Paramount Pictures and Huahua Media have mutually agreed to end their slate financing agreement. That deal would have funded 25% of Paramount film slates up until the end of 2019. The Huahua deal was to be part of a $1 billion one and it was announced at the beginning of this year by late Paramount boss Brad Grey. Paramount’s parent Viacom expects a $59M negative net impact in its fourth quarter due to the Huahua deal going south.
The news comes in the wake of recent changes to Chinese foreign investment policies. Paramount is maintaining its relationship with Huahua and hopes to work with the company again in the future. Again, this news comes as no surprise. Paramount Chairman and CEO Jim Gianopulos was still waiting on the Huahua money as late as September and was beginning to make a back-up plan. At a Merrill Lynch media conference, the Paramount boss said, that if the Chinese money didn’t appear “in a timely fashion,” 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.”
Paramount also announced today that it has secured a series of individual agreements with financing partners, including Hasbro Inc., Skydance Media and SEGA, among others, that will provide financing for approximately 25% of the production costs of the studio’s 2018 and 2019 lineup.
In September, Deadline reported that Paramount was in talks for a round of financing from a consortium of investors led by Dallas billionaire Tom Dundon that would replace Huahua, and fund for upward of 25% of the slate even continuing past 2019. Sources say that deal never came to fruition.
In regards to today’s news Gianopulos said, “The actions we are announcing today establish a financing model that is better aligned to Paramount’s new strategic approach to film production. Our focus on a more balanced slate – a mix of big, broad-audience films and more targeted and co-branded films made with greater fiscal discipline – demands a more flexible and tailored financing model going forward. This structure positions us to capture more upside beyond 2019 as the new slate takes full effect.”
The production financing Paramount has secured is weighted toward its bigger budget films, allowing Paramount to capture greater upside on its more modestly budgeted titles, where presently there is no third party financing.