The Dalian Wanda Group is making further cuts in an effort to reduce debts.
Chinese billionaire Wang Jianlin hoped to turn the Chinese city of Qingdao into a moviemaking metropolis. However now the real estate conglomerate-turned-media-giant Dalian Wanda Group is in full retreat.
Earlier this month Blooloop reported that Wanda was selling a swathe of hotels and tourism projects to real estate rival Sunac China.
Now the tycoon is said to be unloading the studio business as well. This is a key part of his planned $7.3-billion Qingdao Movie Metropolis complex.
The move was reported by Chinese media and then detailed in a report by the Wall Street Journal.
Wanda will apparently retain a 9 percent stake in the studio business. It is also believed to maintain a management role.
“Clearly this indicates Wang is lowering his expectations and goals for the entertainment business,” says John Burke, Head of the Entertainment Group at law firm Akin Gump Strauss Hauer & Feld.
“People were looking at Wanda like they were the real deal,” he continues. “Wang clearly seemed to be a guy who could write checks and do the deal. Now people are scratching their heads.”
“Wanda sold what should be sold and maintained what should be saved,” said Wang in a recent interview with Chinese news service Caixin, claiming the sales were in response to the Chinese government’s call to reduce leverage.
“The tourism assets that were sold always have slow investment return and greater capital pressure.”
China’s communist leaders are reining in some of the country’s biggest private companies. The government believes firms are borrowing too much and investing blindly overseas. They think the companies are overpaying for assets that have little strategic value to China.
Political scientists suspect Wang, along with other tycoons, is being given a slap on the hand for his bravado.
However the Qingdao studio project seemed to be struggling anyhow. Last year Wang offered a 40 percent subsidy to lure Hollywood films to Qingdao. Plans for Wanda Studios, scheduled to open fully next year, showed 30 soundstages, including the world’s largest at 2.5 acres, and a heated underwater stage. Despite the subsidies, there were no independent takers for the project. The only American studio to film at Qingdao was Wanda-owned Legendary Entertainment.
Wanda paid around $1.9 billion for Legendary, plus the assumption of debt. Its only major success has been The Warner Bros. film Kong: Skull Island. However the film company is apparently well-capitalised with liquidity to run its business as usual.