China’s Film Investors: Harvest Seven Stars Fund Hopes to Fly Where Others Have Fallen


By Robert Cain for China Film Biz

February 7, 2012

Yesterday’s flurry of press articles regarding the newly announced Harvest Seven Stars Media Private Equity Fund (HSSMPEF) got me thinking about how easy it is these days to get tongues wagging regarding the promise of Chinese money for Hollywood movies, and how difficult the reality of putting that money to work can be.

The purported $800 million fund is a co-venture between private equity firms Harvest Alternative Investment Group and Sun Redrock Investment Group. The latter company is managed by Bruno Wu and Yang Lan, the Chinese media power couple who I profiled here last week.

The fund’s ambitions, as described by Wu, are lofty: to source and distribute “global movies, primarily English-language films that are not just going to be released in China, but really produced by Hollywood and released on a global basis.”

As a big booster of China-Hollywood cooperation, I’m pleased to see such an ambitious venture mounted. But on the other hand, I’ve seen too many of these sort of initiatives fail to get very excited about what is, after all, just a concept at this point. Other, far larger Chinese investors have attempted to accomplish the same feat that Wu and his partners say they’re pursuing, and all have so far failed to even get to the starting gate. I was close to two of these previous initiatives (confidentiality obligations prohibit me from naming them) and I’m wondering how the new fund will avoid the obstacles and pitfalls that doomed those prior undertakings.

Let’s start with this question: Is the $800 million really there? Is it really $400 million? $100 million? Is there really any committed capital at all? There’s no way to know for sure; China’s securities laws don’t allow for the sort of transparency that other countries require. The new fund’s principals have long track records and their continued success presumably rests on their reputations, so I’m willing to accept that the money’s there. But then again, if it isn’t, it wouldn’t be the first time in recent months that a ‘major’ Chinese-funded film investment partnership turned out to be nothing but vapor.

Another fundamental issue: where’s the film development, production or distribution experience in the HSSMPEF partnership? As far as I can tell, the principals of the two funds have made and released exactly one movie between them. A made-for-internet movie.

But money and experience aren’t even the biggest problems. There’s plenty of money in China, plenty of money interested in funding movies. And relevant experience can be bought (warning: don’t click that link if you’re easily offended by shameless acts of self-promotion). The real challenge, the one that has yet to be surmounted by Chinese investors or their co-production partners, is the creative challenge.

The creative challenge boils down to two fundamental sticking points that caused other, similar film investment schemes to fail. First, China’s censorship strictures. For anyone doing business in China who wishes to continue doing business in China, it is critically important not to anger the Chinese Communist Party (CCP). That means ensuring, with no risk for error, that none of the movies you fund will in any way violate the rules and taboos promulgated by SARFT, or make China or the CCP look bad.

This is a very big deal. Even a cursory review of the SARFT rules reveals that they are antithetical to popular, commercial filmmaking. Without sex, violence, horror, or crime, there’s not much room for entertainment in movies made for adult audiences. Any Chinese fund investing in films–whether made in China, in Hollywood, or anywhere else–will be held strictly accountable to these rules. But Hollywood filmmakers will find it almost impossible to be governed by them. Balancing these opposing tensions has proven an unattainable goal for previous Chinese investment fund hopefuls.

The second creative obstacle is the severe shortage of available co-production screenplays. Very few in Hollywood know how to write a script that can satisfy China’s censors while also serving as the basis for a film with appeal to Chinese audiences as well as global ones. Almost no one in China can do this either. My company, Pacific Bridge Pictures, has a team of writer-producers focused on this very challenge, and there are a few others who have the necessary cross-cultural backgrounds and development skills needed to thread that needle. But an $800 million fund is going to have a very difficult time finding or generating enough material to fill its production pipeline.

In short, for HSSMPEF to succeed, it will have to pull off a major balancing act. Wu, Yang, and their partners are all smart, capable, successful people, but they’re rushing headlong into uncharted territory on a tightrope.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

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China’s Film Investors: How Do You Do, Bruno Wu?


By Robert Cain for China Film Biz

January 29, 2012

When friends in China began telling me last month that a Chinese investor was making a serious play to buy Summit Entertainment, I must admit I was skeptical. His name, Bruno Wu, was unfamiliar to me, and I had long ago grown inured to the come-ons of visitors from China professing to be bona fide investors.

Not that China by any means has the monopoly on posers and wannabes, but I’ve observed a strong correlation between the economic rise of the PRC and the number of Chinese trolling around Hollywood claiming to have money, connections, and the keys to the Middle Kingdom. Many, as anyone involved in Hollywood’s film industry can attest, deliver nothing more than 热风 (hot air).

But when Wu’s name came up in conversation a second, a third, and a fourth time, I realized there might be more to his story, and I decided to investigate. My first call, as usual, went to my good friend and attorney John Zhang, a partner at the Reed Smith law firm and one of the world’s top attorneys focused on U.S.-China business.

“Yes, he is for real,” John told me. “His non-Italianized name is Wu Zheng (吴征); he’s better known as husband of the famed anchorwoman Yang Lan.”

Indeed, Yang Lan’s name invariably comes up when Wu is mentioned. The Chinese power couple has made substantial and extremely lucrative careers together in Chinese media. Their China Sun Media is a significant player in Chinese television production, print and online publishing, and in 2009 Forbes listed them as the 207th wealthiest people in China, with an estimated fortune of $510 million.

Both Yang, 43, and Wu, 45, were educated in China and in the U.S., she at Beijing Foreign Studies University and at Columbia University in New York, where she earned an MA in International and Public Affairs; he at Culver-Stockton College, Missouri, and later at Washington University in Missouri where he earned his MA in international affairs. They were married in 1995 at New York’s Plaza Hotel.

The couple’s ascent as media titans began long before they met, when Yang Lan was selected in 1989 from over 1,000 applicants, at the age of 21, to host the Zheng Da celebrity quiz and talk show on China Central Television (CCTV). The timing for Yang could hardly have been better: in the post-Tiananmen era a new class of people—young, educated, upwardly mobile—was beginning to take root, and they turned to Yang as a sort of Chinese Oprah Winfrey. Within a year she was drawing TV audiences of 220 million.

Wu, for his part, began his career after he and Yang married and returned to China in 1996. He joined Hong Kong broadcaster ATV and served as its COO until 1999, when he and Yang co-founded Sun Media, for which he serves as Chairman. They took the company public on the Hong Kong stock exchange barely a year later, and on the strength of the TV, print and internet businesses they established together, before long the company was trading at a value of nearly $200 million.

Wu also served briefly as Chairman of Sina Corporation, which has since gone on to become China’s Twitter, and as a director of Shanda Interactive Entertainment, a leading online game operator. But at the time of his reported discussions with Summit Entertainment, Wu had little experience as a film executive, and it may have been this inexperience that ultimately doomed his bid for the owner of the Twilight franchise.

According to Sun Media’s corporate website, the company’s foray into film production and distribution only began in 2010, when it entered into a strategic partnership with China Film Group “with an aim to produce a variety of high quality content for women audiences.” In October of 2010 Sun released its first and only film to date, a 90-minute feature titled “Love, Finally,” which was distributed online.

My sources tell me that Wu’s bid for Summit would have been more lucrative for Summit’s shareholders than the $412.5 million in cash and stock that Lionsgate put on the table, but skepticism over Wu’s motives and his inexperience in film led them to accept the lesser Lionsgate deal. Wu has said that he is still on the hunt for media acquisitions, and with partners like the $37 billion finance firm Harvest Global Management and former TPG China head Shan Weijian, he should be well positioned to finance a substantial deal.

A recent Financial Times article speculated that Wu might be exploring a purchase of the large stake in Relativity that Elliot Associates is so eager to jettison, but logic dictates that with their collective experience and brainpower, the Wu consortium will be smart enough to avoid obvious investment blunders.

My own personal experience tells me that Wu is but one of many Chinese individuals and institutions with the wherewithal and desire to invest in Hollywood. Although no Chinese investor has yet made an acquisition of a major Hollywood brand, the Year of the Dragon will likely be the time for that to finally happen.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and www.pacificbridgepics.com.