×
You will be redirected back to your article in seconds

China’s Wanda Group Eyes Investment in Legendary Pictures (EXCLUSIVE)

Chinese entertainment giant Wanda Group is considering acquiring a significant minority stake in Legendary Pictures, the Hollywood studio run by Thomas Tull that has built a substantial, multi-genre content operation from a base of fantasy and gamer franchises, according to three people familiar with the talks.

Among the scenarios being pondered by China’s largest theater operator is purchasing the holdings of one of Legendary’s current shareholders, said two of the sources. The exact percentage and dollar value of the potential investment have not yet been determined.

The Chinese conglomerate — which owns Wanda Cinemas and AMC Entertainment (the second largest circuit in the U.S., which it bought in May 2012), along with vast real estate holdings — is conducting due diligence in advance of an anticipated transaction, one of the sources said. Wanda is currently building China’s largest studio complex in Qingdao.

News of the potential Wanda investment comes a little more than a year after the Japanese telecommunications and Internet company SoftBank Corp. said it was investing $250 million for a minority stake in Legendary.

Wanda, owned by China’s richest man, Wang Jianlin, is intent on becoming one of the world’s leading entertainment and sports groups, with holdings in theme parks,  hotels and sports assets.

A spokesperson for Legendary declined to comment, as did an official with Wanda.

One person close to the matter cautioned that a deal with Wanda is far from done and ultimately might not come to fruition.

Major transactions between Chinese investors and American entertainment companies are notoriously difficult to complete, with deals frequently rumored and even announced by both sides, only to fizzle. Cultural and business misunderstandings and a lack of a real capital commitment have been among the obstacles scuttling previous deals.

Huayi Bros. Media Corp. said in 2014 that it was prepared to invest $150 million in the production company Studio 8, launched by former Warner Bros. executive Jeff Robinov. But the deal was never finalized. Hollywood talent agent Jeff Berg thought he had finalized Chinese investment in his upstart Resolution agency last year, only to see the transaction evaporate. And Legendary chairman Tull, himself, announced a deal in 2011 for a venture with Huayi to co-produce Chinese films. The deal foundered when the Chinese wanted to increase their stake, according to a report in the Los Angeles Times.

Still, the sources said that Wanda’s interest in Legendary is real and that the Hollywood company is likely to welcome outside investment to mitigate the huge risks in a film sector that has become increasingly difficult to navigate. Tull’s company lost tens of millions of dollars on its October release “Crimson Peak,” which Legendary self-funded and Universal Pictures marketed and distributed. Legendary also suffered losses on the big budget features “Seventh Son,” the fantasy adventure that led to a $85 million writedown in 2013 and this year’s “Black Hat,” the cyber-thriller that took in just $18 million on a production budget of $70 million.

Easing some of the financial pain, Legendary scored a big win this year with its 25% investment in “Jurassic World,” the Universal Pictures dinosaur-blockbuster that raked up world ticket sales of $ 1.7 billion. The film is the third biggest global hit of all time behind “Avatar” and “Titanic.” The company also holds a share of “Straight Outta Compton,” a surprise hit last summer.

Legendary has had a significant interest in China for the past several years. In 2010, Hong Kong businessman Kelvin Chan engineered a deal in which exhibition chain Golden Harvest acquired a small minority stake (3.33%) for $25 million. It sold the stake a year later for $30 million, which helped establish a dollar value for the unlisted Legendary. Later the same year, Legendary was in advanced talks with Hong Kong construction firm PY Engineering to be the principal financier of Legendary East, Legendary’s new Chinese offshoot.

While that deal collapsed due to the resistance of the Hong Kong investors, Legendary East subsequently hired CAA agent and long time China resident Peter Loehr to head the production company. Legendary East is now in post-production on its first movie “The Great Wall.” The $150 million film is directed by China’s Zhang Yimou from a story idea originally hatched by Tull. It is slated for a November 23 release.

In another move to share risk and reward, Tull’s company in September said that China’s Tencent Pictures would take an equity stake in Legendary’s “Warcraft,” based on the video game “World of Warcraft.” It is set to debut June 10.

Financial firepower is unlikely to be an impediment to Wanda making a sizable investment in Legendary. The group recently restructured its cluster of film businesses and Wang announced plans to give stock market listings to two of its movie subsidiaries in production and distribution. Wanda Cinema Line is already listed in China and has a market capitalization of $20.3 billion, some nine times larger than AMC.

Although rumors of the talks with Wanda had not been made public, Tull was asked at a business conference earlier Tuesday about the possibility that his company might one day be sold or taken public. Speaking at Business Insider’s Ignition conference, Tull asked rhetorically “Who is that an exit for?” before suggesting the many hurdles that confront companies making public stock offerings.

Tull went on to say that “our focus is to put ourselves in a position where all those options are available.” He added that Legendary’s board, which includes Boston Red Sox chairman Tom Werner and tech investor Jim Breyer, had advised him to “build a great business and those things will take care of themselves.”

Brent Lang and Patrick Frater contributed to this story.

More Biz

  • ‘Hitsville: The Making of Motown’ Acquired

    ‘Hitsville: The Making of Motown’ Acquired by Showtime for U.S.

    Polygram Entertainment, Universal Music Group’s film and television division, along with Capitol Music Group, Motown Records and Fulwell 73 announced today that “Hitville: The Making of Motown” has been acquired by Showtime for release in North America with plans for a fall premiere, and Altitude for theatrical release in the UK and Ireland. The feature-length [...]

  • Sammy Shore Dead: Comedy Store Co-Founder

    Sammy Shore, Co-Founder of The Comedy Store, Dies at 92

    Sammy Shore, the well-known stand-up comedian who co-founded The Comedy Store in Hollywood, died in Las Vegas, Nev. from natural causes. He was 92. Shore founded The Comedy Store with writing partner Rudy Deluca on April 7, 1972. His ex-wife, Mitzi Shore, took ownership of the club in the divorce settlement, and the venue went [...]

  • Outlander Season 4 Finale

    What CBS' Pursuit of Starz Means for CBS, Lionsgate

    CBS’ effort to buy pay TV service Starz from Lionsgate seems on the surface to be a head scratcher. CBS has told Wall Street for years that it has prospered because it brings only two must-have services to the table in negotiations with MVPDs, allowing the Eye to drive a hard bargain. Why would CBS [...]

  • Dana Brunetti

    Dana Brunetti Sues to Block Season 2 of 'Manhunt'

    Producer Dana Brunetti filed suit on Friday seeking to block the second season of the anthology series “Manhunt,” which is set to dramatize the bombing at the 1996 Atlanta Olympics. Brunetti sued Lionsgate, the production company, as well as Discovery Communications and Charter Communications. Brunetti, the producer of “Fifty Shades of Grey” and many other [...]

  • PledgeMusic Sends Message to Artists, Offers

    PledgeMusic Sends Message to Artists, Offers Data From Platform

    PledgeMusic, the direct-to-fan marketplace that is headed into administration (the British equivalent of bankruptcy), today posted a note to artists and fans, offering the ability for artists to download their data from the platform. A source tells Variety that more information will be coming once an administrator is named — when that happens, at some [...]

  • Spanish actress and member of the

    AIG and AS Talents Announce Agency Tie-Up (EXCLUSIVE)

    David Unger’s talent, management and branding venture, Artist International Group, has partnered with AS Talents in France, which represents leading European performers Jean Reno, Christian Clavier, Elza Zylberstein and Rossy de Palma. Paris-based AS Talents is headed by Alexandra Schamis. The move, announced Friday on the sidelines of the Cannes Film Festival, is the latest [...]

More From Our Brands

Access exclusive content