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By Bloomberg

Hollywood film studios are courting Chinese investors to gain access to the world’s most populous nation, brushing aside concerns that their new partners will seek to censor the next generation of films and TV shows.

In the latest sign of the growing mutual interest, Dalian Wanda Group Co. said yesterday it’s in talks to acquire a stake in Lions Gate Entertainment Corp., maker of “The Hunger Games” films. Alibaba Group Holding Ltd. Chairman Jack Ma toured Hollywood in October seeking alliances, while Shanghai-based Fosun International Ltd. invested in Jeff Robinov’s Studio 8, which is making films for Sony Corp.

Hollywood is seeking Chinese investors despite the country’s routine censorship of films and TV shows. Studios from Walt Disney Co. to Metro-Goldwyn-Mayer Inc. have changed story lines, altered national identities and removed sex scenes to accommodate government oversight. Hollywood has even partnered with the Chinese government-owned companies on movies like “Kung Fu Panda 3,” from DreamWorks Animation SKG Inc.

“Every mainstream studio is keenly aware of not offending the Chinese market, because it’s become such an important revenue stream,” said Tom Nunan, a visiting professor at the University of California at Los Angeles School of Theater, Film and Television.

Wanda is interested in buying control of Lions Gate, though the studio, run from Santa Monica, California, is only willing to sell a minority stake, Wanda Chairman Wang Jianlin said yesterday in an interview.

China’s Growth

A deal would likely bring a payout to Lions Gate investors including Chairman Mark Rachesky, owner of a 37 percent stake, after the shares more than quadrupled since the start of 2012. Lions Gate rose 3 percent to $34.90 yesterday in New York.

China, the second-largest film market behind the U.S., is also among the fastest-growing, according to the Motion Picture Association of America, making it the single most important opportunity for Hollywood studios to expand.

At the same time, President Xi Jinping is encouraging his countrymen to help build cultural “soft power” and increase the country’s influence around the world.

“He has really put forward a new vision for China’s place in the world,” said Robert Cain, president of Pacific Bridge Pictures and an entertainment industry consultant.

The Chinese box office grew 27 percent to $3.6 billion last year, while U.S. ticket sales rose 1 percent to $10.9 billion, according to the Motion Picture Association of America. As China looks to grow its creative industries under its latest five-year industrial plan, it is improving copyright protection.

Local Tastes

To appease Chinese censors, and sometimes cater to local tastes, studios are making changes. Disney, based in Burbank, California, offered a separate version of 2013’s “Iron Man 3” with Chinese actors and bonus footage. It totaled $121.2 million in ticket sales in the market.

For the remake of “Red Dawn” in 2012, MGM changed the enemy army to North Korean from Chinese, the Los Angeles Times reported then. “Cloud Atlas,” the Warner Bros. film also released in 2012, had almost 40 minutes cut for the Chinese version, with sex scenes omitted, the Hollywood Reporter said at the time.

Robinov told The Wrap that he had greenlight authority over films made by Studio 8. They will be targeted to a global audience and distributed in China by Fosun.

American entertainment companies are also investing in China. DreamWorks Animation, based in Glendale, California, formed a partnership, Oriental DreamWorks, in 2012 with state- owned Shanghai Media Group, China Media Capital and Shanghai Alliance Investment Ltd. Oriental DreamWorks is producing “Kung Fu Panda 3,” scheduled for release in 2016, and is building an entertainment center in Shanghai for live performances.

Theme Parks

Disney plans to open a theme park in Shanghai next year, while Comcast Corp.’s Universal Studios plans to invest 20 billion yuan to construct a park in Beijing, the company said on Oct. 14.

The international box office is now more than twice as large as the domestic market of U.S. and Canada, growth. That’s incentivized studios to focus on fare that targets as broad an audience as possible, such as superhero films. Those films are easier to conform to Chinese tastes, said Nunan, the UCLA professor, who was a producer of the Oscar-winning film “Crash.”

“When it comes to superhero movies that’s really not that difficult,” Nunan said.