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How China’s Wanda Buying ‘Jurassic World’ Producer Legendary Will Change Hollywood

Films like ”Warcraft“ and ”The Great Wall“ fuel giant Chinese conglomerate’s bid to be global film powerhouse

The Dalian Wanda Group’s billion-dollar gambit for a majority stake in Legendary Entertainment will give the Chinese conglomerate a huge foothold in producing huge Hollywood blockbusters, further evidence of its ambition to be a global entertainment powerhouse.

Wanda already owns AMC Theaters, the second largest movie theater chain in the U.S. and the Wanda Cinema Line, the No. 1 Chinese theater chain that is valued at $19 billion in the fastest-growing movie market in the world, China. In 2013 Wanda announced the construction of an $8.2 billion production studio in Eastern China.

The deal to buy Thomas Tull‘s Legendary – valued by analysts between $3 and $4 billion – would give Wanda majority ownership in a production company that has been part of the success of “Pacific Rim,” “Godzilla” and Universal Pictures’ “Jurassic World,” in which the company had a stake.

“A majority stake in Legendary Entertainment would give Dalian Wanda unprecedented production capacity spanning China and the U.S.,” said Mathew Alderson, a Beijing-based partner at law firm Harris Moure.

“This deal is a natural, because Legendary’s specialty has been these epic-sized action-fantasy movies that Chinese audiences love, and now Wanda has a direct link to them, and can market them at home, in the U.S. and internationally,” said a Hollywood film executive who spoke on condition of anonymity.

The producer will roll out several high-risk movies this year, including the video-game-based tentpole “Warcraft” and the sci-fi fantasy “Spectral.” The most intriguing film on its slate is director Zhang Yimou’s “The Great Wall,” a $100 million-plus co-production with China Film Group starring Matt Damon (photo, top).

But Legendary’s recent track record at the box office has been mixed. For every hit like “Godzilla” or “Interstellar,” there has been a costly misfire like “Jonah Hex” or “Jack the Giant Slayer.”

The year 2015 was variable, with huge wins via its shares in Universal box office hits “Jurassic World” and “Straight Outta Compton” and the low-budget hit “Krampus,” but also major misses with “Blackhat” and “Seventh Son,” films on which it was the primary financier.

These do not seem to matter to Wanda’s owner, billionaire CEO Wang Jianlin whose company, initially focused on real estate, has evolved into a global leisure and entertainment giant.

Legendary, Softbank and Wanda all declined to comment to TheWrap.

For 10-year-old Legendary Pictures, the deal will enable it to expand its operations in the U.S., while providing a pipeline into what will within two to three years be the world’s largest movie market. The Chinese box office is booming, up an incredible 48 percent in 2015, and the number of theaters and acceptance of movies into its popular culture are rising at a breakneck clip.

China’s ongoing fiscal turmoil and its notoriously fickle and powerful film officials run hot and cold on foreign films and partnerships and could negatively impact the deal. So could the cultural differences between the two companies’ leaders, regulatory scrutiny by the U.S. government and the possibility of pricey, high-profile flops.

Legendary wielded significant power in Hollywood when the “Dark Knight” and “Hangover” franchises were going full throttle about five years ago. But it has lowered its profile since moving its co-production and co-financing deal from Warner Bros. to Universal in 2014. Japan’s Softbank acquired a 10 percent stake of Legendary around that time, and is presumably part of the pending deal.

Since 2000, it has ventured into TV, digital media, virtual reality and even comic books. So far, though, none of those forays have had a significant impact on the bottom line.

Tull and President and Chief Creative Officer John Jashni know China, and the pitfalls of doing business there. In 2011, the company launched a joint venture with Chinese distributor Huayi Brothers International.

But a planned offering for Legendary East on the Hong Kong Stock Exchange was scrapped when financing didn’t materialize, and the company then partnered with China Film Group, leading to joint projects like “The Great Wall.”

Wanda, meanwhile, has been expanding into the foreign market. In 2012, it acquired the controlling stake in AMC Theaters for $2.6 billion, the nation’s second-largest movie theater chain, and last year purchased the leading Australian theater Chain, Hoyts Group.

Wanda seems to have run AMC with a light hand, mitigating concerns about the negative impact of Chinese investment in Hollywood companies. That could also reassure jittery regulators who have to weigh in on potential antitrust issues.

The size of the deal may also raise few alarms — especially since Legendary is considerably smaller than studios like Lionsgate Entertainment and MGM where Wanda kicked the tires last year.

“Since Legendary is not a major studio and does not represent a meaningful percentage of annual industry box office, it may not be an issue …or Wanda may need to ensure all dealings are kept separate between the entities,” B. Riley analyst Eric Wold told TheWrap. “But it will be an interesting one to watch.”