Hunan and Shanda Invest in $88M Content Deal

After Gaining Mobile Platform With Hurray Acquisition, Shanda Eyes TV and Film Expansion With Hunan Satellite TV Alliance

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SHANGHAI ( -- Two of China's most powerful media companies are joining forces in an $88 million deal to produce and distribute content for films, online games and other entertainment formats.

The Hunan Broadcasting, Film and TV Group, the regional broadcaster behind hits like "Ugly Wudi," the Chinese version of "Ugly Betty," and the "Mengniu Yoghurt Super Girl Contest" talent contest, is partnering with Shanda Pictures, a subsidiary of a leading Chinese interactive entertainment media company.

Hunan and Shanda will remake a hit TV series about Princess Huanzhu, Huan Zhu Ge Ge
Hunan and Shanda will remake a hit TV series about Princess Huanzhu, Huan Zhu Ge Ge
Based in Shanghai, Shanda Interactive Entertainment is one the largest operators of online games in China as well as a major publishing house that owns Chinese cartoons, literature and music.

In June 2009, Shanda paid $46.2 million for a 51% stake in Hurray! Holding Co. (Hurray!), a mobile phone and wireless service provider in the world's largest mobile phone market.

China had nearly 720 million mobile phone users at the end of September, according to government statistics, and introduced 3G services earlier this year.

Shanda has a strong presence in China's internet cafes through its games but needed to integrate and expand its businesses like games, music and literature with a mobile platform. China's mobile game market is expected to reach $263 million this year, up 38.5% from 2008, according to the iResearch Consulting Group. As 3G mobile services grow in China, mobile entertainment is expected to bec crucial.

"Hurray was an important step for us. This is a further expansion into movie production," said Vivian Chen, Shanda's investor relations manager in Shanghai. Cooperating with a major TV broadcaster "will help leverage both parties' expertise, in terms of production and distribution of the content."

Hunan is a provincial media company founded 12 years ago in Changsha, the capital of Hunan province in south-central China. Through cable and satellite distribution, it reaches around 880 million viewers in China. With a 3.5% share of China's television market, Hunan is the most popular channel among women and viewers under age 23.

The joint venture's first project will be a remake of a hit TV series about Princess Huanzhu, called "Huan Zhu Ge Ge," adapted from a romantic novel by renowned Taiwanese writer Qiong Yao. "Huan Zhu Ge Ge" was first produced in 1998, and became one of China's most popular television series.

Hunan and Shanda are also planning a movie based on "Xing Chen Bian" (Evolution of Beginnings), a popular novels from Shanda's publishing subsidiary.

Shanda is already adapting Xing Chen Bian into an online game.

Hunan is eager to expand in China -- and overseas. Last week, the company signed a content production and distribution deal with an Asian American-owned media company, Multicultural Radio Broadcasting (MRBI). They will develop multi-language content for an international channel that Hunan TV launched in May 2009 in Hong Kong and Macau. The channel has since been picked up in Australia and the U.S. and will also soon be available in Japan, South Korea and Southeast Asia.

In their first joint production, Hunana and Shanda will broadcast a live New Year's Eve party in China and the U.S., according to Interfax China, a local news service. MRBI also wants to work with Hunan TV to launch new channels in the United States, as well as explore opportunities in new media.

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