China's growing voice in Hollywood may lead to changes in film marketing methods

Tang Wei said that considering the huge marketing expenses, the growing role of Chinese capital in Hollywood is likely to lead to changes in the way movies are marketed.

A young Chinese and American company backed by Internet group Tencent and two China media companies is about to buy a controlling stake in Hollywood film and television production company IM Global.

Tang Media Partners, founded by businessman Donald Tang, teamed up with CMC and Huayi Brothers to invest in Indian businessman Anil? Anil Ambani's Reliance group acquired the production company.

Tang Wei, who was once the head of Bear Stearns 'Asia operations, will also work with IM Global and Tencent to form a joint venture TV company to produce and distribute TV content, with Reliance also participating.

The two IM Global deals, worth about $200 million in total, come as China Internet and media companies compete to acquire Hollywood assets. Tencent and its local rival Alibaba are both increasingly interested in creating content for their platforms.

This year, Dalian Wanda paid US$3.5 billion to acquire a controlling stake in Legendary Entertainment, the Hollywood studio that has produced blockbusters such as "Godzilla" and "Jurassic World." In 2014, China private equity group Hony Capital teamed up with US peer TPG Capital to invest in Hollywood producer STX Entertainment.

IM Global has an office in Beijing that handles the overseas distribution of China blockbusters such as "The Mermaid", taking full advantage of the growing two-way flow between Hollywood and emerging markets such as China and India's Bollywood markets. Stewart, who founded IM Global in 2007, Stuart Ford will continue to serve as CEO.

Several people involved in the deal said the China unit could be spun off if the partnership succeeds.

Tang Wei, who currently lives in Los Angeles but originally came from Shanghai, has experience assisting Chinese companies in doing transactions in the U.S. entertainment industry. In 2012, he advised private equity firm Apollo and its investment in AMC on Dalian Wanda's $2.6 billion acquisition of the AMC theater chain.

"It's attractive to use a China perspective to invest in an American company," said Neil Shen, managing partner at venture capital firm Sequoia Capital China. "You need credibility and connections, and Tang Wei has both."

"Content will always be king, but international distribution is increasingly important to both Hollywood and China," Tang Wei said. Hollywood studios have long relied on overseas box office revenue, he added.

James Fong, CEO of Oriental DreamWorks, told the Milken Global conference in Los Angeles that box office revenue in China totaled US$6.8 billion in 2015 and will soon catch up with the United States; box office revenue in North America in 2015 was US$11 billion.

Tang Wei said that considering the huge marketing expenses, the growing role of Chinese capital in Hollywood is likely to lead to changes in the way movies are marketed.

"China is very cost-conscious and its digital awareness is much higher than that of the United States. It relies more on social media and digital media to promote the film,"he said. "There are many places in Hollywood where you can learn from China."

China is eager to gain the know-how of Hollywood, especially given Beijing's restrictions on the number of foreign films that can be released annually in the country. But under World Trade Organization rules, the quota system is supposed to end next year, which means local films will face greater competition.

"In addition to providing additional capital for the company's film and television production and funding for various activities, this transaction also brings to the studio an impressive circle of strategic and financial partners that will drive the company's further growth," Ford said in a statement.

Editor: queenie