Major Chinese deals with Hollywood are unraveling left and right.
Dalian Wanda Group announced plans to buy Dick Clark Productions for $1 billion in November, but that deal is now dead. Eldridge Industries revealed Friday that the deal was terminated after Wanda “failed to honor” its contractual obligations, CNBC reports.
Wanda, run by Chinese billionaire Wang Jianlin, has been on a buying spree in Hollywood. The company purchased AMC Theaters a few years ago and Legendary Entertainment in January in billion-dollar deals. Wanda bought Carmike in May, turning AMC into the largest theater chain in the world. Wang had previously indicated an interest in buying at least one of the Big Six studios in Hollywood, but so far, he has yet to achieve his goal.
The company appeared to still be running hot in January when Wang announced that Wanda intended to spend up to $10 billion on entertainment deals overseas in 2017.
In February, news broke that Wanda was struggling to move funds out of China due to government efforts to control capital outflow, putting the Dick Clark Productions deal in jeopardy. The deal was to be Wanda’s first entry into U.S. television, but Wanda appears to have lost the ability to finance the deal.
In response to strong criticisms of Chinese trading practices in Washington and the significant drop in the value of China’s currency, China’s government has been introducing new regulations to prevent capital flight and the further devaluation of the Chinese yuan.
To curb capital outflows, China has been rapidly draining its foreign exchange reserves to prop up its currency and restricting purchases and acquisitions overseas. In particular, Chinese companies face daunting hurdles when they attempt to secure offshore funding to pursue assets abroad.
Wanda is not the only Chinese company encountering difficulties in Hollywood.
A deal for Metro-Goldwyn-Mayer Studio involving several Chinese companies fell through as a casualty of increased regulatory scrutiny in Beijing, the Wall Street Journal reported in late February.
Talks started to break down last year.
Chinese “investment activity around [Hollywood] assets started to wane just prior to the election and is almost nonexistent now,” Chris Fenton, a trustee of the U.S.-Asia Institute, told WSJ reporters, citing reports from private firms and investment banks. He added that there isn’t a Chinese company prepared to test the heated protectionist rhetoric in Washington or the increased regulatory pressures in China.
In December, Anhui Xinke New Materials Co. suddenly canceled its planned $350 million acquisition of Voltage Pictures LLC without any explanation. The deal is believed to have fallen prey to the new Chinese government regulations on the purchase of assets abroad.
China spent $225 billion on overseas purchases last year. China is desperately trying to rein in overseas spending to restore confidence in its economy.
The country has not completely cut off its major asset acquisition efforts abroad, but Hollywood deals are taking a hit.
Send tips to ryan@
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.