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Legendary, China Film teaming on big-money flicks

The Associated Press, Friday, May 31, 2013, 12:15am (PDT)

HONG KONG (AP) — Legendary Entertainment, maker of the "The Hangover" franchise, is teaming with state-owned China Film Group to produce more global blockbusters as the Hollywood studio expands into the rapidly growing but tightly controlled Chinese movie market.

Their deal is the latest example of growing collaboration between entertainment companies in the world's two biggest movie markets.

Legendary, which also made "Inception" and "The Dark Knight," said its Chinese venture, Legendary East, signed an agreement with the Chinese company's unit, China Film Co., on Thursday in Beijing. The deal calls for the companies to fund development and production of multiple films over three years.

Their first collaborations will be announced in the coming months. Legendary said each is planned as a U.S.-China co-production. That means they can bypass China's import restrictions that limit the number of foreign movies shown on the country's 12,000 screens to 34 each year.

Producers that can avoid the import quota can earn millions more at the Chinese box office because they are allowed to keep about 40 percent of profits, compared with 25 percent for films classified as foreign.

The companies said they plan to produce movies for global audiences that will be "tentpole-scale" — in other words, the big-budget, highly promoted productions that earn enough box-office revenue to support the whole studio, in the same way that a tentpole holds up a tent.

No specific details were released.

In a statement, China Film Co. Chairman Han Sanping said it was the company's first ever long-term, multi-picture deal with a local or foreign partner.

"There can be no doubt that this is one of the most important collaborations for China Film Group in the coming years," Han said. The partnership will allow the companies to "make films that are more appealing to filmgoers, creating new genres that, through the magic of film, bring greater variety to audiences around the world," he said.

China Film Group is an important player because it essentially controls film imports and co-productions, making it an important gatekeeper for foreign studios. Through its China Film Co., which has plans to go public, it owns stakes in eight movie theater circuits that account for half of the country's box office receipts.

Faced with stagnant box-office growth at home, Hollywood studios are keen to enter China, now the world's second-biggest film market. Box-office receipts in China totaled $2.7 billion last year, according to the Motion Picture Association of America. That pushed the Chinese market past Japan's, now the third biggest.

For their part, China's leaders are hoping to use expertise gleaned from joint ventures to rapidly develop their country's cultural industries to expand their influence abroad. Chinese audiences adore Hollywood fare such as "Avatar" and the "Kung Fu Panda" series. Meanwhile, locally produced hits, such as last year's No. 1, road trip movie "Lost in Thailand," have flopped overseas.

"The natural step in a growing Chinese film industry is to make films that successfully take Chinese-based stories to international audiences," said Rance Pow, Shanghai-based founder of film consultancy Artisan Gateway. "Legendary brings Hollywood credentials, and global distribution and marketing relationships to the collaboration."

Other examples of recent Hollywood-China collaborations include DreamWorks Animation working with local partners to make "Kung Fu Panda 3" and Disney teaming up with Beijing-based DMG on the recently released "Iron Man 3."

Legendary East was set up in 2011 with the aim of making one or two "major, event-style films" starting in 2013. But the company had remained quiet since then and a plan to raise $220.5 million through a deal with a Hong Kong construction company was scuppered by rocky financial markets.

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Follow Kelvin Chan at twitter.com/chanman

Online:

Legendary Entertainment: http://www.legendary.com

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