Chinese exhib chain may buy all or part of circuit
AMC Entertainment, the nation’s second largest theater chain, is in active talks to sell itself to Chinese company Wanda Group, an industry source said Tuesday, as investors look to cash out at a buoyant time for the U.S. exhibition biz.Discussions with Wanda go back several years, before the Chinese theater industry had embarked on the explosive growth it’s seeing now with giant real estate developer Wanda at the fore. The move would make China a major player in the domestic U.S. entertainment landscape through AMC’s 5,000-plus screens at a time when the two nations are looking to increase cooperation. China recently raised its cap on foreign films allowed in the country each year and has pacts in place with studios from DreamWorks to Walt Disney. Imax inked a joint revenue-sharing agreeing with Wanda as it builds out the large-screen format in China. Fostering business relationships between the U.S. and China can be complicated. The SEC is said to have sent letters of inquiry to five Hollywood studios including Disney, DreamWorks Animation and 20th Century Fox about dealings with government officials in China. And Wanda’s powerful chairman Wang Jianlin has been linked to Bo Xilai, the disgraced former Communist Party chief of Chongquing who served as mayor in Dalian, where Wanda is based. Xilai was accused of corruption and suspended. His wife was arrested in connection with the murder of a British businessman. An AMC spokesman wasn’t available to comment. Reps for its four main investors, Apollo, JPMorgan Partners, Bain Capital and Carlyle Group, had no comment. AMC filed for an initial public stock offering last year and hasn’t commented on reports last month that it was canceling the IPO. Wanda has 86 plexes and 730 screens. The idea is that buying AMC would increase the company’s leverage with Hollywood. But it’s mostly been U.S. firms seeking leverage in China, not vice versa, and at least one top exhibition exec wondered just what Wanda would get from the deal. “I will admit I’m confused about what AMC does for them,” said the exec who asked not to be named. He said that when the talks started, Wanda was much smaller than it is now, and the idea was that it could import expertise. “I assume they have pretty good expertise now,” he added. But another industry exec thinks AMC’s high-profile theaters — it has six of the nation’s highest-grossing locations including one in Times Square — would make it immensely appealing to Wanda, more so than to another set of private equity firms or a U.S. circuit which would focus more on cash flow and other metrics. AMC has pricey leases at many locations, he said, but Wanda would “be more interested in the exposure and probably pay more for it.” China Lion, a U.S.-based distributor of Chinese pics, has a deal with AMC to distribute its pics in selected theaters across the U.S., principally targeting Chinese language speakers. CEOs of top U.S. exhibs expect the industry to consolidate and see deals on horizon. Regal chief exec Amy Miles said last week that the nation’s biggest chain was actively hunting for acquisitions. But antitrust regs would likely make it tough for the nation’s top two circuits to hook up. They’d have to argue — in a manner analogous to how satellite radio rivals Sirius and XM sold their union — that while they would dominate a specific segment of the biz, there are multiple ways now for consumers to access movies.
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