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Market Insight

Wanda and Sony end marketing deal

November 30, 2017

Xin Zhang Xin Zhang Senior Research Analyst, Cinema, IHS Markit
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The film finance and marketing deal between Dalian Wanda Group and Sony Pictures Entertainment has come to an end. Wanda signed the movie co-financing and marketing deal with Sony Pictures in September 2016. Under the contract, Wanda was to co-finance a number of films produced by Sony Pictures, and would also undertake marketing and promotions in China for Sony titles using its ‘consumer-facing infrastructure’, effectively a group of companies under Wanda’s control. Projects that came into the deal included Passengers, Smurfs: The Lost Village and The Emoji Movie

Our analysis:

Dalian Wanda Group owns China’s largest cinema chain (by box office), Wanda Cinemas, and has been very active in the entertainment industry in the past few years with a few key investments, both domestically and internationally. Domestically, Wanda aims to build the largest film studio in the world, Qingdao Movie Metropolis complex, which is still partly under-construction. Internationally, Wanda first acquired US exhibitor AMC in 2012 and then Australian cinema group Hoyts in 2015; then it purchased Legendary Pictures, a US Big-budget film production house, in early 2016; and more recently, Wanda (through AMC) acquired Odeon (UK), Nordic Film Group (Denmark), and Carmike (US) almost at the same time in late 2016.

In 2017, the Chinese government started to limit the Chinese capital used in foreign acquisitions, and Wanda has been largely affected. Wanda decided to sell some of its assets: hotels and theme park, alongside shares in Qingdao Movie Metropolis complex, in response to a push by the government to restrict its access to capital from state-owned banks and to reduce its debt. Now it seems the end of partnership with Sony Picture is another consequence of the regulatory changes although Sony does say the deal had run its course and was not being renewed.

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