Shanghai Media, Disney Studios sign deal for joint film production

Walt Disney Studios and Shanghai Media Group Pictures, a subsidiary of Shanghai Media Group, signed a multiyear agreement on Friday to develop movies under the Disney brand.

The films will be released in China and other markets. Disney Studios, a unit of The Walt Disney Co, would pair writers from the United States who specialize in action, adventures and fantasy to work with writers and filmmakers in China.

The jointly produced films will feature Chinese elements, meaning they can be made locally while targeting international markets.

"For over 90 years, Disney has built a rich legacy of entertaining families with high-quality storytelling and compelling characters," Disney Studios President Alan Bergman said in a statement.

"Disney's collaboration with SMG adds an exciting chapter of new stories for the next generation of global Disney fans."

Tony To, Disney Studios' executive vice-president of production, will oversee the program.

Su Xiao, general manager of SMG Pictures, which was established in 2007, said the company's rich media resources and understanding of the Chinese market, coupled with Disney's tradition of storytelling, will provide audiences across nationalities and ages with new experiences.

China's film business is expanding rapidly, and it's the world's second-biggest movie market behind the United States.

Disney has made many efforts to break into the Chinese film market.

One of those efforts was a 2013 superhero film, Iron Man 3, which was shown in China. The movie included special footage featuring local actress Fan Bingbing. It grossed more than $120 million in China.

Over the years, Disney has been increasing its investment in China. For example, Shanghai Disney Resort, the first Disney resort on the Chinese mainland, is scheduled to open in 2015.

For its part, SMG has enhanced collaboration with Hollywood filmmakers.

Oriental DreamWorks is a joint venture backed by China Media Capital, SMG, Shanghai Alliance Investment Ltd and Hollywood's DreamWorks Animation SKG. Kung Fu Panda 3 is underway as an Oriental DreamWorks co-production, much of which is being made at a world-class animation studio in Shanghai.

However, the latest deal has its drawbacks. For one thing, SMG Pictures is better-known for television series than films, analysts noted.

Peng Kan, research and development director of the Beijing-based consultancy company Legend Media, said: "Given the timing of the deal, I think the significance of this cooperation for both parties might be something beyond creating good stories for movie production."

SMG Pictures has been preparing for an initial public offering for quite some time, and joining forces with Disney will burnish the company's reputation in the industry, among other benefits, Peng said.