MEDIA: Wanda in Hollywood Overdrive with Dick Clark Talks

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Bottom line: Wanda is likely to succeed in its purchase of Dick Clark Productions, but could pay a rich premium for the awards show producer as part of an effort to develop similar programs in China.

Wanda in talks to buy Dick Clark Productions

Just a week after making headlines through a strategic tie-up with Sony Pictures, China’s star-struck Wanda Group is in talks for yet another blockbuster deal to buy Dick Clark Productions, known for producing a number of popular award shows. My first reaction to the headline was a big “So what?” since the production company’s namesake, who died in 2012, is best known to me as the maker of the aging annual program celebrating New Year’s Eve in Times Square, New York.

But I’m clearly a little out of date, and the new reports on the talks between Wanda and Dick Clark point out the production house’s more recent credits include the popular annual Golden Globe awards show and the “So You Think You can Dance” reality talent show. The reports say a deal could value Dick Clark Productions at around $1 billion. (English article)

These particular talks show an increasingly star-struck and aggressive Wang Jianlin, Wanda’s colorful founder and one of his country’s richest men. Wang got his start in real estate, building a series of highly successful office and shopping center complexes around China, and is now trying to diversify into entertainment.

Earlier this year he made headlines with his $3.5 billion purchase of mid-sized production house Legendary Entertainment, and he also pursued a strategic stake being sold by Paramount, one of Hollywood’s 6 top studios. But the latter talks fell apart, and Wang had to settle for the more general Sony co-production tie-up that was announced last week.

Wang said at the time that he wanted to do more tie-ups with other major studios, though clearly Dick Clark doesn’t fall into that category. According to the latest reports, Wanda’s talks with Dick Clark parent Eldridge Industries are still in the very early stages, and Wanda has begun doing due diligence on the production company’s assets. (English article; Chinese article)

An Eldridge spokesman confirmed the talks were happening on an exclusive basis, a month after Eldridge announced it was conducting a strategic review of its media assets that also include the entertainment industry publication Hollywood Reporter. The company purchased Dick Clark Productions 4 years ago for $370 million, meaning the $1 billion price would represent a big mark-up since that time.

Entertainment Empire

Wanda’s Wang is trying to build an entertainment empire that includes not only film production houses, but also movie theaters and theme parks. Over this past weekend he opened his latest Wanda City, a 35 billion yuan ($5.2 billion) complex in the interior provincial capital of Hefei that includes a theme park, shopping center, movie theater and residential component.

Wang recently said he expected to complete two $1 billion deals in the near future. I previously said that one of those might be the Paramount purchase, though that deal ultimately fell apart. Another could be the company’s plan to buy US cinema operator Carmike (Nasdaq: CKEC), though that plan has also met resistance from shareholders who say the price is too low.

A Dick Clark deal could also roughly fit the $1 billion definition, depending on the final price if Wanda reaches a deal. These latest talks seem to show that Wang is willing to chase almost anything with Hollywood ties and perhaps pay big big premiums for his purchases. Wang is actually a very savvy businessman and wouldn’t normally pay such big premiums. But in this case he really does seem to have caught the Hollywood bug, which may be affecting his usual business judgment.

As to Dick Clark’s value, the company does seem slightly interesting due to its positioning as producer of some major award shows. China currently lacks many similar shows, even though they would probably be quite popular in a country where talent shows are extremely well received. Accordingly, Wang may see some value in bringing Dick Clark’s talents to China, and may be willing to pay a handsome premium for the company.

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