Disney Partners With Tencent, China Group for Animation

Walt Disney Co. (DIS), the world’s largest entertainment company, formed a partnership with Tencent Holdings Ltd. (700) and a Chinese state group to develop animation content for the country and the international market.

Andy Bird, chairman of Walt Disney International, signed an agreement in Beijing with Tencent, China’s biggest Internet company, and the Ministry of Culture’s China Animation Group, the Burbank, California-based company said in a statement today. Disney will help train local talent and develop original content for television, movies and digital platforms, it said.

In February, the U.S. and China reached an agreement that gives U.S. filmmakers improved access to a $2.1 billion box- office market in the world’s most populous nation. Tencent may be able to benefit from the partnership by strengthening its existing businesses such as online gaming, according to Bill Huang, a Shanghai-based analyst at DBS Vickers Securities.

“One of the things Tencent can do through this cooperation is to foster animation-related intellectual property on its own platforms,” said Huang. “But I can hardly see any meaningful near-term earnings contribution.”

China is one of the world’s fastest growing film markets. In 2010, the Asia Pacific box office grew by 21 percent with China accounting for 40 percent of the growth, the Motion Picture Association of America said in February 2011.

Under today’s agreement, Disney will provide its expertise in storytelling from concept creation and story development to market research, the company said.

China said in December it will give tax breaks to emerging ‘cultural’ industries and has provided preferential tax policies to animation and digital television companies. Greater development of the media and cultural industries was set as a national target in the government’s 12th five-year plan that covers the period from 2011 through 2015.

To contact Bloomberg News staff for this story: Stephanie Wong in Shanghai at swong139@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net