Wanda’s Big Week: Two Steps Forward, One Legendary Step Back
While the dust was settling on the $350 million Mtime deal, Wanda suffered a serious setback, shelving a $5.6 billion plan to reorganize its entertainment assets.
It’s been a roller-coaster week for Dalian Wanda Group.
On July 27, the conglomerate headed by Wang Jianlin, China’s richest man, agreed to acquire Beijing-based film marketing and media company Mtime for $350 million. The move adds a powerful suite of movie-related internet services to Wanda’s burgeoning film empire, pitching it into even fiercer competition with BAT, aka the internet firms turned media and entertainment giants Baidu, Alibaba and Tencent.
“This is one more piece on the board in the rivalry,” says Manatt attorney Lindsay Conner. “But it’s also a very interesting and intelligent step in the evolution of Wanda’s business.” Still relatively unknown in the West, Mtime was established in 2005 by former Microsoft executive Kelvin Hou as a listing site for movie times but over a decade has become something like China’s answer to Fandango, IMDb, Rotten Tomatoes and an e-commerce platform for licensed movie goods. As with most things in the Middle Kingdom, the scale is bigger: When Fandango acquired Flixster and Rotten Tomatoes in February, it said the combined services reached 20 million unique visitors per month; Mtime boasts an estimated 160 million unique visitors monthly.
Still, while the dust was settling on the Mtime deal, Wanda suffered a serious setback on Monday, when it shelved a $5.6 billion plan to reorganize its entertainment assets. Wanda was looking to fold its movie production subsidiaries — including Thomas Tull’s U.S. studio Legendary Entertainment, which it acquired for $3.5 billion in January — into the group’s publicly listed movie theater unit, Wanda Cinema Line. Wanda said market conditions had changed, but the central problem appears to have been Legendary, which The Hollywood Reporter reported in May had lost more than $500 million in 2015. In a regulatory filing, Wanda said Legendary should show it can turn a profit on its own before a merger. After releasing Warcraft in June ($433 million), it has several big films in the pipeline, including Matt Damon’s The Great Wall and Kong: Skull Island.
As early as March, Wanda Group vp Liu Zhaohui claimed the company had raised $2.4 billion from Chinese investors for its film production units; the funds were expected to help offset Legendary’s acquisition. But one deal term stipulated that if Legendary and Wanda Media failed to go public in 2016, either through an IPO, backdoor listing or an asset injection into another listing vehicle, Wanda Culture Holding Co. would buy back shares from investors at a 15 percent annualized interest rate. It appears the group now could be on the hook for a few hundred million dollars.
But on Tuesday, Wanda was back to buying, revealing that it would build 150 Imax theaters in China — the largest single booking pact in its history. “This one deal represents 15 percent of our entire network,” Imax CEO Richard Gelfond tells THR. “Our relationship with Wanda is organization-wide now.”