Market Insight

Chinese Wanda Group seeks to invest in Hollywood

December 10, 2014

Xin Zhang Xin Zhang Senior Research Analyst, Cinema, IHS Markit
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Chinese real estate conglomerate Dalian Wanda Group, the owner of Wanda Cinemas, is in talks to buy a controlling stake in Hollywood studio Lionsgate and independent production outfit Metro-Goldwyn-Mayer (MGM). The talks are still in the early stages. Wanda has also indicated its interest to purchase a larger Hollywood studio if available, but on the condition that Wanda wants to be the controlling player. If such deals end up going through, Wanda will have a footprint in the distribution field, both in Hollywood and in the global market. Other major Chinese companies have also stated their ambition to invest in Hollywood.

Wanda already has a significant presence in exhibition. Locally, Wanda is the largest cinema chain in China by box office revenue, and currently operates 150 cinemas with 1,315 screens across the country. Globally, in 2012, it acquired one of the key circuits in US, AMC Entertainment, which gives it approximately 5,000 screens around the world. Wanda also intends to acquire a key exhibitor from Europe as part of its ambitious plans. It has spoken to several leading European exhibitors about such an acquisition, with Odeon/UCI and Vue Entertainment both being openly discussed. Even though no deals have been announced to the public yet, their ambition hasn’t been changed.

In 2013, Wanda unveiled its $8.2 billion project, a multi-functional entertainment studio for film and TV production, Qingdao Oriental Movie Metropolis (QOMM), targeting local and international projects. Given the size and scale it offers, the multi-functional film and TV production complex would be the largest in China and even the largest in the world.

The film and cinema sectors are now a vital business of Wanda Group. With the ambition to develop itself as one of the key players in the world, Wanda has been seeking opportunities to expand their footprint in various directions like film exhibition, distribution and production. Two weeks ago, Wanda Cinema received approval from China Securities Regulatory Commission for an Initial Public Offering (IPO) of shares. It hopes to raise up to RMB 2 billion ($326 million) through a listing on the Shanghai stock market and use the money to invest in cinema building as well as to supplement cash flow. This potential studio deal would be another milestone for Wanda Cinema, providing a better opportunity to further grow and realize its long term ambition of significant industry control.

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