Chinese cinema owner seeks to buy stake in Lionsgate studio
China’s burgeoning film business is poised to take another leap forward on the global stage.
Chinese billionaire Wang Jianlin, who owns China’s biggest cinema chain, is looking to buy the parent of Lionsgate, the independent studio behind the lucrative “Hunger Games” and “Twilight” franchises. He also wants to invest in Metro-Goldwyn-Mayer, which produces the James Bond movies.
The potential acquisition would accomplish two things: provide a steady stream of popular movies for Chinese theaters, and make Wang’s Dalian Wanda Group a more powerful force in the global entertainment industry. Dalian Wanda also owns AMC Theatres, the No. 2 chain in the U.S.
“Many people come knock at my door, but Wanda is only interested in the big players, and we want control,” Wang told Bloomberg News. “China’s movie industry is booming at unprecedented speed. Buying a well-known U.S. company will help our distribution overseas.”
Lionsgate, MGM and Wanda all declined to comment. Shares of publicly traded Lions Gate Entertainment Corp. rose about 3% Monday on speculation of a possible deal.
Although a deal is uncertain, industry analysts were not surprised that Chinese theater interests would be looking to buy into Hollywood.
“Studios have both the know-how to create high-quality entertainment and the relationship with western filmmaking talent that so many Chinese companies covet,” said Lindsay Conner, who chairs the entertainment and media practice at law firm Manatt, Phelps & Phillips. “If you buy a studio, you get the content, the know-how and the relationships in one package.”
Lionsgate is the most likely acquisition target among the Hollywood studios, with a market value less than $5 billion. The other Hollywood studios — Disney, Universal, Sony, Paramount and 20th Century Fox — are much bigger and are part of major media companies.
“I think [Wang] would prefer to buy a really big studio, but those are not for sale,” said Stanley Rosen, a USC professor and expert on the Chinese film business. “Lionsgate is kind of the last of the independent studios where there’s a chance you can actually afford it.”
And Lionsgate has what Wanda lacks: a pipeline of franchise movies that have a track record overseas, especially in China.
In addition to the “Hunger Games” films, Lionsgate has scored overseas hits with “Divergent,” “The Twilight Saga: Breaking Dawn — Part I” and “Escape Plan,” which last year pulled in about $41 million in ticket sales in China.
Chinese entertainment companies like Wanda need Hollywood content to help fill their theaters and cater to a growing box office that is expected to reach about $5 billion this year and surpass the U.S. by 2019. China is adding about 10 theaters a day. Leading much of the multiplex growth is Wanda Cinema Line Corp., with more than 1,247 screens in 149 Chinese theaters.
Lionsgate could help Wanda Group expand globally. The studio has had a surge in revenue in the last year, with help from its franchise films and growth in its television division. The company posted a net income of $20.8 million, or 15 cents a share, for the three months that ended Sept. 30. That’s up from $505,000 in the same period last year.
Lionsgate has also already branched out to the Chinese market. In July, Lionsgate teamed up with Chinese e-Commerce giant Alibaba to launch a subscription streaming service for mainland China. The service, called Lionsgate Entertainment World, allows users of the platform to watch box-office and television favorites such as “Divergent” and AMC’s “Mad Men” on set-top boxes.
Wang, a real estate tycoon who is one of China’s wealthiest men, made a splash two years ago when his company acquired AMC Entertainment for $2.6 billion, creating the world’s largest theater chain.
In 2012, he told The Times that he planned to invest $10 billion in U.S. companies in the next decade, which could include buying department stores, hotel management companies and at least one more cinema chain. Worldwide, Wanda plans to invest as much as $30 billion in the next decade.
In addition to AMC Theatres, Wanda recently bought the site of the former Robinsons-May department store in Beverly Hills, where it will invest $1.2 billion to build a mixed-use development. The company also announced a $20-million donation to the Academy of Motion Picture Arts and Sciences for its forthcoming film museum.
Dalian Wanda Group isn’t alone in its attempt to make Hollywood connections. Because China is the world’s second-largest film market, Chinese companies have looked to studios to increase their stakes in the industry.
In October, Jack Ma, the founder of Alibaba Group, visited major studios for a series of sit-downs with high-level executives. Ma was said to be mulling investing in Lionsgate.
Rosen said that Wang’s attempt to buy Lionsgate is undoubtedly supported by the Chinese government, which sees film as a way to expand through “soft power.”
“He is establishing his footprint,” Rosen said of Wang. “He’s becoming a global player, which is exactly what the Chinese government wants their big names to be doing.”
Doing so, however, requires making films with broad international appeal.
“China is getting better at making movies for its own citizens, but creating a global footprint to match Hollywood would be difficult to do on its own,” said Phil Contrino, vice president and chief analyst at BoxOffice.com.
But deals between large Chinese companies and major studios haven’t necessarily come to fruition.
Huayi Bros. Media Corp., a Beijing film production company, was in talks this year to invest as much as $150 million in Studio 8, the film company led by former Warner Bros. Pictures Group President Jeff Robinov. But negotiations reportedly fell apart, leading Huayi to invest in its own U.S. subsidiary.
Rosen said that even if Wanda can’t buy a controlling stake in Lionsgate, it could make a significant investment and “gradually build up.”
Wang held an Oct. 8 meeting in Beijing with Lions Gate Entertainment Chairman Mark Rachesky, the studio’s largest shareholder, with a 37% stake, according to a news post on the Chinese company’s website.
In addition to cinemas, Wanda has been a key player in growing China’s film industry. The company recently partnered with the Qingdao municipal government in eastern China to launch a fund that would provide as much as 1 billion yuan ($162 million) annually to support film and TV productions.
Billed as the first of its kind in China, the subsidies would mainly be available to projects that film at Qingdao Oriental Movie Metropolis, a sprawling production facility recently launched by Wanda Group that aims to be the “Hollywood of China.” Wanda announced the $8.2-billion project last year with plans for 20 film and TV soundstages.
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