Warner Bros. Entertainment Inc. is in talks with China Media Capital for a joint venture to produce local-language films in China, according to people with information on the potential partnership.
In the past, Hollywood studios have worked with partners in China to produce films, but those deals would normally not be long-term and last only a few films. This deal, which aims to make several films annually, could be the most expansive of its kind.
The agreement serves as a way to ensure that the fastest growing major film market in the world will continue to consume films despite doubts regarding the growth prospects of the Chinese economy as a whole.
The agreement is not yet clear regarding the number of films that would be produced or the amount each partner would invest.
Closing the deal is potentially challenging due to recent financial turmoil in China. However, China's recent economic slowdown has not hindered the Chinese box office, which has continued to expand, with more local productions taking a bigger share.
China's box office grew 45 percent in 2015, with local films taking the greater share of growth.
Six of the top 10 films in the Chinese box office this year have been domestic productions, namely "Monster Hunt," "Pancake Man," "The Man from Macau 2," "Monkey King: Hero Is Back," "Dragon Blade" and "Wolf Totem."
The top-grossing film in China this year and of all time is "Furious 7," but "Monster Hunt" is only $33 million away from beating its record as of Aug. 16.
The Warner Bros. deal hopes to get around rules in China that limit the release of foreign films to 34, on a revenue sharing basis that only lets the Hollywood studio keep 25 percent of box-office revenues.
Time Warner Inc., the parent company of Warner Bros., invested $50 million in China Media Capital. The investment opened the doors to the current discussions that have been going on for several months.
China Media Capital also entered a joint venture with DreamWorks Animation SKG Inc., which led to the production of the upcoming "Kung Fu Panda 3."
Legendary Pictures LLC also partnered with China Film Co. to produce the recently wrapped "The Great Wall."
Both of those deals were made to produce primarily English-language films for global audiences, unlike the current deal Warner Bros. is pursuing.
Both China Media Capital and China Film Co. are state-backed.