How China's Capital Clampdown Torpedoed a Billionaire's Oscar Dream

By Wayne Ma in Beijing and Erich Schwartzel in Los Angeles Features Dow Jones Newswires

The calls started going out last year. Wang Jianlin, the Chinese billionaire on a Hollywood spending spree, wanted to win an Oscar. Who could help?

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The quest was led by former Academy of Motion Picture Arts and Sciences president Hawk Koch, who along with other representatives of Mr. Wang's Dalian Wanda Group approached studios across Hollywood in search of prestige projects, according to people familiar with the situation.

The effort initially focused on partnerships with boutique studios known for mining Oscar gold, including Weinstein Co., Fox Searchlight and Sony Pictures Classics, the people said. Eventually, it led to the creation of "the O Project"--O as in Oscar--to establish a film division within Wanda to produce awards-caliber films, they said.

Those Oscar dreams have now been sidelined after Wanda came under fire from the Chinese government for spending money on costly overseas acquisitions, a move at odds with China's efforts to rein in capital outflows, people close to the matter said. President Xi Jinping in June approved a decision barring state-owned banks from making loans to Mr. Wang's company, underscoring the government's displeasure.

An unlikely victim of the clampdown, these people said, is Mr. Wang's best shot yet at an Oscar. Mr. Wang backed away from plans to finance 50% of "Arc of Justice," a film set to star Russell Crowe and David Oyelowo, because it would have meant seeking regulatory approval to move money out of China. The film's expected budget was $12.5 million.

The abandoned Oscar campaign illuminates the rise and fall of Mr. Wang's Hollywood ambitions. After making a fortune in Chinese real-estate development, Mr. Wang spent billions of dollars to acquire theater chain AMC Entertainment Holdings Inc. and blockbuster producer Legendary Entertainment.

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Mr. Wang, known to many in his orbit as "the chairman," also wanted Hollywood's ultimate accolade: an Academy Award.

"The chairman loves big, shiny things," said one Hollywood producer approached by Wanda. "Buildings, malls, shopping centers, big companies--and an Oscar."

A Wanda representative declined to comment.

Mr. Koch, with decades of experience networking in Hollywood, was key to Wanda's O Project push. The 71-year-old producer, whose credits include "Wayne's World" and "Primal Fear," met Mr. Wang when the billionaire visited Los Angeles in March 2013. He was later invited to travel in China with Mr. Wang to consult on the location of a new sound-stage business, Wanda Studios, people familiar with the situation said.

In September 2013, Mr. Koch attended the groundbreaking for the Qingdao sound stages. Wanda brought in a bevy of Hollywood luminaries for the occasion, including actors Leonardo DiCaprio, Nicole Kidman and John Travolta and producer Harvey Weinstein.

Afterward, Mr. Koch was hired as a part-time adviser--drawing a salary of between $300,000 and $500,000 a year--to promote Wanda Studios around Hollywood, according to people familiar with the matter.

In pursuit of his Oscar goal, Mr. Wang at first targeted Weinstein Co., known for its success in producing award-winning films. In 2014, Wanda spent $30 million to fully finance the boxing drama "Southpaw," starring Jake Gyllenhaal.

In contract negotiations with the studio, Wanda wanted a guarantee that "Southpaw" would receive an Oscar nomination or else the company would receive a payout, according to people familiar with the matter. Wanda was told the Motion Picture Academy doesn't work that way, the people said. The film wasn't nominated in any category.

Mr. Wang later changed tack and decided to bring the projects in-house.

Mr. Koch soon found a contender in "Arc of Justice," a drama based on the 2004 National Book Award winner about a landmark civil-rights trial. Wanda was set to cover half of the movie's $12.5 million budget in return for an equity stake of about 50%, according to the people.

But when the Chinese government clamped down on companies moving money out of the country, Wanda decided to pull financing for the film, one person said. Regulators have been especially wary of investments in foreign media and entertainment.

It's unclear what will happen to "Arc of Justice" now. One person said there was "zero possibility" Wanda will give any future funding to the O Project or other overseas films. Those familiar with the production are hopeful a new financier will step in, even if it means reducing the movie's budget.

Insiders say the episode is an example of how Hollywood-Chinese partnerships can be upended by a third party: the Chinese government.

"Getting any movie made is a miracle, but you don't see the Chinese government shutting it down as a possibility," said one person involved in the project.

Wanda sent representatives to Los Angeles last month for meetings with studios to assure them that Wanda is still in the game. But executives privately wonder if the conglomerate will be allowed to resume its Hollywood pursuits with the same gusto it displayed before the government crackdown.

Mr. Wang will, however, retain a certain proximity to Oscars. In 2013, Wanda donated $20 million to the Academy's new film museum--enough to give the company naming rights in the museum's film-history section.

The Academy, in turn, gave a nod to Wanda in its Oscar broadcast this year, briefly showing the company's Wanda Plaza logo in a segment about movies around the world.

Write to Wayne Ma at wayne.ma@wsj.com and Erich Schwartzel at erich.schwartzel@wsj.com

(END) Dow Jones Newswires

October 04, 2017 05:44 ET (09:44 GMT)