Beverly Hills, California and Shanghai – Relativity Media (“Relativity”), a next-generation media company, announced on June 15 at the Shanghai International Film Festival that it has been appointed as the strategic international distribution partner for Chinese language films licensed by China Film Promotion International (“CFPI”), a state-owned government agency that oversees the promotion and commercial distribution of Chinese films overseas.

In addition, Relativity and Jiangsu Broadcasting Corp. (“JSBC”) announced a partnership agreement to develop, co-finance, co-produce and distribute film and television content for both the international and Chinese markets. As part of the partnership, JSBC will make an equity investment in Relativity.

Relativity also announced it has signed a strategic advisory agreement with Industrial and Commercial Bank of China Limited (“ICBC”). SeedShine Capital, a Chinese investment firm focused on the media and entertainment sector, has entered into a binding agreement to invest in Relativity. Financial terms of the agreements were not disclosed.

“Relativity has deep and growing ties to China, one of the world’s most dynamic and vibrant film markets, and the partnerships we announced today will further strengthen the robust foundation we have built in China,” said Ryan Kavanaugh, CEO of Relativity. “The partnerships with CFPI and JSBC will deepen our relationship with the Chinese media and entertainment industry and provide a world-class platform from which to co-develop Chinese and international film and television content from two leading organisations. Finally, the strategic advisory agreement with ICBC, the world’s largest bank, and the investment by SeedShine are strong endorsements of Relativity’s strategy and we look forward to a mutually beneficial relationship with Chinese companies and financial institutions.”

In 2013, box office revenues in China grew 27 percent over the prior year to $3.6 billion, making China the first international market to exceed $3 billion in box office. That growth is only expected to continue; by one estimate the Chinese box office could be worth as much $5 billion in value potential for Hollywood studios by 2017, including imported and local productions.

Relativity in China

Relativity’s existing presence in China is underpinned by its ownership of SkyLand Entertainment, a film distribution and financing company headquartered in Beijing. Originally launched as a joint venture between Relativity, IDG China Media Fund and SAIF Partners, SkyLand is now a wholly-owned subsidiary of Relativity and maintains a close strategic relationship with the government-run distributor Huaxia Film Distribution Co. Recent Relativity films released in China include Immortals,Mirror Mirror and Free Birds.

CFPI Partnership

Under the terms of the partnership with CFPI, Relativity will become the cooperative partner for promoting and distributing Chinese films licensed by CFPI in the international arena. CFPI is mandated by State Administration of Press, Publication, Radio, Film and Television to promote Chinese films internationally. Relativity will distribute select Chinese language films in the U.S. and help to promote Chinese language films at various major film festivals overseas. Relativity will receive a distribution fee in return for its services.

Guoqing Gu, the newly appointed Head of CFPI said, “Relativity is an ideal partner to help drive CFPI’s mission of bringing Chinese films to international audiences. CFPI and Chinese film makers will benefit from Relativity’s strong international distribution network and track record of success as one of the fastest growing film studios that is breaking new ground in Hollywood with its seamless multi-channel platform. This partnership is an important step for the Chinese film industry and we look forward to working with Relativity to promote high quality Chinese films abroad.”

The currently-titled, Imperial Consort Yang, now in production, is expected to be the first film that Relativity will distribute in the U.S. in partnership with CFPI. This Chinese epic romance war film is a love story between Yang Guifei and Li Longji, also known as Emperor Xuanzong of the Tang Dynasty. The movie is directed by Cheng Shiqing (writer of Codename Cougar) and features Fan Bingbing, Leon Lai, Wu Chun, Joan Chen, Ning Jing. The film also has a director group including Zhang Yimou and Tian Zhuangzhuang.

Jiangsu Broadcasting Corporation Collaboration Agreement

As one of the most influential media operators in Jiangsu and in China, JSBC is a multi-media company that operates television, radio, newspapers, magazines and internet properties. The two companies will develop, produce and distribute new film and television content across JSBC and Relativity’s platforms.

Bu Yu, President of JSBC, said, “JSBC is delighted to make this investment into Relativity, one of the world’s fastest growing media companies. Combining our distribution and content with Relativity’s will strengthen the already formidable platforms of both our companies. This partnership will allow JSBC and Relativity to collaborate across the full range of content from film and television, to sports and music, and we are excited about the possibilities it creates.”

ICBC’s Strategic Advisory Service

The strategic advisory relationship with ICBC will grant Relativity access to ICBC’s extensive, international network of financial resources.

Wenwei Duan, Managing Director of Investment Banking of ICBC, said, “Given Relativity’s quite sophisticated, risk-mitigated business model and its high growth potential, investing in the company is an attractive opportunity for investors like SeedShine Capital. We look forward to working with Ryan and the Relativity team as they tap into the Asian and international capital markets to continue to pursue strategically compelling growth opportunities.”

Hugo Shong, Founding General Partner of IDG Capital Partners and a member of Relativity’s board of directors, said, “We are excited to partner with the world-class team at ICBC as we build on our success in the fastest growing entertainment market in the world. This partnership will provide us with the added financial services and network to help Relativity capitalise on the significant opportunities in the Chinese market.”

SeedShine Capital is an investment management company with deep experience and strong ties to China’s media and entertainment industry. The firm is focused on serving as a bridge connecting the Chinese film industry with the international film market.

Proceeds from the SeedShine Capital and JSBC investments will be used to support Relativity’s core business strategy, which is focused on three key growth areas:

• Increasing Relativity’s annual release slate to over 15 movies by 2015/2016.
• Expanding Relativity’s digital offer to include increased content creation and distribution via investments in mobile, internet, multi-channel network and over-the-top space capabilities.
• Strategic acquisitions of complementary film and television libraries, television production and distribution networks, and advertising and branding agencies that fit with Relativity’s existing infrastructure.