I just spoke with DreamWorks Animation CEO Jeffrey Katzenberg about his company’s new joint venture with two Chinese-owned media companies and the Chinese government in an exclusive interview. This new studio, based in Shanghai, aims to reach far beyond DreamWorks Animation’s [DWA 20.65 1.13 (+5.79%) ] current focus on digital animation — Oriental DreamWorks wants to be the definitive family entertainment company — yes, the "Disney of China." Katzenberg calls the new venture the first family-branded media in the fast-growing media market.

Katzenberg tells me that this partnership is unprecedented, giving DreamWorks a major head start on Chinese production over its rivals.

The new studio won’t release a digitally animated film until 2016, but Katzenberg tells me that the new venture will start generating revenue *this year* as it starts to put its DreamWorks content through the Chinese distribution system. But the real value will come down the line when the new studio starts to generate a range of original content. And eventually, this is the kind of company we could see IPO.

What about the fact that the China’s government will own 55 percent of the company? Does DreamWorks Animation have to worry about censorship? Or having to produce propaganda? Katzenberg says no — that a main reason DWA was selected by the Chinese government, is the fact that they’ve never been asked to censor a single one of the movies the studio has distributed in China over the past 16 years.

There’s no denying that it’s been tough for Hollywood to get into China—the fact that DWA has to make this kind of deal to really get into the market is a testament to that fact. Katzenberg cautioned that China is still not an open market, despite the fact that it announced Friday it is allowing 14 more 3-D and Imax movies to be distributed annually. Still, Katzenberg says more movies, with a better cut of the box office will be good for all of Hollywood. And in the meantime, Katzenberg is working with the system to diversify DreamWorks Animation’s business and eventually boost its bottom line.

Jeffrey Katzenberg Wants to Create the 'Disney of China' - CNBC