What if China’s money stream stops flowing to Hollywood?

What if China’s money stream stops flowing to Hollywood?
(Image: EPA via WSJ)

Chinese companies poured record amounts of capital into Hollywood in 2016 — a trend eagerly embraced by the U.S. film industry. Among the deals: Dalian Wanda Group acquired Legendary Entertainment for $3.5 billion and Dick Clark Productions for $1 billion; Alibaba made a major investment in Steven Spielberg’s Amblin Entertainment; and Beijing-based Perfect World Pictures put $500 million into 50 films from Universal.

But tighter regulatory scrutiny and rising protectionism in the U.S. and China now have the industry questioning whether the deal flow could dry up in 2017. Already, there have been casualties.

Indie film player Voltage Entertainment, producer of The Hurt Locker and Dallas Buyers Club, surprised many in November when plans came to light for a provincial Chinese manufacturing firm to acquire the Los Angeles-based studio for $350 million. But within weeks, the firm, Anhui Xinke New Materials, revealed it was aborting the deal after failing to meet additional documentation requests from local regulators.

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