- - Monday, January 2, 2017

In 2017, America will likely have a new leader in movie theaters.

The shareholders of Carmike Cinemas — the fourth-largest movie theater operator in the United States — recently agreed on a deal to sell the company to AMC Entertainment for $1.2 billion. Now granted conditional approval by the Justice Department, the merger will make AMC the largest movie theater chain in the country with 8,380 screens in more than 600 cinemas nationwide.

So what’s the big deal? According to AMC CEO Adam Aron, there isn’t one. He argues that the merger is business as usual because “AMC is completely run by its American management in Leewood, Kansas, as American as an American place in the heartland you can find.” There’s one apparent problem with that description: AMC’s parent company is Dalian Wanda, a Chinese Communist Party-supported firm. Company chairman Wang Jianlin says, “[AMC’s] boss is Chinese, so more Chinese films should be in their theaters .” Maybe something got lost in the translation.

Mr. Wang’s words — and his track record — cut to the heart of the issue. He is a former Communist deputy who served in the People’s Liberation Army for almost two decades. Mr. Wang claims to “stay close to the [Chinese] government,” steering more than $1 billion in state subsidies from the Communist Party — which has vowed to “build its capacity in international communication” — to Wanda, Beijing’s foot soldier on the ground. (The heavy subsidization is expected from a country that invests $10 billion annually in external propaganda.)

Mr. Wang has sold company stakes to relatives of some of China’s most powerful politicians and business executives, including the business partner of former Prime Minister Wen Jiabao’s daughter and relatives of two members of the Politburo — the Communist Party’s principal policymaking committee.

Mr. Wang’s Wanda sees high-dollar mergers and acquisitions as an avenue to accumulate soft power, which the Chinese government can leverage to influence U.S. public opinion. By expanding his control of U.S. movie theaters, Mr. Wang gains access to major distribution channels and the ability to block certain movies from playing in his cinemas if they criticize the Chinese military or communist dogma — opening the doors for censorship under our noses.

Consider that when Wanda acquired the film studio Legendary Entertainment for $3.5 billion earlier this year, it praised China’s “largest cross-border cultural acquisition to date.” Or take Mr. Wang’s recent suggestion that “there needs to be more Chinese elements in films.” Nowhere does he mention buttered popcorn or soda sales — which Mr. Aron maintains is AMC’s priority.

Censorship is not a stretch. Wanda recently bankrolled the $25 million production budget for “Southpaw” — becoming the first Chinese firm to “solely finance an American movie” — only to leave its fingerprints everywhere. According to David Glasser, who helped produce and market the film, “[Wanda was] involved — it wasn’t just a silent investment.” Mr. Glasser went even further: “They were on the set and involved in production, post-production, marketing, everything.”

AMC’s U.S. management team can claim that “Wanda does not participate in any of the day-to-day running of AMC,” but production, post-production and marketing represent every step along Hollywood’s supply chain.

The aggressive posturing has even caught Congress’ eye. In September, Rep. Robert Pittenger, North Carolina Republican, and 15 other House members asked the Government Accountability Office to investigate whether the Committee on Foreign Investment in the United States (CFIUS) — an interagency committee with the power to block foreign purchases of U.S. assets — has jurisdiction over purchases in the U.S. movie industry, namely those carried out by Wanda. Just weeks later, Rep. John Culberson, Texas Republican, asked the Justice Department to take a closer look at Wanda’s purchases. Even incoming Senate Minority Leader Chuck Schumer of New York opined on the matter, imploring Treasury Secretary Jack Lew and U.S. Trade Representative Michael Froman to review CFIUS’ charter.

They’re right to be concerned. The AMC-Carmike deal is America’s new red scare. And this one is real.

Richard Berman is the president of Berman and Company, a public affairs firm in Washington, D.C.

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