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Wang Jianlin, the owner of Dalian Wanda Group Co.[file photo]
Wang Jianlin, the owner of China's largest theater chain, said Monday that his company, Dalian Wanda Group Co. has no plans to promote home-grown Chinese films in the U.S. and confirmed that he would retain the majority of AMC's incumbent executives after the recent high-profile merger between Wanda and major U.S. cinema chain AMC.
Some analysts have pointed to the fact that Wanda's acquisition of AMC ties in perfectly with China's strategy of forming alliances with American companies to expand its homegrown entertainment industry. Wang, however, refuted the notion that this is a part of his strategy. "We never discussed, in any form, the promotion of any Chinese films during our negotiations [for the merger]," said Wang.
He added: "We don't have any plans to promote Chinese films in the American market. I think such a decision should be taken by the chief executive officer, who will judge if a film will make money, otherwise he will not choose to buy the rights and distribute it."
Wang also refused to attribute the poor performance of Chinese films in the U.S. market to distribution problems. "The quality of Chinese productions is still weak," said Wang. "If we can make a movie like 'Avatar,' we could also get an international response."
Wang moved to deny suggestions that the merger could bring more foreign films into the Chinese market. "We don't have a license to import foreign films yet, though we have submitted our application [to do so] to the authorities," he said. Currently, only two film companies in China have the import license - China Film Group and Huaxia Film Distribution Co., Ltd.
In a move which bore a resemblance to Sony Corporation's acquisitions of CBS Records and Columbia Pictures in 1988 and 1989 respectively, Dalian Wanda Group Corp Ltd signed a US$2.6 billion agreement on Monday to merge with AMC Entertainment, the world's second-largest theater chain, after two years of negotiations. Wanda acquired a 100 percent stake in AMC and assumed its debt.
Wanda started the acquisition talks with AMC in 2010. AMC is owned by investment groups, including the Apollo Investment Fund and J. P. Morgan Partners. The merger was confirmed this March by the National Development and Reform Commission (NDRC).
The agreement also guarantees that Wanda will invest up to $500 million dollars after the merger, which takes the total value of the deal to US$3.1 billion.
There have been concerns that, with declining American cinema audiences and box office receipts, profitability could be a problem. AMC's losses of US$ 82.7 last year did not allay such fears.
However, Wang said Wanda's evaluation indicated that there were no problems regarding AMC's administrative and operating capabilities. However, he refused to elaborate on the major problem of the company's debt ratio. It remains to be seen just when AMC can achieve a complete turnaround, but as of the period from January to April, 2012, it had achieved a measure of profitability.
The merger, which is currently awaiting the approval of both the Chinese and U.S. governments, will make Wanda the largest theater chain operator in the world, covering 10 percent of the global market. Wang anticipates that Wanda will cover 20 percent by 2020.
Wang and Gerry Lopez, CEO and president of AMC, both confirmed that Wanda will retain its existing executive staff.
"There's only been one big change, and that the boss," said Wang. "Other than that, nothing has really changed." According to the agreement, AMC's president will also join Wanda's board of directors.
"We have signed a long-term agreement with Wanda and communications between our companies will increase in the future," said Lopez. "But our administration is stable, our strategies remain unchanged."
Analysts believe the deal will help Wanda gain a foothold in the US market, and the numbers certainly look good. China is currently in the midst of fulfilling its goal of installing 25,000 movie screens over the next five years. In addition, China's box office sales grew by 30 percent last year, reaching US$2.1 billion, and this year China overtook Japan to become the biggest foreign market for Hollywood films.
Industry insiders said that the Wanda-AMC merger will encourage more Chinese theater chains to look abroad. "This indicates that foreigners have confidence in the Chinese market and it is a big step for the Chinese cultural industry to go international," said Sun Lexiang, a leading industry expert and former general manager of Shenyang Huachen Cineplex.
Sun also believes that the merger will provide an opportunity for the increased promotion of Chinese films, despite the previous denials from Wanda.
US studios and film companies also are expanding their business investments in China. This month, Chinese film distributor Bona Film Group announced that it had agreed to sell News Corp. a roughly 20 percent stake in the company. Walt Disney Co. and DreamWorks Animation Studios also have recently announced joint ventures in China.
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