Can Legendary Entertainment Bypass China’s Film Quota System?

In the wake of Dalian Wanda Group’s $3.5 billion acquistion of Thomas Tull’s studio, the high-stakes political maneuvering in Bejing is gathering steam.

When Chinese real estate and investment conglomerate Dalian Wanda Group acquired Thomas Tull’s Legendary Entertainment for $3.5 billion in January, many thorny questions came to the fore.

For the first time ever, a Chinese company — one headed by China’s richest man, Wang Jianlin, no less — had come to own a U.S. film company that has backed several international blockbusters, with a track record that included hits like Godzilla, Pacific Rim and Jurassic World.

Sizing up ensued: Was Wanda the latest dumb money to airdrop cash into tinsel town, or was it up to something far more sophisticated? (the latter, it turns out: Wanda managed to offset most of the cost of Legendary in a matter of weeks, flipping the studio to Chinese investors in a share offering that raised $2.4 billion).

Meanwhile, Wanda continued expanding its already sprawling global movie theater network, merging U.S.-based Carmike Cinemas with AMC Entertainment in a $1.1 billion all-cash deal (which still needs FTC approval) that will create the largest cinema chain on the planet, spanning North America, China and Oceania. No company has ever held so many screens in so many places. Again, what was Wanda’s strategy? (theories here)

Above all, many wondered whether these watershed moments signaled that 2016 would finally be the year when the deals between Hollywood and China begin to flow in earnest, after so many false starts in the past. (Thus far, that has indeed been the case: Weeks later, China’s Perfect World Pictures invested $250 million into Universal’s film slate, Hangzhou-based Film Carnival poured $500 million into former Disney chairman Dick Cook’s startup studio; and Joe and Anthony Russo, the director duo behind Marvel’s Captain America franchise, launched boutique studio Anthem & Song with an estimated $200 million to $300 million in Chinese financing)

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