More toWanda’sHol­ly­wood foray than meets the eye?

China Daily (Canada) - - BUSINESS - By SIVA SANKAR

There must be more to DalianWanda Group’s $3.5 bil­lion deal for con­trol of Hol­ly­wood film stu­dio Leg­endary En­ter­tain­ment than meets the eye.

The price ap­pears rea­son­able as last year alone, as many as seven Hol­ly­wood flicks, in­clud­ing Leg­endary’s Juras­sicWorld, grossed more than $1 bil­lion each at cin­e­mas world­wide. Of the seven, Star Wars: The Force Awak­ens, which has al­ready raked in $1.73 bil­lion, is not yet done at the box of­fice.

Th­ese are just box of­fice re­ceipts. Movie rev­enues also stream from DVDs, Blu-rays, tele­vi­sion broad­cast rights, pay-per-views, mer­chan­dis­ing, so on. The 2009 sci-fi epic Avatar holds the all-time rev­enue record (nearly $3 bil­lion). Clearly, suc­cess­fulHol­ly­wood movies make a lot of money. But money is not what cash-flushWanda ap­pears to be chas­ing through Leg­endary.

For per­spec­tive, try this: At the end of 2015, the di­ver­si­fied con­glom­er­ate had as­sets worth 634 bil­lion yuan ($97 bil­lion), up 21 per­cent year-on-year. Last year’s rev­enue of 290 bil­lion yuan, up 19 per­cent year-on-year, ex­ceeded the group’s tar­get. Bulk of it (190 bil­lion yuan) came from com­mer­cial prop­er­ties, in the form of real es­tate con­tract rev­enue, rent and ho­tel busi­ness.

Its 2015 film and cinema rev­enue was just 8 bil­lion yuan, or 2.75 per­cent of the to­tal, in­clud­ing 6.3 bil­lion yuan from sale of 151 mil­lion tick­ets at its 292 cine­plexes with 2,557 screens in China.

I think small change is not what Wanda’s “leg­endary”— there, I’ve said it— bossWang Jian­lin, al­ready the Chi­nese main­land’s rich­est man, is hop­ing to spin from the Hol­ly­wood stu­dio.

Wang im­plied as much while an­nounc­ing the deal in Bei­jing on Tues­day. If money were the prime mo­tive, he would have tar­geted more well-known names— the Warner Bros, Walt Dis­neys and the Uni­ver­sals.

Wanda de­scribed the deal as “China’s largest cross-bor­der cul­tural ac­qui­si­tion to date”. Wang told the BBC that if US films wish to suc­ceed in the high-growth Chi­nese mar­ket, the world’s se­cond-largest, they “should do some­thing to cater to Chi­nese au­di­ences’ in­ter­ests— if they don’t, there might be trou­ble”.

What bet­ter way to pre-empt “trou­ble” than tak­ing con­trol of a Hol­ly­wood stu­dio? That way, you can do “some­thing” about “cul­tural” aspects. Cor­rect? Afraid, not. Then, all that talk is just cor­po­rate­s­peak? Prob­a­bly.

So, let’s look be­yond cash and cul­ture then, at­Wanda the con­glom­er­ate. The world’s big­gest cinema com­pany— tick. Film pro­duc­tion— yes. Stu­dio com­plexes— of course. Com­mer­cial real es­tate, depart­ment stores, ho­tels, theme parks, re­sorts, schools, hospi­tals, mu­se­ums, yachts, sports clubs, sports mar­ket­ing, peo­ple­based sports com­pe­ti­tions... Tick, tick, tick….

Given the global reach and in­flu­ence ofHol­ly­wood films, con­trol of a rea­son­ably suc­cess­ful but not iconic stu­dio, it ap­pears, would fit well with­Wanda’s ap­par­ent de­sire to ex­pand its me­dia busi­ness out­side China, with­out shock­ing ev­ery­one and lift­ing Amer­i­can brows.

If you are nurs­ing global me­dia am­bi­tions, if a stu­dio deal is just the tip of the ice­berg— more on this in a bit, bear with­me­for now— you wouldn’t want to give the game away now by buy­ing out iconic la­bels.

With Leg­endary and the 379-cinema, 5,261-screenAMCal­ready in its pocket in theUS, Wanda could milk Hol­ly­wood for all its worth to pub­li­cize its busi­nesses with­out spend­ing an ex­tra buck on ad­ver­tis­ing.

A sub­lim­i­nal in­ser­tion here and a film shoot in its theme park there, a shot with its ho­tel in the back­drop here, a film role for one of its foot­ball play­ers there… and, soon, the whole world will know who isWanda and what China has. Why “some­thing”, Wanda stands to win ev­ery­thing.

Wang­may or not have heard of In­dian me­dia ty­coon Ramoji Rao who has al­ready blazed a trail by mak­ing bil­lions from a news busi­ness span­ning print, broad­cast and on­line me­dia, film and stu­dio busi­nesses, ho­tels, com­mer­cial prop­erty, fi­nanc­ing, food and what have you.

Okay, now for the “tip-of-the-ice­berg” the­ory. Go­ing by the fi­nan­cial mus­cle, fre­netic ex­pan­sion and am­bi­tion ofWanda, I would not be sur­prised if it plumps for the­New York Stock Ex­change to list the com­bined en­tity com­pris­ing Leg­endary and its own film pro­duc­tion unit.

And then? I can vi­su­al­ize scream­ing head­lines like, “Wanda snares NewYork Times”, “Wanda swal­lows CNN”, “Wanda pock­ets eBay”. Watch out Alibaba Group’s JackMa, here comesWanda’sWang.

Con­tact the writer at siva@chi­nadaily.com.cn

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