Disney, SMG to build brand in China

Updated: 2014-11-24 10:47

By JACK FREIFELDER in New York(China Daily USA)

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The Walt Disney Co will benefit from the expansion of its partnership with the Shanghai Media Group (SMG) by gaining more support for its films and family programming in China, said a managing director with a global investment bank.

"The catalyst, if not the urgency, of expanding the partnership is the ability to increasingly capitalize on the Disney brand throughout China in association with the prominence that the park will bring when it opens in Shanghai," David Bank, a managing director of equity research at RBC Capital Markets, said in an interview with China Daily on Saturday.

The first Disney theme park on the Chinese mainland - worth nearly $4.4 billion -is scheduled to open by the end of 2015, about 10 years after the Hong Kong theme park opened.

"Disney typically has a multipronged approach globally: consumer products, movie studios, parks, television, etc, and Shanghai can be a reinforcement of the brand across those and other platforms," Bank said. "As all the pieces are coming together, it becomes more important to have an expanded partnership with a media player on the ground."

Shanghai also will have Disney's first store on the Chinese mainland early next year. The 53,000-square-foot venue will be the company's largest and one of more than 350 stores around the world.

SMG and Disney announced on Friday that their 15-year partnership would be expanded to include "television content development, film co-production, content distribution and marketing initiatives".

In March, the companies signed a multiyear agreement to produce Disney films for the Chinese market.

There are a number of projects in the works, including Born in China, a co-produced nature and wildlife film set for release in 2016. Disney is also in talks with Toonmax, China's leading children's programming and animation production company, about developing a China-centric animation series for kids.

"The strength of this deepening relationship with Disney, and the volume and diversity of the initiatives that we are pursuing, helps set the foundation of a multi-faceted strategic alliance with Disney," Li Ruigang, chairman of SMG, said in a press release.

"The series of projects we are announcing … will serve as the cornerstone of actualizing SMG's vision in applying world-class creative process," Li said.

Robert Iger, Disney chairman and CEO, said in a statement Friday: "Disney is committed to providing high quality entertainment experiences to audiences worldwide. SMG's … digital destinations and assets provide unparalleled access to that entertainment in China."

Disney and BesTV New Media Co Ltd agreed to form a joint venture in Shanghai in 2013, and the two companies are in the “final steps of registering”, the release said.

BesTV, an SMG subsidiary, has formed joint venture deals with a number of domestic and foreign partners, including: Lenovo Group Ltd, Microsoft Corp, Sony Corp and the ZTE Corp.

SMG, established in 2001, is a media conglomerate with holdings in radio, television and print. BesTV's main business is Internet-based television services.

Bank said China is "an extraordinarily difficult" media entertainment market to penetrate without a local partner. The fact that SMG has secured partnerships with major multinational firms points to its “importance in the Chinese ecosystem”, he said.

"There's a market for kids' programming in every global market, but you can't do this alone," Bank said. "It's about leveraging intellectual property in a world where it's increasingly difficult to do so, but that's Disney's edge in any mobile or online ecosystem. If it's the Disney brand, you'll be able to find it."