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Colony Capital Eyes Minority Stake in Legendary Studio, Home of Godzilla

Liana Baker, Gillian Tan and Anousha Sakoui

(Bloomberg) -- Colony Capital Inc., the investment company led by Tom Barrack, is weighing the purchase of a minority stake in Legendary Entertainment, the film and TV company behind the “Godzilla” franchise.

Colony has held talks about buying the stake in the media company from Chinese billionaire Wang Jianlin’s Dalian Wanda Group, according to people familiar with the matter. The investment could value the backer of “Jurassic World: Fallen Kingdom” significantly lower than the $3.5 billion Wanda acquired it for in 2016, some of the people said, asking not to be identified as the talks are private.

The investment would be made via a new fund called Colony Media Partners and mark a return to the media industry for Colony, which sold production company Miramax to Qatar-based BeIN Media Group in 2016, some of the people said. Saudi Arabia’s Public Investment Fund has also shown interest in investing in Legendary via the fund, the people said. No deal has been finalized and could still fall through.

Representatives for Colony, Legendary and PIF declined to comment. Wanda couldn’t be reached outside of business hours in China.

Saudi Arabia’s sovereign wealth fund may be revisiting its interest in Legendary. PIF explored a potential $700 million stake in Legendary last year, Reuters reported. A deal backed by the fund could test Hollywood’s appetite for Saudi-backed investments.

Endeavor Group Holdings Inc., led by talent agent turned media mogul Ari Emanuel, returned $400 million from Saudi Arabia’s investment fund following reports that the government was linked to the killing of journalist Jamal Khashoggi.

Barrack, who was chairman of President Trump’s inaugural committee, announced plans earlier this month to step down from his role as chief executive officer of Los Angeles-based Colony in 2021.

Joshua Grode, Legendary’s CEO, knows Colony well. Before joining Legendary, he advised the firm on its 2010 purchase of Miramax from Walt Disney. And Colony looks favorably on opportunities to invest with Grode, one of the people said.

The rise of streaming and the domination of Walt Disney Co.’s major film franchises has put pressure on box office revenues for smaller film producers like Miramax and Lions Gate Entertainment, which have been seeking new investors. Since its 2016 takeover by Wanda, Legendary has had some box office disappointments like most recently “Godzilla: King of the Monsters,” which missed industry projections. However it has had other successes such as “Pokemon Detective Pikachu,” one of its first movies via Warner Bros. after its co-financing agreement with Universal Pictures came to an end in December.

--With assistance from Matthew Martin, Crystal Tse and Jinshan Hong.

To contact the reporters on this story: Liana Baker in New York at lbaker75@bloomberg.net;Gillian Tan in New York at gtan129@bloomberg.net;Anousha Sakoui in los angeles at asakoui@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net, ;Liana Baker at lbaker75@bloomberg.net, Linus Chua, James Ludden

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