Legendary Pictures made its name bringing the dinosaurs of Jurassic World and the monsters of Godzilla to the big screen. Now Wang Jianlin, China’s richest man and the new owner of the American studio, wants the acquisition to turn his company Dalian Wanda into one of the biggest beasts in the movie industry.
The tycoon says Wanda will raise returns from its entertainment holdings this year, as the real estate market cools and he seeks to continue the diversification of his business.
It turns out that the sight of Hollywood A-listers Leonardo DiCaprio, Nicole Kidman, John Travolta and producer Harvey Weinstein treading the red carpet launch of Wanda Dalian’s vast movie facility in Qingdao in 2013 was a powerful and glitzy statement of intent (see WiC211).
Just how significant his intent is now starting to emerge, as Wang continues to buy holdings in entertainment, sports and tourism interests, making the group less dependent on property (Dalian Wanda is China’s largest commercial real estate developer).
Wang’s ambitions are now better understood, leading him to complain at how difficult it is to find the right targets.
“When I want to buy, they won’t sell and when they want to sell, I don’t want to buy,” he told a gathering in Hong Kong this week.
Days after he bought Thomas Tull’s Legendary for $3.5 billion, Wang was projecting a 30% surge in revenue for Wanda’s entertainment and sport businesses in 2016. And he is expecting to complete three more overseas purchases and two domestic ones this year, excluding cinema chains.
Wanda’s unlisted cultural and sports unit, Wanda Cultural Industry Group, is expected to generate revenues of just over $10 billion this year, while the film production arm Wanda Pictures is targeting an increase of 71% to $152 million in sales income.
On the film distribution side, his Wuzhou Film Distribution is aiming at generating box office receipts of nearly $1.4 billion and earning annual revenues of $268 million this year, up about 10.6%.
Wanda Cinema Line, the biggest operator of cinema theatres in China with 292 cinemas and 2,557 screens, is planning to open 77 new theatres and add 698 screens this year (the forecast makes no allowance for potential acquisitions).
Meanwhile new purchase Legendary is expected to contribute Rmb4.02 billion ($612 million) in revenue this year.
That said, overall group revenue is forecast to drop by 12.4% year-on-year to $38.7 billion in 2016 because of falling commercial property sales (although Wang said he expects net profit to grow).
Wanda has been busy buying overseas targets for several years. Among the previous acquistions are the American cinema chain AMC Entertainment, Infront Sports & Media, a chunk of Atletico Madrid soccer club, a plot of land at 9900 Wilshire Boulevard, Beverly Hills, for the group’s US headquarters and even the World Triathlon Corp, which organises the Iron Man Triathlon races.
Now is the time to see whether Wang has the stamina to bring these businesses together in what could turn out to be a lengthy struggle to improve returns across Wanda’s entertainment portfolio.
While Wang has courted Hollywood celebrities to help him promote his plans, he is no slouch himself when it comes to putting on a show. At a Chinese New Year event for employees last weekend, Wang took to the stage and sang Fake Monk, a song made popular by Cui Jian, one of China’s Bruce Springsteen equivalents.
Costumed dancers pranced around a giant cardboard bird behind him, and as the crowds cheered, Wang was given bouquets.
Just days later he was in Hong Kong, causing a stir at a conference. The South China Morning Post says Wang was “whirled in and out of the Wanchai venue like a rock star”, before announcing a plan to issue 500 million credit and debit cards to Chinese consumers.
The billionaire also gave short shrift to the predictions of doom for the Chinese economy.
The naysayers, he scoffed, don’t really know China: “The Western world has been talking about a China property collapse for 20 years; the Western world has been talking about China’s collapse for 20 years. If you want to view China’s problems, you must view it from China’s standpoint, you can’t view from a Hong Kong, US or Europe standpoint.”
Negative views on China’s property market were unfounded, Wang insisted. “Many people just follow others’ views– they read some media reports and then quickly form their views. They should use their brains.”
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