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(Reuters) - Chinese film production company Huayi Brothers Media Corp has closed a three-year deal with new Hollywood studio STX Entertainment to jointly finance, produce and distribute up to 15 movies annually by 2016, the companies said on Wednesday.
The funding will allow STX to significantly expand its film production plans, Chief Executive Robert Simonds said in an interview. Financial terms were not disclosed.
Simonds and private equity firm TPG Capital founded STX in 2014 with a plan to release eight to 10 films per year, each at a cost of $40 million to produce plus $35 million for marketing, Simonds said. After seeing a large number of interesting projects, STX sought additional funding to increase its output.
Now, STX will boost its slate to 12 to 15 movies per year by 2016, he said. The company is focused on mid-budget films aimed at wide audiences, an area major Hollywood studios have moved away from as they focus on big-budget franchises or inexpensive movies with little risk.
STX will spend $750 million on film production and marketing in the next 12 months, $900 million to $950 million next year, and $1.1 billion to $1.2 billion in 2017, Simonds said.
The pact is the latest partnership between a Hollywood studio and a company in China, the world's second-largest film market behind the United States and Canada. It is the first deal in which a Chinese film company will be involved in the entire process from production to marketing and distribution, the companies said.
"Partnership with STX is an important step as Huayi Brothers implements an international growth strategy and enters the U.S. film market," Huayi Brothers CEO Dennis Wang said in a statement.
The films produced by STX and Huayi will be made for markets around the world, Simonds said, with the hope that Huayi will help secure distribution in China, which limits imports of foreign-made movies.
"They have unbelievable reach and power to help some of the movies that we are doing find a home there," Simonds said.
The first film from STX and Huayi, psychological thriller "The Gift" starring Jason Batemen, will reach theaters in July.
Reporting by Lisa Richwine; Editing by Cynthia Osterman