As part of the agreement, Shanghai Film Group and Huahua Media will finance a combined 25% of all Paramount's films for the next three years, with the option to extend it to a fourth year, according to a source familiar with the situation.
The deal comes as parent company, Viacom Inc, focuses on a turnaround plan under new Chief Executive Officer Bob Bakish.
Paramount also could use the partnership as an entry point into China, said Brad Grey, CEO and Chair of Paramount, noting that the studio would someday be interested in producing films in the country.
"Certainly Paramount would love to produce films (in China) and we think that should be a win for us," Grey said in an interview.
