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Chinese entertainment giant Dalian Wanda Group is buying the Nordic Cinema Group Holding, a major theater chain in Scandinavia, for $930 million. The acquisition by AMC Entertainment, a subsidiary of Dalian Wanda, would add 600 screens to the conglomerate’s chain.
With almost 1,400 moviehouses which have 15,000 screens globally, AMC is close to owning 20 percent of movie theaters across the world, Caixin reported. It is this buying spree by Chinese giants of entertainment assets overseas that led the U.S. Congress to initiate an investigation over fears of China, using Dalian Wanda, to control content of movies globally.
20 Percent Target by 2020
Dalian Wanda now controls 12 percent of the global cinema market, making it the largest moviehouse operator in the world. By aiming for one out of five theaters, Wang Jianlin, the richest man in China and chairman of Dalian Wanda, aims to compete with the six largest Hollywood moviemakers in terms of controlling the global movie distribution network.
The buying spree came just after Dalian Wanda bought in December the Odeon & UCI Cinema Holdings, the leading UK-based theater operator in Europe. Nordic operates 118 cinemas with 664 screens in 50 European cities, including Finland and Sweden, Nikkei reported.
With its plan to buy Nordic, Dalian Wanda would own theater chains in the U.S., Australia, Europe and China. However, its big distribution capacity may not necessarily mean the films it markets would become box-office blockbusters.
Mediocre Movie
Ding Daoshi, research head of Sootoo, a Beijing consultancy, cited Dalian Wanda’s spending $150 million for “The Great Wall,” a joint production produced by Legendary Entertainment, a subsidiary of Dalian Wanda, which after 40 days of showing, earned only $170 million. The film needs $430 million just to break even.
He pointed out that the Matt Damon-starrer had a high cinema penetration rate, but its box-office result was mediocre. Chinese moviegoers did not patronize the film even if it had reference to the country’s iconic landmark, reflecting the 2016 box office trend in China in which the audience refused to spend money on films with bad quality.
The company’s buying spree also have negatively impacted Dalian Wanda, now holding over $26 billion debt that accumulates interest. The almost junk rating by a European ratings agency on Dalian Wanda Commercial Properties, a subsidiary, could even worsen into another downgrade if its planned buy-in of Nordic proves to be a wrong business decision and cause Dalian Wanda from being a giant into a deeply-indebted company because of its ambition to be the world’s largest entertainment firm.
