To judge by the premiere, every movie is a triumph. Wider audiences often take a different view. Yesterday, shares in Wanda Cinema Lines jumped one-tenth as it reopened from a trading suspension. Ignore the air-kissing on the red carpet: Wanda could have done better things with the $5.7bn it is spending to acquire Wanda Pictures Media from its parent group.
Wanda Pictures Media owns Legendary Entertainment, a US media group bought by Wanda in January for $3.5bn, as well as other content-related businesses. Wanda Cinema will issue new shares to its unlisted parent and other shareholders at a discount, raising $6.8bn.
Marrying content and distribution can make sense in mature or highly competitive distribution channels. Apple locks in users by providing ever more software and apps. Television networks, too, ensure viewers do not defect to rivals by offering exclusive content. But China’s cinema industry is far from mature. Box-office revenues have been growing at double digits annually; the market may overtake the US next year. The ratio of screens to population is less than one-fifth that of the US, according to HSBC.