WaPo: Shadowy Forces are Fighting for Control of Your Local Movie Theater

  December 5, 2016   News Stories

News story originally published at WashingtonPost.com

By Ana Swanson

On a sweltering day this summer, a handful of protesters gathered outside an AMC movie theater in Times Square, holding red signs proclaiming “AMC = American Movie Communists.” They were opposing the giant movie theater company AMC’s $1.2 billion purchase of a rival cinema chain, Carmike, that has theaters in 41 states. The deal, which is still subject to government approval, would make AMC the largest theater chain in the U.S.

The protesters targeted AMC’s Chinese owners—the sprawling Chinese real estate and entertainment company called Dalian Wanda that acquired the American movie chain in 2002, creating the world’s largest theater empire. The protest suggested the Carmike acquisition would further extend Beijing’s hidden control over American mass media.

But the protesters had not gathered on their own volition. They were being paid to be there by a Washington lobbying firm, Berman and Company, waging a war against Chinese acquisitions of American movie theaters.

It was one of the many unexpected ways a quiet battle is underway to halt a trend of Chinese businesses gobbling up American companies. The battle’s reach now goes beyond traditional areas with obvious national security implications—such as President Obama’s decision late Friday to block the acquisition of a semiconductor company with sensitive technology—into more surprising areas like movie theaters, where concerns about financial ownership collide with issues of cultural openness.

Berman and Company, which uses a network of organizations to carry out campaigns on behalf of anonymous clients, is led by Rick Berman, a veteran lobbyist whom “60 Minutes” once called “Dr. Evil”  for his defense of issues like secondhand smoke, trans fats, tanning beds and payday loans. For decades, his firm has launched ad campaigns to attack targets like the Humane Society, labor unions and Mothers Against Drunk Driving.

The new campaign, called “China Owns Us,” is nominally run by the Center for American Security, a registered trade name for a 501(c)4 nonprofit called the Enterprise Action Committee, according to D.C. corporate records. A small group of people employed by Berman’s K Street lobbying office run these and dozens of other similarly structured organizations, Berman said in an interview.

To drum up opposition to Chinese acquisitions in Hollywood, Berman’s operatives purchased two billboards this summer calling AMC “China’s Red Puppet”—one on Los Angeles’ Sunset Boulevard, another outside AMC’s Kansas headquarters. Berman and his groups wrote opinion pieces, produced YouTube videos, appealed to think tanks and hired a lobbyist to reach out to Congress, Berman said, to warn people of China’s insidious influence.

Berman says he fears that Dalian Wanda could use its theater screens to subtly influence people’s views about the U.S. and China. He compares political messages in movies to a can of Coca-Cola sitting on the table in a film, or James Bond driving an Aston Martin.

“What I’m trying to do is stop somebody else from managing the culture here,” Berman says.

AMC’s chief executive, Adam Aron, said those concerns were unwarranted.

“AMC is completely run by its American management in Leawood, Kansas, as American as an American place in the heartland you can find,” he said. “We’re in the business of selling movie tickets and popcorn, and we don’t involve ourselves in what goes on in China.”

Berman says he has helped foster concern on Capitol Hill about the issue. In September, 16 congressmen sent a letter asking the government to reexamine the role of a federal committee known as the Committee on Foreign Investment in the U.S., or CFIUS, in determining whether deals like Wanda’s takeover of AMC and Carmike undermine national security. Another congressman sent a letter urging the Justice Department to reconsider whether Chinese media influence should be regulated under the same rules as foreign lobbying.

On Wednesday, Democratic Sen. Charles Schumer (N.Y.) sent a letter to the Treasury secretary and the U.S. trade representative urging the U.S. government to more closely examine Chinese acquisitions in the U.S., including by Dalian Wanda. “I am concerned that these acquisitions reflect the strategic goals of China’s government and may not be receiving sufficient review,” Schumer wrote.

Officials on Capitol Hill acknowledge meeting with Berman or his associates, but say they have been motivated by preexisting concerns about Chinese national security threats. “It would be incomprehensible to me to turn a blind eye and think all is well with China,” said Rep. Robert Pittenger (R-N.C.), the lead signature on the CFIUS letter.

It’s unclear who is funding Berman’s campaign. Berman says he launched it himself out of personal interest, and only later received a “modest contribution” from two donors, whose names he won’t reveal, but whom he describes as wealthy people who “care about national security issues.”

“What matters is whether or not what I’m saying is right. And if it’s right, it’s doesn’t matter that somebody gave me the money to go out and say it,” he said.

But several industry experts point to Berman’s past ties with Philip Anschutz, a conservative billionaire who has a controlling stake in Regal Entertainment Group, which owns America’s largest cinema chain—at least until the AMC-Carmike deal goes through.

“The odds are that it’s the film-making community. They certainly have a dog in this fight,” John Carroll, a communications professor at Boston University who has blogged about Berman’s advertising tactics, says of Anschutz and Regal Entertainment. “But Berman resolutely refuses to reveal his donors.”

Tax records indicate that the Anschutz Foundation has given hundreds of thousands of dollars to Berman’s nonprofits. Anschutz also owns the Weekly Standard and the Washington Examiner, where Berman has advertised and written about his China campaign.

“The relationship I have had with Phil has generally been over employment/union issues. It does not extend into this area,” Berman said in an emailed response. The Anschutz Foundation and Regal Entertainment did not respond to repeated requests for comment.

Shareholders have already approved the AMC-Carmike deal, and it is expected to close in late 2016 or early 2017 unless U.S. regulators intervene. In addition to an anti-trust review by the Department of Justice, CFIUS could rule that the deal threatens U.S. national security.

Chinese investment in the U.S. entertainment industry skyrocketed to $3.7 billion in the first three quarters of 2016, up from $1.1 billion in 2015 and $2.7 billion in 2014, which was largely due to AMC’s purchase of Wanda, according to research and advisory firm Rhodium Group.

Dalian Wanda is the most prominent among the Chinese companies that have been on a buying spree in Hollywood in the past few years. Wanda purchased Legendary Entertainment, one of Hollywood’s biggest movie production companies, for $3.5 billion in early 2016. The company has a pending deal to buy Dick Clark Productions, the TV producer for the Miss America pageant and the Golden Globe Awards. AMC inked a deal in July to acquire the Odeon & UCI Cinemas Group, the largest cinema chain in Europe.

Executives at AMC and Dalian Wanda say Chinese political interests do not influence what’s shown in American movie theaters. “There is no political point of view,” Wang Jianlin, the head of Dalian Wanda who is also China’s richest man, told a crowd in Los Angeles in October. “I am a businessman.”

Others in the film industry, like Hollywood producer Janet Yang, attribute the backlash to Chinese media control to xenophobia and discomfort with China’s rising global power. “If you grew up on John Wayne or Clint Eastwood or superhero movies, or these very powerful iconic pieces of content, that does affect what you think the world order looks like,” she said. “That’s a paradigm shift, some people can’t handle it.”

But some film industry executives and academics say the acquisitions warrant more scrutiny, partly due to Wang’s extensive ties with China’s military and top leaders.

China tightly controls its own domestic media to ensure that the press, film and other media portray the Communist Party in a positive light, and it allows only 34 foreign films to show in its cinemas each year. Domestic and Hollywood films that are critical of Beijing or highlight sensitive topics like Tibet or Taiwan, for instance, have little chance of reaching China’s lucrative cinema market, which by some estimates overtook the U.S. as the world’s largest this year.

Robert Daly, the director of the Kissinger Institute on China at the Wilson Center, says there is no evidence as yet that Wanda is changing what Americans see. The push in Congress to regulate media investments is “a very dangerous notion,” he said. “It would be a gross infringement on our cultural freedom if we couldn’t see good Chinese films, because Congress had determined that a Chinese film threatened our cultural security.”

On the other hand, Daly says, the U.S. has never confronted a potential security threat quite like this before. “With China, you’ve got authoritarianism and purchasing power in one nation.”

More Updates

  • The Recorder: Hollywood Deal Lawyers Wrestle With Great Squall of China
  • Yibada: Dalian Wanda Offers 40% Rebate for Projects Shot at Movie Metropolis in Qingdao
  • Variety: What’s Next for Dalian Wanda?