China’s richest man eyes global film empire with purchase of Hollywood blockbuster studio

Reuters, Bloomberg

Flanked by models in white sequin dresses amid booming music and dazzling lights, China’s richest man savored his latest entertainment triumph this week: the announcement of a $3.5 billion deal to take over a Hollywood blockbuster movie studio.

Acquiring Legendary Entertainment on Tuesday puts Wang Jianlin and his conglomerate, the Dalian Wanda Group, a step closer to the ultimate goal: a movie empire underpinning a globally recognized, household name to rival Google, Apple or Microsoft.

“The acquisition of Legendary strengthens Wanda’s entertainment ecosystem in China,” said David Hao, an analyst at Credit Suisse Group AG in Hong Kong. “I would expect Wanda Group and Wanda Cinema to continue acquiring high-quality cinemas and online ticketing platforms both overseas and in China to further solidify its positions as the world’s largest cinema operator.”

Wang has hinted at big acquisitions before. In a past interview with Bloomberg, he acknowledged that he was in talks to buy a majority stake in “Hunger Games” studio Lions Gate Entertainment Corp. and that he was keen to invest in Metro-Goldwyn-Mayer Inc., producer of the James Bond and Hobbit franchises.

One hint dropped on Tuesday by Wang was that he was looking at cinema assets in Europe but prices are too high right now.

He also said he will begin the process of pursuing an initial public offering of his film-production operations, including Legendary, soon.

Under President Xi Jinping, China is broadening its use of so-called soft power, and — through skyscrapers, soccer and movies — Wang, a former People’s Liberation Army officer, is on the front line.

“It’s entirely possible in the future that we’ll hold an even bigger ceremony to announce we bought an even bigger entertainment group,” Wang told reporters this week.

Wang’s rise to prominence has required a mix of political nous and commercial savvy.

The son of a Long March veteran, he started his business life in the northeastern city of Dalian, where his company grew to become the country’s largest property developer.

Wanda also is the world’s biggest commercial properties developer, with a Hong Kong-listed company that controls 125 commercial shopping malls, along with 81 hotels. The group reported total revenue increased 19 percent last year to $44 billion.

“Remain close to government, and away from politics,” Wang, 61, told Reuters in a 2014 interview. Deal with the authorities, he said, referring to the Communist Party and the government, “less with individuals.”

Over the last two years, Beijing has pledged tens of billions of dollars to boost its image abroad, funding a slew of international development, trade and investment initiatives, led by a $50 billion commitment to fund the newly established Asian Infrastructure Investment Bank.

Capturing hearts and minds through film distribution and production is Wanda, the world’s biggest motion picture theater company, with 6,600 cinema screens on three continents, including more than 2,200 in China. In 2012, Wang spent $2.6 billion to buy AMC Entertainment Holdings in the United States, and last year bought Australian cinema operator Hoyts Group.

Dalian Wanda’s acquisition of Legendary Pictures is “certainly symbolic,” said Chen Shaofeng, vice dean of Peking University’s Institute for Cultural Industries.

Schuyler Moore, a Hollywood-based entertainment attorney who has represented the China Film Group and other Chinese companies that have financed Hollywood content, said Wanda’s acquisition was likely “a precursor” to a bigger deal.

“This is going to be a big year,” Moore said.

Alongside movies, sports plays an important role for China, promoted by Xi Jinping, a soccer fan who is pushing for the country to host the World Cup finals.

Again in tune with Beijing, Wanda last January bought a 20 percent stake in the then-reigning Spanish soccer champion Atletico Madrid, a move that Wang said was aimed at “strengthening the quality of Chinese football.”

One month later, the group signed a $1.2 billion deal to buy a controlling stake in the Swiss sports marketing firm Infront Sports & Media Group AG, which focuses on distributing media rights for broadcasting such events as the soccer World Cup and the Olympic winter games.

Timing has always been crucial for Wang, who was raised in China’s southwest Sichuan province, the eldest of five brothers.

Wang followed his father into military service when he was 15 but left in 1988 and borrowed 1 million yuan ($150,000) to start a real estate company in provincial Dalian in the earliest days of the boom in China’s housing market.

He started out buying construction quotas from one of Dalian’s three state-owned property developers to develop slum housing — a job nobody else wanted. The local government, led by now-disgraced former Mayor Bo Xilai, supported Dalian Wanda.

He took control of Dalian’s soccer team in 1994 at a time when Bo elevated the sport as an important calling card for the city. Wang renamed the team Dalian Wanda, and it went on to win four national league championships over the next six years.

But politics and business occasionally overlap. A member of Xi’s family was an investor before he sold out. Wang, however, is adamant: “Wanda has no political affiliation,” he told Harvard students in October.

Wang’s shrewdness in business dealings played out more than two years ago in the port city of Qingdao at the launch for a planned $8.1 billion film studio and tourism development.

As Wang celebrated alongside guests such as film stars Leonardo DiCaprio, Nicole Kidman and John Travolta, 350 kilometers (220 miles) to the west at a courthouse in Jinan, former Dalian boss Bo was convicted of corruption and abuse of power.

That sealed the fate of a rival local industrialist, Xu Ming, who died in prison after admitting spending millions on Bo’s family.