Why DC Started Caring About Dalian Wanda Group and China in Hollywood

Aggressive posturing from China’s richest man — and Washington lobbying — is fueling a reaction

China’s Dalian Wanda Group made its first big splash in Hollywood back in 2012, when it acquired AMC Theaters. Since then, the real estate and media conglomerate has been on quite a shopping spree, including buying “Jurassic World” production company Legendary Entertainment for an aggressive $3.5 billion in January — which made Wanda the first Chinese company to own an American studio or production house.

But it was only the past few days when D.C. really took notice — and began pushing back.

The Washington Post published a strongly worded Oct. 5 editorial that raised red flags over the possibility of China’s ruling party using its entertainment assets to spread propaganda.

Also last week, the Government Accountability Office agreed to a request from 16 members of Congress to review the legal powers of a foreign investment committee, and Rep. Jim Culberson sent a letter to the Department of Justice urging it to take another look at the Foreign Agents Registration Act, specifically mentioning Wanda’s entertainment purchases and their potential to be used for “propaganda purposes.”

So why did Washington decide to start paying attention now?

For one, Wanda — and other Chinese firms — are stepping up their investments in Hollywood. Co-financing deals between U.S. studios and Chinese partners have been booming for a couple years now, including arrangements such as Lionsgate’s deal with Hunan TV, STX’s with Huayi Bros. and Universal’s with Perfect World Pictures.

This year, in addition to purchasing Legendary, Wanda was also a leading contender to buy a minority stake in Paramount Pictures — before that was taken off the table — and is also in talks to acquire Dick Clark Productions for $1 billion.

Wanda isn’t a typical entertainment company, either. Its founder and CEO, Wang Jianlin, is China’s richest man and close to the ruling party. Several individuals with ties to government officials have significant economic interests in Wanda’s businesses. Wang has made no secret of his desire to spread “Chinese values” around the world via entertainment, making that point — and criticizing U.S. rivals like Disney — in a blustery fashion that can rub people the wrong way.

But as members of Congress have plenty of issues to occupy their minds and public pronouncements aside from Chinese investments in entertainment companies, one instrumental factor in the recent string of fusillades from Capitol Hill has been a campaign by Richard Berman, the president of D.C. lobbying firm Berman & Co.

Berman started paying attention to the fire hose of Chinese money flowing into Hollywood this summer and had one of his staffers do more research, realizing it was bigger than he thought. He then began reaching out to sympathetic legislators.

“We reached out to some people on the Hill that we knew already had an agenda,” Berman told TheWrap. “There are people who are predisposed to being suspicious [of China] because of some other issues. And a lot of those people have committee assignments that overlap [with Chinese investment in Hollywood].”

Berman said last week’s events were the culmination of that work, and that someone on his staff had been in touch with Culberson.

“My fingerprints are all over this,” he said.

Berman acknowledged that studios tailoring their product to appease the China’s gatekeepers — don’t expect to see a Chinese villain in the next James Bond film — is primarily a business decision driven by the desire to get into the world’s second-biggest and one of its fastest growing movie markets, but he’s more focused on China’s ownership of distribution outlets.

“The issue of censorship in China is not my concern,” he said. “People changing their movies so they can be shown in China is not my concern. The thing that really triggered my interest is the distribution issue. If you control distribution, you control what the retail market sees.”

To that end, Berman pointed out Wanda’s ownership of AMC Theaters, which is currently in talks to acquire Carmike Cinemas — making it America’s biggest theatrical exhibitor. He said he had conversations with AMC personnel that didn’t give him great comfort that the theater chain would be free to show movies that the Chinese government didn’t like.

“Wang has been pretty blatant that AMC is owned by the Chinese,” he said.

Berman said he’s doing this “just to make people aware,” adding that he’s satisfied with last week’s Washington Post editorial and the correspondence between members of Congress and the GAO and DOJ.

“I’m not trying to make this a McCarthy-ite type issue; but as far as I’m concerned, it needed to have more light shown on it,” he said.