Federal Regulators Should Reject AMC-Carmike Deal

  November 28, 2016   Op-Ed Columns

Op-ed column originally published at TheHill.com

By Richard Berman

Lost in the Election Day shuffle, America is about to have a new leader in movie theaters.

Earlier this month, the shareholders of Carmike Cinemas—the fourth largest movie theater operator in the United States—approved a deal to sell the company to AMC Entertainment for $1.2 billion. The merger will make AMC the largest movie theater chain in the country with 8,380 screens in more than 600 cinemas nationwide. With it, the company gains access to 20 percent of America’s moviegoing audience.As the deal awaits Department of Justice approval, federal regulators would be wise to reject it.

The underlying concern lies not on anti-trust grounds, but rather AMC’s ownership. Since 2012, the company has been controlled by Dalian Wanda, a Chinese firm closely aligned to the China’s Communist Party. While Wanda appears to be a private company far removed from Communist policymaking, the company’s founder and chairman, Wang Jianlin, is a former Communist deputy who served in the People’s Liberation Army for almost two decades. He claims to “stay close to the [Chinese] government,” steering over $1 billion in state subsidies from the Communist Party—which has vowed to “build its capacity in international communication”—to Wanda, Beijing’s foot soldier on the ground. (The heavy subsidization is expected from a country that invests $10 billion annually in external propaganda.) Wang has sold company stakes to relatives of some of China’s most powerful politicians and business executives, including the business partner of former Prime Minister Wen Jiabao’s daughter and relatives of two members of the Politburo—the Communist Party’s principal policymaking committee.

Wang’s Wanda sees high-dollar mergers and acquisitions as an avenue to accumulate soft power, which the Chinese government can leverage to influence American public opinion. Consider that, when the company acquired the film studio Legendary Entertainment for $3.5 billion earlier this year, it praised China’s “largest cross-border cultural acquisition to date.” Nowhere did Wanda mention buttered popcorn and soda sales.

The Legendary deal grants Wanda a greater say in the movie business, allowing it to promote scripts supportive of the Chinese government’s foreign policy agenda. This is already happening. Prior to completion, Pixels—the 2015 action-comedy flick—initially depicted aliens blasting a hole in the Great Wall, but the scene was removed entirely from the final version of the movie. Producers “spared the Great Wall because they were anxious to get the movie approved for release in China.” Similarly, the 2012 remake of Red Dawn originally featured Chinese soldiers invading an American town, yet producers changed the invaders into North Koreans pre-release anticipating a formal complaint from Beijing.

Wanda’s larger stake in American film studios exacerbates the issue. Even worse, the takeover of movie distribution channels—AMC’s newly acquired 8,380-screen behemoth—gifts the company another mechanism with which to determine what gets shown in the U.S. Wang’s firm could block a “controversial” movie—that is, one critical of the Communist Party—from being shown at its cinemas. This means that moviegoers might be hard-pressed to see American military flicks favorably portrayed or positive images of the Dalai Lama.

It’s not a stretch. Wanda recently bankrolled Southpaw’s $25 million production budget, becoming the first Chinese firm to “solely finance an American movie.” And it left fingerprints everywhere. According to David Glasser, who helped produce and market the film, “(Wanda was) involved—it wasn’t just a silent investment.” Glasser went even further: “They were on the set and involved in production, postproduction, marketing, everything.”

As Wang proudly admits, “AMC’s boss is Chinese, so more Chinese films should be in their theaters where possible.” While AMC’s U.S. management team claims that “Wanda does not participate in any of the day-to-day running of AMC,” Wang’s public comments suggest otherwise.

That fact alone should terrify Washington, D.C.

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