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Shareholders of Hong Kong construction firm approve investment in Hollywood-China film venture
HONG KONG (AP) ' A Hollywood-China movie production venture that plans to make big budget films for worldwide audiences has been cleared for an infusion of $220.5 million from an unlikely source ' a construction company.
Shareholders of Hong Kong's Paul Y. Engineering Ltd. on Tuesday approved the investment in the joint venture that is also aimed at China's increasingly lucrative film market.
The construction firm, which says it wants to diversify and thinks the movie industry has strong growth potential, is taking a 50 percent stake in the production company, Legendary East Ltd., in exchange for the investment.
"Diversification into some unremarkable business is totally useless. Profit margin would be low, risk high," Paul Y. Chairman James Chiu said. "We decided to seek an innovative growth avenue."
After the deal, Hollywood production house Legendary Entertainment will have a 40 percent stake while China's Huayi Brothers Media Corp. will have 10 percent.
Legendary Entertainment has produced global blockbusters including "Inception" and the two "Hangover" movies while Huayi releases include the hit Feng Xiaogang disaster epic "Aftershock," the kung fu drama "Shaolin" and the Tsui Hark fantasy epic "Detective Dee and the Mystery of the Phantom Flame."
Paul Y executives promised to leave the movie making to the experts.
"What we're bringing to table is, practically, cash," Deputy Chairman Tom Lau said. "We do not understand the business of motion pictures nor do we pretend that we can contribute" anything more than money.
Legendary and Huayi executives will control the film development and approval committees "completely," Lau said.
The Hong Kong-based venture, which was announced in June, plans to make one or two big budget movies a year starting in 2013 for worldwide audiences that are also commercially viable in China. The movies will be mainly in English and feature themes based on Chinese history, mythology or culture.
Beijing-based Huayi will distribute the movies inside China while Warner Bros. Pictures will handle international distribution.
Movies produced by the partnership will be allowed to bypass Chinese import restrictions that effectively limit the country to about 20 foreign blockbusters a year. Chinese box office takings surged 64 percent to $1.5 billion in 2010 and are expected to grow 30 percent this year to $2 billion.
Legendary East said in August its first film, "The Great Wall," will be directed by Edward Zwick and look at how the Great Wall of China came to be built.
Chiu said there are many other stories from Chinese history the venture could draw on, such as the epic novel "Romance of the Three Kingdoms," a fictional account of feuding warlords amid the disintegration of the Han dynasty in the second century.
Chiu said while he enjoyed "The Dark Knight" and "Superman Returns," both Legendary Entertainment productions, he's not a big moviegoer.
"I have no patience to sit in the cinema for two hours."