Laid in america theaters12/14/2022 and Chinese markets work will become increasingly valuable, as the two film markets combined will likely account for about 40 to 45 percent of total world box office receipts by 2020. Wanda has already begun to develop and produce films in China, and an understanding of how both the U.S. AMC will give him a nice business escape hatch if he needs it.ĪMC could serve as the first element of a vertical integration strategy under which Wanda would get into financing, production and distribution of Hollywood style films for the global market. Although Wang denies he is being investigated, he must be thinking about the possibility of future political fallout from the Bo scandal. But unlike Paul Y, Wanda already has a presence in the movie business.Īt least part of Wang Jianlin's business rise can be attributed to his close dealings with disgraced politician Bo Xilai, who was once the party chief of Dalian, where Wanda is based. We've already seen one hobbled Chinese real estate company, Paul Y Engineering, attempt, unsuccessfully, a foray into entertainment with Legendary Pictures. So Wanda may see AMC as a better mid- to long-term bet than its core real estate development business. And commercial real estate in China hasn't been a very appealing business lately, with government regulation, tight debt policies, and a slowing economy all contributing to a downturn in the sector. Theaters are a cash business, and Wanda could eventually take AMC public, which would be a nifty way for the company to shift a chunk of its asset base and grow it in the relatively safe haven of the U.S.ĭalian Wanda, the parent company of Wanda Cinema Line, is mainly in the business of commercial real estate in China. The AMC purchase might simply be a vehicle for Wanda to move a large sum of money from "soft" Chinese currency into hard American greenbacks. So what, then, are Wanda's true motivations for buying AMC? How does Wang Jianlin benefit? Herewith, a few theories. Wanda could have chosen to amass a huge market share in a very fast-growing, profitable territory. The $3.1 billion they're spending on AMC could instead have acquired or built thousands of Chinese and Asian cinemas. The opportunity costs for Wanda are huge. There may be some scale economies such as increased bargaining leverage in dealing with suppliers of films, equipment, and popcorn, but these hardly justify paying a peak market price for an aging cinema chain with limited growth prospects and low profitability. Size alone, and global reach, offer no discernible strategic advantages in a business whose customers' movie-going choices are purely local ones. If there were competitive advantages to becoming a very big global player in the cinema business, someone would have done it before. "This transaction will help make Wanda a truly global cinema owner" "We want to be a big company, not just in China but in the world." The rationales offered by Wanda's billionaire chairman Wang Jianlin have so far been unconvincing, the following being representative of his statements: Now that a deal has been announced I still don't see any compelling business reasons for it. Last week I laid out a detailed argument that the acquisition doesn't appear to make much sense for Wanda. Wanda has indicated that it will also spend an additional $500 million on theater renovations and technology upgrades. Dalian Wanda, the $16 billion private Chinese conglomerate that operates in the commercial real estate, culture & entertainment, and retail industries, announced on Sunday that it has signed an agreement to purchase AMC Entertainment and its 5,048 screen North American theater chain for the sum of $2.6 billion.
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