Wanda's $1-billion Dick Clark deal is said to be falling apart

Dalian Wanda Group, which announced plans to purchase the TV production company in November, is expected to call off the deal as soon as Friday

The much-ballyhooed $1-billion deal to sell Dick Clark Productions to China’s Dalian Wanda Group is headed for collapse, said three people familiar with the matter who were not authorized to speak publicly.

Wanda, which announced plans to purchase the TV production company in November, is expected to call off the deal as soon as Friday, said one of the knowledgeable people.

Representatives from Dick Clark Productions and Wanda declined to comment.

The acquisition of Dick Clark, which produces the Golden Globe Awards broadcast and Academy of Country Music Awards, would’ve marked Wanda’s first foray into television, adding to its formidable arsenal of film and cinema assets.

But a confluence of problems prevented the deal from closing. Roadblocks are said to include the Chinese government’s clampdown on the movement of capital out of the country and Wanda’s hesitation over the purchase price amid the struggles of Legendary Entertainment, which it acquired last year.

There have been growing concerns within Wanda and the government that the company would be vastly overpaying for Dick Clark, which is controlled by Eldridge Industries. A group of investors led by Guggenheim Partners bought it for $380 million less than five years ago.

Wanda, the Beijing-based real estate and media company that owns AMC Theatres, has displayed a tendency to pay hefty sums for entertainment companies.

Last year it announced a $3.5-billion purchase of Legendary Entertainment, the Burbank production company that backed the “Dark Knight” and “Hangover” films. But Legendary has since struggled. It recently co-produced “The Great Wall” and “Warcraft,” which were disappointments. Legendary Chairman and Chief Executive Thomas Tull resigned in January, leaving Wanda film executive Jack Gao in charge as its interim chief.

Gao, chief executive of international investments and business developments for the Wanda Cultural Industry Group, was a key player in orchestrating the Dick Clark deal with Eldridge CEO Todd Boehly.

Wanda had hoped that buying Dick Clark would have given the Chinese company control of popular awards shows, including the Golden Globes. But the reality proved to be more complicated. Although Dick Clark Productions has the rights to produce the broadcast of the ceremony, the awards themselves are controlled by the Hollywood Foreign Press Assn., limiting Wanda’s influence.

Other factors also held up the closing. Signs emerged in February that Wanda, run by billionaire Wang Jianlin, was having trouble getting its capital out of China to pay for Dick Clark. Chinese companies have faced increasing hurdles as the government tries to curb the flow of money pouring out of the country.

The government clampdown has potentially far reaching consequences for Hollywood, which is relying more and more on China to help fund its films. Paramount Pictures this year secured a film financing deal from Shanghai Film Group and Huahua Media. Government scrutiny recently resulted in Chinese copper company Anhui Xinke New Materials scrapping plans to buy "The Hurt Locker" producer Voltage Pictures for $350 million.

Chinese officials, fearful last year of falling currency values, tightened restrictions on capital leaving the world's second-largest economy. The government stepped up oversight of foreign acquisitions and tried to curb "irrational" outbound investments. That made it more difficult for firms to receive permission to transfer yuan and close deals.

Protectionist rhetoric by the Trump administration and Washington lawmakers has added to the anxiety over U.S.-China deal making. Several prominent politicians including Senate Minority Leader Charles E. Schumer (D-N.Y.) have called on regulators to heavily scrutinize Chinese investment in U.S. industries, singling out Wanda’s entertainment investments.

Special correspondent Jessica Meyers contributed to this report.

Copyright © 2017, Los Angeles Times

Asia China Dalian Wanda Group Dick Clark Legendary Pictures Thomas Tull

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