We've Got Hollywood Covered

Who’s Afraid of China’s Hollywood Invasion?

Members of Congress are alarmed, but Tinseltown is more sanguine

The richest man in China is coming to a theater near you. He might already own it. And Washington has taken notice.

Chinese mega-conglomerate Dalian Wanda Group, owned by Wang Jianlin, its wealthiest man, has been snapping up entertainment assets from AMC Theaters to Legendary Entertainment. AMC is in the process of acquiring Carmike Cinemas, making it America’s largest exhibitor, and Wanda is also in discussions to snag Golden Globes producer Dick Clark Productions — and was a leading candidate to buy a minority stake in Paramount Pictures before deposed Viacom CEO Philippe Dauman lost a power struggle.

A handful of legislators and the Washington Post editorial board fear the explosion of Chinese investment in Hollywood — led and symbolized by Wanda — could lead to the Communist Party of China manipulating America’s enduring instrument of soft power. But to plenty of folks in and around Hollywood, it’s a relatively harmless — and maybe naïve — way for the world’s most populous nation to learn how to produce quality entertainment, and of course, enriching studio execs in the process.

On Oct. 4, the Government Accountability Office agreed to a request from 16 members of Congress led by North Carolina Rep. Robert Pittenger to review the Commmittee on Foreign Investment in the United States and determine whether its legal powers have kept pace with the accelerating rate of acquisitions, particularly in the entertainment sector.

The lawmakers asked the GAO to address several questions, including: “Should the definition of national security be broadened to address concerns about propaganda and control of the media and “soft power” institutions?”

One day later, the Washington Post published an editorial that was very critical of China’s anti-competitive approach to imported films, which it restricts to 34 and subjects to a review by a state censorship body. For example, “Captain Phillips” was blocked from entering the country, due to its positive depiction of the U.S. military.

The newspaper’s editorial board feared what will happen when Chinese companies close to the government such as Wanda Group start accumulating more assets, drawing a distinction between China and democratic Japan, which made major investments in Hollywood a generation earlier.

“It is not far-fetched to assume that China would seek to spread pro-regime propaganda via ownership of U.S. entertainment media,” the editorial board wrote.

And on Oct. 6, Texas Rep. John Culberson sent a letter to the Department of Justice urging the agency to take a look at the dealings of Wanda Group specifically. He asked the DOJ to review how the Foreign Agents Registration Act applied to foreign ownership of U.S. media entities “that may be subject to foreign propaganda, censorship or other pressures that lead to self-censorship in order to receive financing and distribution.”

Culberson echoed the Post’s argument, sounding an alarm at the flurry of entertainment industry acquisitions by Chinese companies and co-financing deals which “allow Chinese state-controlled companies a significant degree of control over the financing and content of American media that raises serious concerns about how this may be used for propaganda purposes.”

But here in Hollywood, the mood is different. The self-censorship that does occur — try to find a Chinese villain in an upcoming tentpole — is chalked up to the reality of doing business with the world’s second-largest movie market. And while Wanda-owned Legendary Entertainment is probably not going to release anything about Tibet, there are dozens of substantial studios and production companies in the U.S. who will produce movies China’s censors would never clear.

Sky Moore, an entertainment attorney who’s worked on several U.S.-China co-production deals, told TheWrap earlier this year that the “holy grail” for Chinese studios is to make a crossover English-language film that is a global hit and can demonstrate a prestige movie industry. A heavy-handed propaganda message seems like a curious way to get there.

East West Bank CEO Dominic Ng, who recently became a board member of independent distributor STX — which also received a strategic investment from Chinese internet giant Tencent at the same time — suggested watching director Stephen Chow’s offbeat and unfailingly positive comedies for a preview of what it might look like when “Chinese values” come to Hollywood.

In an October interview with TheWrap, Ng pointed at the success of “The Mermaid” — easily China’s highest-grossing film of all-time with more than $550 million — which has an unmistakable pro-conservation message.

Former Paramount Pictures President Adam Goodman joined China’s Le Vision Entertainment, a subsidiary of tech giant Le Eco, last month as its president and overseer of a slate of English-language films. At the time the deal was announced, Goodman touted Le Eco Vice Chairman Zhang Zhao’s foresight and financial resources — and did not shy away from highlighting the fundamentally Chinese DNA of his new venture.

“This is a story about a Chinese company for the first time opening a studio in Hollywood,” he told TheWrap.

But lately, that’s a story that has aroused some suspicion — mainly from far outside Hollywood. One longtime China insider told TheWrap that a good part of the recent backlash has been stirred up by a certain presidential candidate who engages in China bashing on a regular basis, and downticket politicians seeking to adopt a message that appears effective.

And the aggressive posturing of Wanda honcho Wang — in August, he went on a Chinese talk show and pledged to make Shanghai Disneyland Park unprofitable within two years — hasn’t helped to win over elected officials who were skeptical to begin with. During the same August interview, Wang also said his goal is to “change the world where rules are set by foreigners.”

But as long as Wanda is paying premium prices for assets like Legendary and Dick Clark, don’t expect too much backlash from Hollywood. The entertainment industry has never been one to look a gift horse — or dragon — in the mouth.