Asian investors have long formed the backbone of Hollywood. Throughout the late 1980s and early ‘90s, it was Japanese companies like Sony who invested heavily in film and television studios, and recently, Chinese investment has injected billions into the California-based film industry and helped offset steady declines in domestic box office revenue.. Asian investor support has helped the entertainment industry thrive, even as Wall Street backed away from the industry.
Despite the history of mutually beneficial relations, new Chinese regulations have caused several major acquisitions in Hollywood film and production companies to fail. Chinese government officials appear concerned that acquisitions of US media companies by mainland Chinese firms are causing capital to leave the economy. Among the deals affected in the last year are Dalian Wanda’s $1 billion takeover of Dick Clark Productions and a $345 million acquisition of Voltage Pictures – the production company behind Academy Award-winning films like The Hurt Locker and Dallas Buyers Club – by Anhui Xinke, a Chinese mining group. The problem posed by increased regulation on investments is exacerbated by declining interest in local Chinese markets for Hollywood’s summer blockbusters; this year, summer ticket sales hit a 25-year-low.
New capital controls have contributed to sell-offs by American companies as well; in August, the largest American theater owner, AMC Entertainment Holdings, was forced to sell its 50% stake in Open Road Films — the American production company and distributor responsible for Spotlight — to Tang Media Partners (TMP), a joint US-Chinese venture, due to pressures the controls placed on AMC majority-owner, Chinese billionaire Wang Jianlin. While the successful acquisition by TMP proves that some Chinese capital is still able to reach US shores, the new regulation’s indirect influence on AMC highlights studios’ concerns about diminished investment from Asia.
According to figures released by the Motion Picture Association of America, 75% of theatrical revenue comes from international markets like China and helps to support jobs in every US state, including over $21 billion in wages in California alone. Developments in Chinese capital controls are bound to impact the American film industry and thus will affect the lives of millions of Americans.
Jake Howry is a research intern at the East-West Center in Washington and a master's candidate at Georgetown University