Looks like Viacom just opened a fortune cookie that reads “It’s not your lucky day.”
The media giant’s Paramount Pictures movie unit has failed to strike a deal with two Chinese groups to receive $1 billion in financing for a fresh series of films, according to several Hollywood sources who spoke to The Post.
"It’s DOA,” one source close to the talks said Friday. “China is passing on all investments.” A second source familiar with conversations confirmed that talks collapsed last week, adding: "Paramount deal is dead.”
Paramount, behind box-office productions such as “Arrival,” “Transformers” and “xXx: Return of Xander Cage,” appears to be the latest casualty of the Chinese government’s clampdown on cash that had been exiting the country and pouring into Hollywood coffers.
Viacom insiders insist they still have confidence in a positive outcome, pointing to recent statements from Chinese partners suggesting the parties are still trying to resolve their issues in the so-called “slate financing” deal to fund future movie projects.
The proposed deal was welcomed by Viacom shareholders when it was announced Jan. 20 as a way to buttress the risk from future film flops.
The China deal was supposed to see $300 million in financing from two companies, Shanghai Film Group and Hua Hua Media, flow to Viacom this year.
Paramount, which is searching for a new chief and is being run temporarily by a committee, suffered $450 million in losses in its last fiscal year, instead of delivering hundreds of millions in positive cash flow, sources close to the company said.
"Viacom can fund their films but slate financing is about mitigating risk. You already have an overstretched company, on the edge of being downgraded,” said one finance insider.
Controlling shareholders, however, didn’t want to sell. After former president, CEO and chairman Philippe Dauman exited, new management opted instead for a smaller Sino-American partnership, which again is floundering.
"They all just wanted to get their money out of China,” one source said of the initial flood of Chinese interest in Tinseltown assets.
Now the Chinese government is scrambling to reverse that tide. The Financial Times reported that some $75 billion of China-originated overseas deals were cancelled in 2016 across all industries.
In Hollywood, it isn’t just Viacom that’s hurting. Wanda Cultural Industry Group’s international chief, Jack Gao, is now persona non grata, according to some Tinseltown execs. That’s because Wanda backed out of a $1 billion deal to acquire Dick Clark Productions. It is now facing a court battle over the owner’s insistence that Wanda pay a break-up fee.
Hollywood players who previously missed out on Chinese money might still get a chance this fall. A new Congress comes in October and President Xi Jinping could loosen restrictions. The Chinese leader is set to meet with President Donald Trump in April.