New York, March 20, 2015 -- Moody's Investors Service said that the partnership agreement announced this week between Lions Gate Entertainment Corp. (Lionsgate - Ba3 CFR) and Hunan TV & Broadcast Intermediary Co. Ltd. (Hunan) whereby Hunan will co-finance qualifying Lionsgate films over three years, is positive for Lionsgate's strategic and fundamental growth though will not impact the company's credit ratings. Given its scale, the Chinese market is playing an ever growing important role in global film and television industry decisions including the types of content being greenlit. Some western films released in China are surpassing the box office performance in the US. The partnership relationship clearly benefits both parties as Hunan gets to aligns itself with a successfully growing studio with proven franchise building capabilities in both film and television. For Lionsgate, it continues to manage a highly volatile and therefore financially risky film production business by selling foreign territories to reduce its production budget exposure for individual films. The slate financing arrangement with Hunan excludes The Hunger Games, Divergent and Twilight franchises. With this new arrangement, it layers over that framework a partnership which will co-finance a portion of most of Lionsgate films, further reducing the company's film production cost exposure. Lionsgate will continue to distribute its own films and benefit from distribution fees in most important markets that are not presold, and with some help from Hunan, the second largest broadcast and cable network owner in China after the Chinese government, distribute up to four of the co-financed films in China through Hunan's wholly-owned TIK Films subsidiaries in partnership with LEOMUS Pictures, a leading distributor in the Chinese film industry. We believe that Lionsgate can benefit from other strategic opportunities and collaborations given Hunan's broadcasting and cable networks presence in China and the transaction does not limit Lionsgate's control over the film acquisition and greenlighting process. Nor does it affect Lionsgate's control over production timing or release dates in territories where Lionsgate will be the distributor. Therefore, we believe this deal has strong potential for development and expansion in one of the world's largest markets with a strategic local partner.

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