Wanda delays integrating Legendary into entertainment business
The entertainment unit of China’s Dalian Wanda Group has delayed a planned integration of Legendary Entertainment just months after the conglomerate acquired the Burbank-based company.
Wanda Cinema Line Corp., a publicly traded arm of Beijing-based Dalian Wanda Group, said in a regulatory filing on Monday that Legendary should operate independently for a period of time and show it can produce stable profits.
Legendary, which is headed by Thomas Tull, has had an up-and-down run at the box office over the last year, with films such as “Crimson Peak” and “Warcraft” failing to live up to expectations to varying degrees.
Wanda Group surprised Hollywood in January by announcing it would purchase Legendary, one of the production companies behind “The Dark Knight” and “Jurassic World,” for as much as $3.5 billion.
The deal, which was the largest by a Chinese firm of a U.S.-based production company, closed in March, but financial details of the arrangement were not disclosed.
Now, according Wanda Cinema Line’s filing with the Shenzhen Stock Exchange, it has suspended a planned $5.6-billion reorganization because of securities markets conditions. China’s economy has been roiled by several issues this year, including a contraction of its manufacturing sector and Britain’s surprise vote to leave the European Union.
Wanda Cinema Line, which houses Wanda Group’s exhibition assets, said that a potential integration of Legendary into its business at a later date would better serve both companies. Still, Wanda Cinema Line said it expects Legendary to be profitable this year.
Legendary declined to comment.
Led by Tull, 46, Legendary made its name by co-producing a series of hits over the last decade. Movies such as “The Dark Knight” and “Jurassic World” grossed more than a billion dollars worldwide. The company maintains a marketing and distribution pact with Universal Pictures.
One of Legendary’s highest-profile future releases, “Kong: Skull Island,” was well received at Comic-Con last month. Fans were shown the first trailer for the film, which is scheduled for release in March and stars Brie Larson and Tom Hiddleston.
Legendary has already made inroads in the Chinese film market. Although “Warcraft” had a disappointing domestic box office haul of $47 million, the fantasy film, which cost an estimated $160 million to produce, was a hit in China. Released in June, “Warcraft” took in $221 million there, according to Box Office Mojo.
In recent years, deals between U.S. entertainment firms and Chinese partners have become infamous for hitting snags and delays — or suffering worse fates.
Among the failures was a deal between Beijing-based film company Huayi Bros. Media Corp. and Studio 8, the production company launched by former Warner Bros. film chief Jeff Robinov.
But Wanda Group has been aggressive and unabashed in its effort to become a major Hollywood player. The company is run by chairman Wang Jianlin, who is China’s richest man and a staunch advocate of the country becoming more influential in the global entertainment business.
In 2012, Wanda purchased exhibitor AMC Entertainment for $2.6 billion, making it the largest cinema operator in the world. And last month, The Times reported that Wanda Group was in advanced talks with Viacom Inc. to acquire a 49% stake in the Paramount Pictures studio.
Also, its AMC subsidiary is closing in on a deal to acquire rival exhibitor Carmike Cinemas for $1.2 billion.
“Whatever difficulties exist in the financial markets, it has not stopped Wanda from acquiring very real assets in the entertainment space,” said Lindsay Conner, an entertainment industry lawyer and partner in the firm Manatt, Phelps & Phillips.
Wanda did not respond to requests for comment.
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