Paramount Stake Auction: DMG Entertainment Emerges As Surprise Suitor


EXCLUSIVE: Deadline has learned that Dan Mintz’s Beijing- and Los Angeles-based DMG Entertainment is one of the entities seeking to buy a piece of Paramount Pictures. The sale of what is believed to be a 40% stake in the Melrose Avenue studio is thought to be going for about $2 billion. Viacom CEO Philippe Dauman told investors last month that the company had been “approached by several potential strategic investors in Paramount” and is “pursuing a transaction with a strategic minority investor,” although he did not name the parties involved.

Since then, speculation has been that Paramount has attracted interest from Chinese e-commerce giant Alibaba, and the very acquisitive Dalian Wanda Group. Neither has been confirmed.

DMG’s interest, which multiple sources have confirmed, in getting a chunk of a Hollywood studio comes as something of a surprise while much of the speculative attention has focused on the Chinese giants. It’s not clear if Paramount is speaking with Middle Kingdom companies only, but access to the world’s soon-to-be largest box office market is seen as the Holy Grail these days and there is a lot of money flowing to Hollywood from the PROC.

DMG is officially a U.S. company, but has deep ties in China. Its interests include features, television, music, gaming, OTT, mobile distribution platforms, live entertainment, creative management, and communications. It also has a Chinese affiliate, DMG Yinji Entertainment and Media, which is traded on the Shenzhen Exchange.

DMG is already tangentially in business with Paramount, having inked a deal with Hasbro to launch the world’s first live-action Transformers attraction in China. Transformers has been a major property in the Middle Kingdom where Paramount entered a cooperation agreement for Transformers: Age Of Extinction with state-backed China Movie Channel and U.S./Chinese streaming company Jiaflix, and saw it become the biggest-grossing film ever in the market when it released in summer 2014.

Due to a complicated rights deal, Paramount logos also adorned 2013’s Iron Man 3 on which DMG was partnered with Disney and Marvel in the Middle Kingdom. DMG successfully engineered a release that led to record-breaking numbers. DMG’s other production credits include Bruce Willis-starrer Looper and the recent Point Break which tested out a new model by going out in China a full three weeks before its domestic rollout, securing the last non-blackout slot of 2015. In the coming year, DMG is teaming with James Cameron and Studiocanal to release a digitally remastered 3D version of Terminator 2: Judgment Day with a particular focus on China. Paramount last year got China’s first post-summer-blackout release date for Terminator Genisys and saw it far outperform the domestic run.

For DMG, which I hear would partner with China-based private equity to write the check, the upside is international distribution for the films it produces, as well as access to Paramount’s library for Mandarin-language remakes. The company also has its own IP including the Valiant comics catalog and Mini Marilyn. For Paramount, it would provide access to the Mandarin markets. DMG, with a market cap of $4B, is notably awaiting regulatory approval for a $600M deal to purchase Taiwan’s Eastern Broadcasting Company from the Carlyle Group. The largest Mandarin-language broadcaster in Taiwan, it has 20 channels and is carried on cable and satellite platforms in the U.S. and Europe.

With regard to Alibaba and Wanda, Paramount has worked with both companies before. A source suggests, however, that those companies would seek to outright buy a studio rather than settle for a minority slice. Last year, Paramount released Mission: Impossible – Rogue Nation, with investment from Alibaba. Wanda’s AMC last year partnered with the studio on its accelerated VOD plan for Paranormal Activity: The Ghost Dimension and Scouts Guide To The Zombie Apocalypse. Wanda chairman Wang Jianlin has previously shown interest in Lionsgate and MGM, but has also said, “Many people come knock at my door, but Wanda is only interested in the big players and we want control.”

Last week, Viacom’s Dauman said he felt “very good about the kind of partners we’re talking to.” A deal “will provide strategic benefits for Paramount and likely for Viacom generally.” He suggested that the right partner would offer “primarily international and digital” benefits to the studio. “It’s a crown jewel out there” that has “an iconic studio with a very high-quality library which is continually being replenished.” It is unclear how advanced any of the talks are, but Dauman has said he expects to finalize a deal by the end of June.

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