Box Office Billionaire: How Legendary's Thomas Tull Used Comics, China And A Secret Formula To Remake Hollywood

While most of the country ground to a halt around Christmas, Thomas Tull, the billionaire founder of Legendary Entertainment, had never been busier. Or more stressed. He was smack in the middle of a deal to sell his studio to China’s richest man, Wang Jianlin, and his Dalian Wanda Group. But Christmas is just another day in China, and various hiccups stood in the way of Tull and a $3.5 billion cash-out.
Pacing the floors of his massive home in the tony Westlake Village complex just outside of Los Angeles, he first had to explain the deal to his consortium one by one, a varied bunch that ranged from institutional giants like Fidelity and Morgan Stanley MS -1.00% and Japan’s SoftBank to individuals like billionaire venture capitalist Jim Breyer.
Then came the near-impossible task of minimizing taxes on both sides–every shift in the terms invariably caused repercussions for one side or the other.
Finally Tull had to navigate the Chinese regulatory system, which forbids foreigners from owning stakes outright in entertainment companies–a problem, since Tull, who would continue in his CEO role, wanted to hold on to his 20% or so stake of Legendary. In the end, knowledgeable sources told FORBES, Tull likely had to make do with phantom stock, a China-friendly workaround that would mimic actual ownership, giving him a yearly payout plus 15% to 20% of the profit if the company is sold. (Legendary would not confirm this arrangement.)
Such details were the culmination of a two-year process that started with a lunch at Wanda’s headquarters in Beijing in late 2013. Legendary, which has co-produced blockbusters such as The Dark Knight and Godzilla, had recently partnered with state-run China Film Group to develop movies in the country. He gained access to a burgeoning market–it will surpass the U.S. next year as the world’s largest–and a near-sure distribution channel in a place that permits only 34 foreign films annually. The previous year Wang had snapped up U.S. cinema chain AMC for $2.6 billion, taking the first step in what would become a string of international entertainment acquisitions to broaden the scope of his real estate conglomerate.
Almost immediately they began smoothing out personal differences–amid China’s culinary riches, Wang served Tull and his “very narrow palate” grilled chicken and salad–and basking in their similarities, including the fact that they grew up poor (albeit 7,000 miles apart). “I liked that there wasn’t a lot of flowery talk,” says the bread-and-butter Tull.
That lunch coincided with his forging of profitable partnerships (Tull’s humans-versus-monsters epic, Pacific Rim, pulled in 27% of its $411 million gross from China, much of it from Wanda’s theaters) and led to small investments, as Wang took a nearly 2% stake in Legendary. Then came more culinary courtesies: When Wang came to Los Angeles, it was Tull who sucked it up, taking China’s $29 billion man to a spicy Sichuan restaurant in the Century City Mall.
A positive dynamic had been set up. “At any business deal of size, it always seems like there are three moments that you feel like there’s just no way,” Tull recalls. Yet by New Year’s Eve Tull was able to call Wang with six fateful words: “I think we have a deal.”