’s State Administration of Radio, Film and Television.
Hollywood has been eager to gain a stronger foothold in the market, as box-office revenue in the US and Canada dropped 4 percent to $10.2 billion, according to the Motion Picture Association of America.
DreamWorks Animation SKG Inc. DWA -1.18 percent in February announced plans to form a joint venture with state-owned investment-management company China Media Capital and Shanghai Media Group Inc., one of China’s largest television broadcasters.
The Chinese government also agreed in February to expand its quota of movie imports to 34 from 20 and agreed to allow additional 3-D and IMAX movies.
Neither News Corp., which owns The Wall Street Journal, nor Bona Film disclosed financial terms of their deal.
Bona Film’s revenue more than doubled to $43.7 million in the first quarter as its profit jumped 35 percent to $3.3 million. American depositary shares of the company, which has a market capitalisation of $363 million, were up 5.2 percent midday Monday on the Nasdaq Stock Market.
The Chinese company distributes films across China, South Korea, Southeast Asia, the US and Europe. It also produces films across genres and owns and operates 13 movie theaters in China. Its films have included the 3-D “The Flying Swords of Dragon Gate” and the popular drama “A Simple Life.”
A forerunner of Bona Film was once part-owned by the business arm of the People’s Liberation Army, China’s military, though it no longer has an equity holding in the company.
News Corp. plans to tap Bona Film’s reach and vertical business model in China, said Jack Gao, senior vice president of News Corp., in a prepared statement.
News Corp. has set its sights on China for years but has faced challenges. Chief Executive Rupert Murdoch in 2011 called for China to open its film market, allowing more foreign films to be distributed in the tightly regulated market.
News Corp.’s 20th Century Fox recently has succeeded with Chinese audiences with the global release of “Titanic” in 3-D. In its opening weekend in China, the film’s box-office sales hit $67 million, according to 20th Century Fox. -By LAURIE BURKITT