While some feared the collapse last week of Dalian Wanda Group’s $1 billion acquisition of Dick Clark Productions could signal the end of China’s Hollywood love story, industry experts said a growing spate of failed deals is likely just a bump on the road to a happy ending.
The reason for the breakdown has little to do with business concerns or creative conflicts between Hollywood and China’s own soaring production industry, said insiders, but a lot to do with that country’s clampdown on overseas investment that began in November.
“I would not bet against the China-Hollywood partnership,” said Lindsay Conner, partner and co-chair of the entertainment and media group at West L.A.’s Manatt Phelps & Phillips, who has represented several Chinese companies in negotiations with local entertainment studios. “There are compelling reasons for both sides to expand.”
Z. John Zhang, a professor of marketing and director of the China Center at the University of Pennsylvania’s Wharton School, agreed that the future of Hollywood-China partnerships is not in any real danger.
“I think it’s more postponed than canceled,” Zhang said. “The appetite for Hollywood companies will not go away.”
Dalian Wanda, chaired by Wang Jianlin, has joined a growing list of Chinese companies whose Hollywood deals have fallen apart in recent months. Chinese copper processing company Anhui Xinke New Materials announced in November that it would buy 80 percent of Voltage Pictures, producer of “The Hurt Locker” and “Dallas Buyers Club,” among others, for a reported $345 million, but that deal collapsed a month later with Anhui Xinke reportedly alleging that Voltage had failed to provide adequate documentation to Chinese regulators.
Viacom Inc.’s Paramount Pictures Corp. also has yet to receive the first payment from an announced $1 billion deal with Chinese partners Shanghai Group and Hua Hua Media to co-finance movies for the next three years, according to The Hollywood Reporter.
‘Blind and irrational’
While Dalian Wanda and Paramount declined to comment on the situations, industry watchers said the deals are falling apart largely because of the China’s mandate to slow down and restrict the outflow of capital to overseas investments. China reportedly struck a record $225 billion in deals to acquire companies abroad last year.
The restrictions came into sharper focus the day after Dick Clark’s parent company, Eldridge Industries, announced the termination of the deal between one of its affiliates and the Chinese conglomerate.
Zhong Shan, China’s minister of commerce, decried the overseas deals as “blind and irrational investment” in a March 12 New York Times story, noting the country’s officials planned to intensify supervision of some companies.
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