Chinese billionaire Wang Jianlin has big plans for building a movie business empire, but that golden future looks a bit further off after the tycoon’s Dalian Wanda Group announced an indefinite delay in the incorporating Legendary Picture into its mainland-listed film entertainment unit.
Wanda now says it will not go forward with plans to merge the Hollywood production house into its publicly listed movie theatre subsidiary until such time as Legendary is profitable on its own, according to an account in the Los Angeles Times.
The Chinese conglomerate bought the US-based producer of such films as The Dark Knight, Jurassic World and Straight Outta Compton in January for a reported $3.5 billion, but a recent story in the Hollywood Reporter indicated that Legendary lost $500 million last year.
Wanda had announced n April that it would merge Legendary and Chinese production subsidiary Wanda Media with its Shenzhen-listed movie theatre chain, Wanda Cinema Line.
Legendary Needs a Few More Hits
Since the January deal, Legendary has since had one box office smash with its “Warcraft” film release. The video game-based release became one of the top-grossing films of all time in China, bringing in RMB 1.04 billion (US$156 million) from mainland ticket sales, which contributed the majority of the movie’s worldwide gross of RMB 1.9 billion (US$286 million) and is said to have prevented a major flop for the production house.
The Wanda Group cited changed market conditions for its decision to delay the Legendary merger. In a regulatory filing with the Shenzhen stock exchange, Wanda called the Legendary merger “premature” and said melding the groups now would not be in the best interest of minority investors.
The company stated that it would revisit the restructuring in 2017. The statement also indicated it anticipates that Legendary will become profitable this year.
Movie Merger the Latest Setback for Wanda
The halting of the merger follows the unexpected July closing of the highly touted Wuhan Wanda Movie Park for “upgrades and renovation” just 19 months after its grand opening. The company did not reveal why it was necessary to completely renovate the park so soon after opening, and no re-open date has been set. Reports by local press indicated that attendance was far short of the anticipated 8,000-10,000 daily visitors expected.
Legendary’s delayed merger may provide flexibility for Wanda while it pursues other entertainment options, including a rumoured purchase of 49 percent of Paramount Pictures.
The company has also set plans to expand mainland cinema fleet by adding 150 theatres to the existing 160 Imax movie houses it currently operates in China. Wanda also recently signed a deal with California-based RealD to add 4,000 3-D projection systems to its existing array of 1,600 3D cinema screens on the mainland.
Wanda is the world’s largest theatre chain, having acquired U.S.-based AMC Entertainment Holdings in 2012 as well as spending $743 million to buyout Australia-based theatre chain The Hoyts Group and the $1.2 billion acquisition of Europe’s largest theater chain Odeon & UCI Cinemas Group earlier this month.
The Chinese film market is expected to become the world’s largest by next year, according to analysts, and Imax has long been a leader in the large-format screens that favor big budget action films.