CORRECTION: The original version of this story incorrectly described AMC Holdings. It is the second-largest theater operator in the U.S. Regal Entertainment Group is the largest. The text has been corrected.
Kai Ryssdal: There was an interesting development today in the globalization’s here, and we’re getting used to it department. A huge Chinese movie theater company is about to become America’s second biggest theater chain. China’s Dailan Wanda conglomerate is going to buy AMC Holdings and its 5,000 movie screens across the U.S. and Canada for $2.5 billion. The Chinese — and others — have tried to buy high-profile American companies before, and were met with resistance. Probably not this time, as Marketplace’s Mitchell Hartman reports.
Mitchell Hartman: The U.S. has a huge trade imbalance with China. That means our dollars flow there, and China has to reinvest those dollars somewhere. So they’re trying to buy American companies, says Penn State business professor Fariborz Ghadar.
Fariborz Ghadar: That’s what the Japanese did a while ago, that’s what the Persian Gulf countries are doing with their excess cash.
In the ‘80s and ‘90s, the Japanese invested in Hollywood studios and Manhattan skyscrapers, like Rockefeller Center. More recently, a government-owned company in Dubai tried to buy some big U.S. port operations.
Ghadar: If the industry is sensitive — whether it’s ports, or whether it’s defense-related, or it’s telecom-related, etc. — you begin to see some kind of concern, either from a national security point of view, or ‘Oh my god, the foreigners are coming, buying this, that, and the other.’
But not this time. Ghadar says a Chinese company owning 350 movie theatres in malls across America isn’t likely to raise hackles. But is this a good investment?
Gary Hufbauer: Naturally they hope to make money with AMC.
China trade expert Gary Hufbauer at the Peterson Institute.
Hufbauer: The Chinese, in this case, are looking for technology acquisition. Well, that’s a pretty fancy expression — but for learning how to run movie theatres for China.
Where there is a growing middle class that will pay to sit in nice seats and see movies with state-of-the-art projectors and sound systems. I’m Mitchell Hartman for Marketplace.