Why China's Richest Man Could Buy Time Warner
This story first appeared in the Aug. 22 issue of The Hollywood Reporter magazine.
Now that Rupert Murdoch has withdrawn his $80 billion bid to buy Time Warner, rumors again are heating up about who could make a play for the media giant. Wang Jianlin, founder of real estate giant Wanda Group and China's wealthiest person, might seem like a dark horse in the sweepstakes. But the opportunity for the ambitious Wang to own an empire as massive as Time Warner could be impossible to resist.
Although a Wanda spokesman tells THR "this is not happening -- the takeover of Time Warner does not exist," several indicators suggest the interest and wherewithal to seal a deal. Here are three reasons why Wang, 59, could succeed where Murdoch failed:
1. He likes making bold moves
Wang is not shy about his plans for overseas expansion. Wanda revealed Aug. 8 that it will purchase the Robinsons-May department store site in Beverly Hills and build a $1.2 billion compound as its "first important step into Hollywood." The goal, Wang has said, "is to make China's Wanda a world-known brand like Walmart, IBM and Google." Asked by CNN in July about his expansion strategy, Wang quipped, "You can go back and ask your boss if CNN is for sale. I can buy it, too."
A Time Warner purchase would face tough regulatory hurdles: Given trade tensions between Washington and Beijing, the U.S. government might frown on a Chinese company owning the home of Warner Bros., CNN and other Turner television networks. But Chinese sources say a play by Wang for Time Warner is not impossible. "It makes sense as it would be an easy way for him to give his company the global standing he wants -- and fast," says one China veteran.
2. He's probably rich enough
Could Wang afford the $80 billion-plus price tag to buy something as big as Time Warner? He boasts a personal fortune of about $14 billion -- the same as Murdoch, according to Forbes -- and Wanda's revenue hit $30 billion in 2013 and is on track to top $100 billion by 2020. Wang teased in July that Wanda will buy "one or two" large international entertainment companies this year, but he declined to elaborate.
So far, his biggest industry purchase has been AMC Entertainment, the second-largest U.S. theater chain, for $2.6 billion in 2012. He also gave $20 million to the Academy's planned movie museum. Says one source, "Time Warner is more expensive than he can afford right now, but he has ways of getting money." The options for leveraging the deal include going for a listing overseas, which would allow for more investors and a higher valuation. Fellow Chinese giant Alibaba is set to become the biggest tech company in the world when it goes public.
Time Warner CEO Jeff Bewkes resisted Murdoch's $85-a-share offer, but another Beijing-based exec believes that while the timing of a full sale might not be right, he could see Wang "buying chunks to start off." Major stock purchases also are an option.
3. He needs protection
Since his early days in Dalian, Wang has maintained close ties to Bo Xilai, the former mayor of the city and a onetime rising star of the Communist Party. Bo since has been purged and is in prison, while his wife, Gu Kailai, has been jailed in connection with the murder of British businessman Neil Heywood. Gu is a lawyer and allegedly collaborated with Wang on numerous real estate projects. Wang survived Bo's downfall, but his links to Bo have not done him any favors with the government of new leader Xi Jinping, who has launched several corruption probes and oversaw Bo's purge.
Some sources speculate that Wang is eager to expand overseas as a measure of protection against domestic political issues. Wang increasingly has found it difficult to operate on his own terms in China's highly regulated media world. In July, the country's version of the SEC denied an application by Wanda Cinema Line for a $320 million offering. Wang shrugged off the rejection, but it showed that he no longer was assured of having things his own way in China.
With a new compound in Beverly Hills, Wang could be a step closer to buying his way into Hollywood.
Three Other Suitors-in-Waiting:
The prospect of combining Disney's Marvel with Time Warner's DC Comics might be too compelling to ignore, plus CNN would give Disney the cable news asset it lacks. Disney's market cap as of Aug. 8 was $149 billion compared with Time Warner's $63 billion, which gives Disney CEO Bob Iger more leverage than Murdoch might have had.
The search giant most often is mentioned as a potential bidder, though Time Warner still has the historically awful AOL merger fresh in its memory. Still, Google has a track record of massive profits (unlike AOL at the time) and a hefty $385 billion market cap to back up a potential play.
As with Google, Apple's massive market cap ($567 billion), not to mention $38 billion in cash on hand, makes it an automatic potential bidder. Time Warner's giant library of film and TV content presumably would fit neatly into whatever plans the maker of iPads and iPhones has for its still-nascent Apple TV product. And, of course, iTunes always is looking for some video leverage as it goes to war with Netflix, Hulu and other online content services.
"Three Other Suitors-in-Waiting" written by Paul Bond.