Dalian Wanda Group has spent nearly $16 billion buying up movie production houses, theatre chains and sports marketing companies this year, but the transformation of China’s biggest mall owner into a global entertainment empire may not be finished yet.
As part of a mid-year report last week Dalian Wanda Group set a target of tripling revenue from its entertainment business to RMB 150 billion ($22.5 billion) by 2020, and doubling the portion of its revenue that comes from overseas to 30 percent over the same time frame.
Buckets of Ambition, Scarce Details
While Wanda didn’t provide a road map to future acquisitions or details of other steps that might treble its sales, it already has deals in the works for a second US theatre company and is also bidding to acquire Paramount Studios in Hollywood.
The firm plans to increase the RMB 51.3 billion ($7.6 billion) earned in revenue last year from Wanda Cultural Industry Group, the company’s entertainment and leisure arm, threefold in the next five years. While this target appears ambitious, Wanda’s recent string of acquisitions helped it to outperform revenue forecasts in the first half of 2016 thanks to a 57.1 percent increase in its entertainment business over the same period last year.
Wanda has been aggressively expanding its entertainment empire since 2012 after acquiring AMC Entertainment Holdings, the second-largest theater chain in America, for $2.6 billion. Since then, the conglomerate has established itself as the world’s largest theater chain operator after the $743 million buyout of Australia-based The Hoyts Group and the $1.2 billion acquisition of Europe’s largest theater chain Odeon & UCI Cinemas Group earlier this month.
Beyond its theater holdings, the group also expanded into the sports industry in 2015, taking a 20 percent stake in the Spanish soccer club Atletico de Madrid for €45 million ($49 million) and acquiring Swiss sports marketing firm Infront Sports & Media for €1.05billion ($1.2 billion), which now holds broadcasting rights for the next two World Cup finals.
Wanda Property Business Facing Tougher Times
While Wanda’s most recent forecasts focused on the potential for its entertainment business, the company’s announcement largely overlooked its property business, which suffered declines in revenue and profits in 2016.
Overall debt levels in Wanda’s Hong Kong-listed subsidiary increased 3.14 percent to RMB 187 billion ($28 billion) in the year to December 2015, prompting agencies Fitch Ratings and Standard & Poor’s to drop the company’s credit rating to near junk status in February while Moody’s Investors Service downgraded its outlook to negative from stable. More recently Wanda Commercial Properties reported a 17.3 percent decline in revenue in the first half of 2016.