Viacom’s Paramount Pictures is still waiting for an overdue payment from China’s Huahua Media — part of a $1 billion, three-year film finance deal made this year — studio CEO Jim Gianopulos told an investor group today. But “very shortly, we’ll know” whether it’s coming, he said. And, if it isn’t, then Paramount could “replace it in a timely and immediate fashion.” Gianopulos made the remarks at the Bank of America Merrill Lynch 2017 Media, Communications and Entertainment Conference.
“The Chinese government has imposed a number of different regulatory hurdles in terms of investment by Chinese companies in sectors, particularly entertainment,” he said. “Part of it got caught up in that. So we haven’t received the money we are entitled to under the deal.”
Viacom Says All's Well Despite Concerns Over M&A, Missed Huahua Payment, And Charter Dispute
Paramount has received “continuing assurances that they’re processing [the payment] and going through it.” But Gianopulos acknowledges that it’s “a very opaque or, at best, translucent process for an American company to understand how that process works, and what the timing is.”
If the money doesn’t appear “in a timely fashion,” he says, then “we have a great deal of confidence based on overtures that have come to us and relationships that I and others have, that if that doesn’t work out then we would replace it in a very timely and immediate fashion. We’re waiting to see how that plays out. Very shortly we’ll know, and then I think enter into the replacement plan.”
Viacom said in August it did not book the missed June payment in its quarterly earnings report. In July, Huahua was sold to Oriental Times Media.
“The deal continues to be in effect, and we view Huahua Media’s acquisition by Oriental Times Media — who we know well — as a positive,” CFO Wade Davis said last month.
He added that Viacom has “been in business with Huahua for a long time and they have and continue to be a valuable strategic operational and financial partner.”
Gianopulos also said today that premium video on demand is “inevitable” in “a period of months, not years.”
“The issue has evolved” since 2011 when Universal riled movie theater owners by proposing to offer an Eddie Murphy film, Tower Heist, on home video within the 90-day window when theaters typically offer new releases exclusively. Now “various stakeholders have come around to the idea that this has to happen” because consumers are “demanding it,” the studio chief says.
The key questions are how much time theaters would show new releases exclusively before they appear on PVOD, and how much home viewers would pay.
If the PVOD terms result in a big cut in exhibition sales, then studios would “obviously” provide them with “an enhanced revenue stream” incorporating cash from home viewing, he says.
The Paramount chief says that the company has “no immediate plan” to offer its own direct-to-consumer streaming service — similar to one that Disney plans.
Meanwhile, Gianopulos says that 2019 is the year when Wall Street, and others, should see a payoff from his efforts to improve Paramount’s performance.
“2016 was a disaster,” he says. “Some of it was bad luck and some of it was other factors. 2017 will be much better. 2018 will continue to improve and 2019 is where you’ll start to see a substantial swing…The slate for ’19 is coming together and some of it is brilliant.”
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