Dalian Wanda Group spends big in Hollywood
The Chinese entertainment conglomerate hopes to get American films shot in China
BEVERLY HILLS— Wang Jianlin, chairman of the Dalian Wanda Group, the Chinese conglomerate that is emerging — controversially — as a superpower in the entertainment business, sat in an opulent armchair at the Peninsula Hotel on a recent Sunday and discussed his business ventures with a casual efficiency.
His response to criticism from a member of U.S. Congress that Wanda, after a spectacular $8-billion (U.S.) shopping spree in Hollywood, is a propaganda threat and should be subject to more Justice Department scrutiny? It is “not like we are invading,” Wang said, contending that Wanda’s goal involves “helping” U.S. film companies “get more market share in the emerging movies market that is China.” (And, of course, making money for Wanda along the way.)
Wang, visiting California to unveil sizable financial incentives aimed at wooing U.S. productions to Wanda’s new $5-billion studio complex in China, went on to call himself an “angel” investor. He noted that Wanda had purchased struggling companies like AMC Theaters and Legendary Entertainment — “the best companies would not sell to us” — and strengthened them. AMC’s stock price, for instance, has risen 64 per cent since Wanda bought it for $2.6 billion in 2012.
But what about concerns that Wanda is moving aggressively in Hollywood as part of a move by the Communist Party to control the portrayal of China on the screen? Wang, who noted that Wanda was focused on entertainment “profit” 14 times during a 40-minute interview, said storytelling decisions by American studios in relation to China, with or without Wanda ownership, were about maximizing returns at the fast-growing Chinese box office. “More Chinese elements mean more Chinese profits,” he said.
Wang had arrived by private jet to wrap up Wanda’s latest acquisition — the company is buying Dick Clark Productions for about $1 billion — and dangle an enormous carrot in front of Warner Bros., 20th Century Fox, Paramount, Universal and Walt Disney. Wanda and the Qingdao municipal government have established a major incentive program to lure movie and TV production to the 165hectare Qingdao Movie Metropolis.
Billed as an effort to “bridge the entertainment capitals of the world,” the program will provide a 40-per-cent rebate on certain production spending in Qingdao, which is about 725 kilometres north of Shanghai and the site of Wanda Studios, still under construction. Scheduled to fully open in 2018, Wanda Studios will feature 30 advanced sound stages, including the world’s largest at more than 107,000 square feet, an underwater stage and an 89hectare back lot.
The rebate on each film or television production will be limited to $18 million. The total amount available to disperse will be $150 million annually. There will be three classifica- tions of rebate productions, according to Wanda, and only one of those would require Chinese cultural elements, Chinese actors and Chinese investors — films classified by the Chinese government as co-productions that are not subject to import limits. (Only 34 non-Chinese films are allowed to play in the country annually and those must suit Chinese censors.)
Applications will be evaluated by a 10-person committee of government officials and Wanda executives, a Wanda spokesperson said.
Wang, a spry former military officer who is said to be China’s richest man, said he hoped that an additional $3 billion in Qingdao amenities — “international hospitals, interna- tional schools, yacht clubs, hotels, shopping” — would make American stars and marquee directors more willing to spend months at a time working there. “Like going on a vacation” is how he described it.
If successful, the rebates could shift the global movie incentives game, in which Hollywood has moved production to locales like Canada, Romania and New Zealand. Legendary Entertainment has plans to film at least two movies under the program, including a sequel to Pacific Rim, which was filmed in Toronto.
In an interview, Mary Parent, Legendary’s production chief, dismissed concerns that Wanda was seeking to push a pro-Chinese agenda.
“There has been zero interference with storytelling,” she said. Parent, an Oscar-nominated producer highly regarded in Hollywood, added that Wanda had made it possible for Legendary to increase its output.
“Unlike most Hollywood companies, we’re not operating in a resource-constrained environment, which creates tremendous opportunity,” she said.
Still, Wang’s trip probably won’t do much to ease concerns by some lawmakers, editorial writers and lobbyists about the ambition of Wanda, which has financial ties to relatives of senior Chinese Communist leaders.
In an Oct. 6 letter to the Justice Department, Rep. John Culberson called for heightened oversight of Chinese moves in Hollywood.
Culberson cited “serious concerns” about how Chinese media acquisitions “may be used for propaganda purposes.”
Wang said Wanda intended to control 20 per cent of the world’s movie theatres seats by 2020. It has about 13 per cent, including those run in Europe by the Odeon and UCI Cinemas Group, which Wanda bought for $650 million. By 2020, Wanda aims to have an annual revenue of $100 billion and net profits of $10 billion.
The company remains interested in buying more Hollywood companies as it seeks growth, including a major studio, Wang added. As Wanda pushes deeper into filmed entertainment, the company plans to build a $1.2-billion headquarters in Beverly Hills “to aid in China’s entry into Hollywood’s film industry and generally promote Chinese culture abroad,” Wanda said in a news release.
Wang came across as a disciplined executive who cared only about making money and not tinkering with scripts. He said he had not seen any videotape from The Great Wall, a coming $150-million Legendary Entertainment film starring Matt Damon.
He “is not quite into the technical details like that, because the entire movie sector in Wanda accounts for only one-eighth or one-tenth of the revenue,” he said. The more handsoff that Wang can appear, of course, the better Wanda will fare among those calling for heightened scrutiny of its entertainment dealings.
But all that matters to Hollywood is Wanda’s money. The mainstream movie industry, after all, has been only too happy to self-censor its scripts in an effort to appease Chinese regulators and win clearance into a fast-growing market.
By that measure, Qingdao applications should already be rolling in.
“We’re not operating in a resource-constrained environment, which creates tremendous opportunity.” MARY PARENT LEGENDARY ENTERTAINMENT PRODUCTION CHIEF