China to cut film, TV investment

Chinese spending in the international TV and film industry could be cut back under new rules laid out by the country’s government.

The new regulations on spending have emerged after a spate of investments by Chinese companies over the past 12 months. These include a £30m (US$37m) deal involving UK-based animation studio Blue Zoo and Dalian Wanda Group’s US$3.5bn purchase of film and TV producer Legendary Entertainment.

Further deals will now face increased scrutiny as spending on entertainment companies, as well as in the areas of sport, film and hotels, is restricted.

Investors will have to show that the deals offer “mutual benefit” and The People’s Bank of China is expected to reduce lending that supports investment in Hollywood.

“Profound changes are taking place in international and domestic situations and Chinese enterprises face not just relatively good opportunities but also various risks and challenges in overseas investments,” the Chinese government said in a statement.

Chinese company Wanda has already been hit by a tightening of the rules, which caused its US$1bn acquisition of US-based Dick Clark Productions to fall through.

China’s “outbound investment” fell by 44% on the first seven months of this year compared with last year’s figure, according to Bloomberg.

The Chinese authorities have already forced domestic broadcasters to cut back on imports of international programming and, more recently, foreign formats.