Chalk up a win for Wanda Group. The unlisted Chinese conglomerate will pay $3.5bn for Legendary Entertainment, the US media company behind films including Jurassic World and The Dark Knight. The deal will be Wanda’s largest to date, according to Dealogic.
Wanda’s founder Wang Jianlin has acquired plenty of other overseas trophies in recent years, but this move makes strategic sense, too. China’s entertainment market is growing rapidly and is an area of increasing focus for Wanda Group; last weekend Wanda said 2015 revenues for its culture and tourism arm, Wanda Cultural Industry (which accounts for 17 per cent of the total top line), were up nearly one-half year on year against group revenues up a fifth. Growth at Shenzhen-listed subsidiary Wanda Cinema Line was similarly racy.
Despite this rapid pace of growth, China’s movie-goers are underserviced. At the end of 2014, there were only half as many cinemas in China as the US, according to EntGroup; this is set to grow. Content, too, presents opportunities. Chinese film production went from 91 in 2010 to 320 in 2014, accounting for just over half of the total box-office receipts. Hollywood films are subject to a quota of 34 a year, but joint productions involving Hollywood studios and a local partner fall outside this quota and do not have to pay 14 per cent of box office takings to the state distributor.