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25 Years After Japan, China Eyes Hollywood With Paramount Interest

China’s growing love affair with Hollywood is reaching new peaks, with word that major studio Paramount Pictures may be preparing to sell a stake of itself to a Chinese buyer. Such a deal would be the highest profile investment yet in an ever-growing string of Chinese tie-ups with Tinseltown over the last two years. In some ways the movement looks strangely similar to Japan’s invasion of Hollywood more than 25 years ago, which saw Universal and Columbia Pictures sold to Japanese buyers.

That parallel may lead some to wonder if this latest Chinese drive into Hollywood could end with similarly disappointing results that saw both studios sputter under Japanese ownership. Prickly U.S.-China relations could also add an element of discomfort to this new budding love affair, since Beijing enjoys a far less friendly relationship with Washington than Tokyo.

China’s interest in Paramount is coming from media reports that say parent Viacom is exploring a stake sale in the studio after being approached by several potential investors. (English article) CEO Philippe Dauman disclosed that Viacom has hired an outside adviser to help it evaluate potential deals to sell a minority stake in Paramount, and hopes to reach a final agreement in the next three-four months.

Viacom is under pressure to boost its share price, which had tumbled by more than half over the last year before a small rally over the last two weeks. Paramount has struggled of late, ranking sixth among the six major Hollywood film studios last year. Against that backdrop, it’s not difficult to understand why the company might be looking to China and that nation’s exploding box office as a tonic to cure its woes.

Viacom isn’t giving any specifics on where potential buyers might come from, but one analyst says the most likely source is China or India. He valued Paramount at about $10 billion, meaning a strategic stake sale of around 5-10% would cost around $1 billion.