Alibaba Poised to Buy Control of Hollywood Studio

By James Hirsen, Special for USDR

Jack Ma recently delivered a keynote address at the Wall Street Journal’s digital tech event, “WSJD Live.” The richest man in China described the company he founded, Alibaba, as “the biggest entertainment company in the world.”

The Chinese magnate told the crowd, “I want to come here looking for partners.” He emphasized a reality that most Hollywood executives and creative types already know, that China is destined to become the largest movie market in the world.

“Movies are the best way to change young people’s behavior and thinking,” Ma said, touching on an issue with which young people in his country are having to deal concerning the rapid economic growth that China is undergoing.

The Alibaba founder came to the United States looking for film and television content for the company’s streaming media outlets. Ma’s presence had been anticipated by the Southern California entertainment industry, especially after word got out that he has $25 billion in cash at his disposal, due to Alibaba’s recent record-breaking initial public offering.

Ma met with an assortment of Hollywood power players, including Paramount’s Brad Grey, Sony’s Michael Lynton, Amy Pascal and Doug Belgrad, Imagine’s Ron Howard and Brian Grazer, Icon’s Mel Gibson, and TriStar’s Tom Rothman.

Kevin Tsujihara, CEO of Warner Bros., reportedly had to settle for a telephone conversation with Ma, while WME’s Ari Emanuel and Patrick Whitesell were photographed with Ma and Alibaba board member Jet Li at a Los Angeles Lakers game.

Executives from Fox, Universal, and Relativity met with other Alibaba executives after Ma had already left the Southern California area. However, what may turn out to be the most significant meeting of Ma’s trip was when he and his team sat down with executives from a certain independent Hollywood studio.

In observing this first major step into Hollywood territory, many have been thinking that Alibaba may be seeking something greater than the acquisition of content only. It could be that the Chinese giant is looking to buy its very own American movie studio, specifically a possible controlling stake in Lionsgate.

The New York Post reported in October 2014 that Alibaba was looking to purchase a 37.4% stake in Lionsgate from hedge fund manager and former protege of investor Carl Icahn, Mark Rachesky, who owns Lionsgate’s shares via his firm, MHR Fund Management, and is Lionsgate’s chairman. The story was not confirmed by the studio or Alibaba.

Ma is already doing business with Lionsgate. Alibaba is in a partnership with the studio for the Chinese subscription streaming service, Lionsgate Entertainment World, which features Lionsgate content, the “Twilight” films, “The Hunger Games: Catching Fire,” “Divergent,” and “Mad Men.”

Additionally, Lionsgate CEO Jon Feltheimer assisted in the dissemination of rumors about the Alibaba purchase during a recent conference call with analysts.

“I just got back from Hong Kong and, at the end of the day, if there’s an equity component, it encourages people to do other strategic things with you,” Feltheimer said in answer to a question about the value of having a major Asian equity investor.

Hollywood has been fretting over moves in recent months by Chinese officials to control foreign-media content. In September 2014, government officials limited foreign television programming to 30% of Chinese streaming content.

Having Alibaba as a major shareholder and strategic partner is seen by studios as a way of getting movies and television shows past the Chinese censors.

This may be the reason that Feltheimer let it be known, “You’re going to see me spending a lot of time in China at the beginning of next year.”

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.

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