WSJ: U.S. Weighs Stricter Reviews for Media Acquisitions by Foreign Buyers
News story originally published at WSJ.com
By Erich Schwartzel
The U.S. government is considering whether to increase scrutiny of takeovers of U.S.-based entertainment companies by foreign buyers, as Chinese entities have been picking up the pace of such acquisitions.
The Government Accountability Office, responding Tuesday to a letter from 16 members of the House of Representatives, said it would review whether the government arm charged with reviewing overseas acquisitions of U.S. firms should expand its scope beyond its usual sectors like aerospace and defense.
That expansion of the Committee on Foreign Investment in the U.S. (CFIUS) could introduce new hurdles for deals that have historically escaped government review, including media and entertainment assets that have recently been scooped up by Chinese companies.
The letter from the members of the House, sent to the GAO on Sept. 15, specifically called out Dalian Wanda Group, a Chinese conglomerate that has made a series of big-ticket acquisitions in Hollywood. Those have included deals for Legendary Entertainment and AMC Entertainment Holdings Inc., raising concerns about a foreign power controlling so much of the U.S. media business.
The acquisitions have heightened “concerns about China’s efforts to censor topics and exert propaganda controls on American media,” the representatives wrote in the letter. A spokesman for Wanda didn’t immediately return request for comment.
The GAO said the letter’s request to review whether CFIUS’s role should be expanded is “within the scope of its authority” and that it anticipates it will start looking into the matter in about four months. A response to a congressional inquiry is required, though the GAO, Congress’s auditing and investigative arm, could have said the request falls outside its purview. Loren Yager, managing director of international affairs and trade, has been assigned to the request.