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Deal Expands Chinese Influence on Hollywood

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Deal Expands Chinese Influence on Hollywood.

LOS ANGELES — The Wanda Group, a Chinese conglomerate with extensive interests in the entertainment business, has agreed to acquire AMC Entertainment, North America’s second-largest movie theater owner, in a deal that is valued at $2.6 billion, including roughly $2 billion in assumed debt, the companies said Sunday.

The acquisition creates the world’s largest theater group, the companies said. It also represents a significant expansion of Chinese influence in the American film industry. The industry has been looking to China for a vast new reservoir of ticket buyers for Hollywood movies, while joining Chinese investors to produce films like the planned “Iron Man 3” and teaming up to build studio facilities and a new Disney theme park in China.

Wang Jianlin, chairman and president of Wanda, said his goal was to own theaters covering 20 percent of the world theater market by 2020. Speaking through a translator on Sunday, Mr. Wang said his aim for the circuits was to “combine, and synergize and make them profitable.”

Eventually, Mr. Wang said, he anticipated a stock offering, but he said it was too soon to know whether the companies would be combined, in what country or when stock would be sold.

Gerardo I. Lopez, AMC’s chief executive, said that he would stay with the company for a period of years under a new contract, and that other top managers at AMC were similarly expected to remain in place, though he declined to be more specific.

A former top executive at Starbucks, Mr. Lopez aggressively expanded food and beverage offerings in AMC theaters after taking charge in 2009.

The current deal offers Wanda a point of entry to the North American movie market. Its box-office, with about $10.2 billion in ticket sales last year, remains nearly five times the size of China’s, which is now the world’s second largest, with more than $2 billion in annual sales.

In addition to the $2.6 billion value assigned to AMC’s debt and equity in the deal, Wanda is expected to invest $500 million for what the companies called “strategic and operating initiatives.” Mr. Wang said that the money would generally be used for renovation and other needs, but that specifics were up to Mr. Lopez and his team. Mr. Lopez said there was no plan in place for the money. But, he said, it might be used to retire debt, acquire new theaters or fix up old ones.

After nearly two years of on-and-off negotiations, the deal grants an exit to private equity investors who have sought to cash out their interests in AMC, which has an enormous presence in a mature industry with uncertain prospects for future growth at home. After a buyout in 2004, AMC has been owned by a collection of funds led by the Apollo Investment Fund and J.P. Morgan Partners, which together control about 39 percent of the company. Other investors include Bain Capital, the Carlyle Group and Spectrum Equity Investors.

AMC says it operates 5,034 screens in 346 theaters in the United States and Canada — a count that places it behind Regal Entertainment, with about 6,580 screens in 522 theaters in North America. Wanda, which has been rapidly building multiscreen theaters in China to mimic those AMC operates in the United States, has 730 screens in 86 theaters.

Both companies have been aggressively expanding their numbers of large-screen Imax theaters, which command premium ticket prices that have significantly increased the take for fantasy- and effects-driven films like “Marvel’s The Avengers.” “The Avengers” has taken in about $1.2 billion around the world since its release by Disney, starting with a number of foreign markets last month. The Imax factor is particularly important in China, which recently expanded its 20-film import quota to 34, but required that the added films be in 3-D or Imax formats.

The Wanda-AMC combination is subject to approval by authorities in both the United States and China. Mr. Wang said he had preliminary indications that approval in China would come quickly.

In addition to its theaters, Wanda produces and distributes films in China. As word of Wanda’s negotiations with AMC became public in recent weeks, some American executives have privately said that Wanda might eventually use newly acquired American theaters to help pry open an export market for Chinese-made films.

Asked about that prospect on Sunday, Mr. Wang said he had no plans to distribute movies here. But he said he expected the theater company to be a platform for the development of commercial property, hotels and retail centers in the United States. Wanda already operates hotels, department stores, and a number of tourism-related businesses, including a large theme park, in China, but does not have a significant business presence here, he said.

Mr. Lopez said executives of Wanda and AMC began talking about a combination in the summer of 2010, as AMC began looking for ways to retire debt, including a possible stock offering. Wanda stepped away, but renewed its interest about nine months ago.

Re-posted from the New York Times
Michael Cieply | May 20, 2012 | NY Times


8 Responses to “Deal Expands Chinese Influence on Hollywood”

  1. China Watcher says:

    Americans should get used to this sort of headline. As long as there is no effective response to undervalued currencies, no fundamental tax reform that establishes equal conditions of competition in international trade, no strategy for converting retained corporate earnings into investment, no investment to redress our massive infrastructure problems, no coherent national energy strategy — America will be auctioning off its assets to the highest bidder. With trillions of surplus dollars, the Chinese are the logical buyer.

    • Tom T says:

      The biggest asset being auctioned off is demand that comes from a prosperous economy and the people in it who earn enough to create that demand.

      Tom T.

  2. Bob Hall says:

    The AMC chain should prove an effective conduit for Chinese propaganda. Working their way upstream, the Chinese can conquer the entire U.S. film industry — one of our most successful exporters and wealth creators.

  3. Gustav Schmoller says:

    We are all Tibetans and Uighurs now — or will be soon.

  4. Joe Brooks says:

    Gustav, we have been on the way quite some time, now.

    Ever wonder why McConnell seems to be completely ignorant of any realities?

    “A Heritage Foundation military analyst who sounded warnings about Chinese threats to U.S. security was shown the door after Elaine L. Chao, the conservative think tank’s top Asian studies adviser, complained about his policy writings, WorldNetDaily has learned.

    Chao’s views on China have come under closer scrutiny after President-elect Bush picked her to head the Labor Department. As a Cabinet member, she would have top-secret clearance and be in regular contact with national security officials.

    As WorldNetDaily earlier reported, her China-born father is on a first-name basis with Chinese President Jiang Zemin, who also heads the state Communist Party and Central Military Commission. Her father also owns a shipping company that does business with China.

    Greenberg and AIG, through its employee PAC, also have donated thousands of dollars to Chao’s husband, Sen. Mitch McConnell, federal records show.”

    • MK says:

      I think that the best argument against the “conservative mindset” can be found on Alternet. They are running a piece this week from the “formerly conservative” head of the well known “Little Green Football” blog. After being flown to Europe to meet conservatives there, he was appalled to find out that some of the top Belgians that he was meeting were former NAZI party members. This has been my experience as well.

      Why is everybody so shocked that the country is being sold out by these people? Since Bush Sr. signed the Executive Order (12083?) that PRIVATIZED US INFRASTRUCTURE to his friends, they have been stealing us blind just like Hitler and his minions did to Germany. The dance is the same even though the tune is updated.

      I have been warning people for almost a decade about who these clowns really are. About 2007, people began to tell me, I thought that you were kidding or crazy…now, I am beginning to see that you were absolutely on the mark. I left Texas because it is filled with these clowns and they have destroyed the state.

  5. Tom T. says:

    Wow, the highest ranking minority member in the Senate is a security risk to the country through policy that kills the economy and favors China.

    No wonder things have gone the way they have.

    Tom T.

  6. Arthur Taylor says:

    This is the final step in the free trade saga. Trade deficits, which are the after effects of the loss of millions of jobs here in the USA, now fund the procurement of US concerns, who’s revenue streams will now flow out of country. Brilliant! Absolutely brilliant!


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