Eldridge Industries, which owns TV unit Dick Clark Productions, has terminated the $1 billion sale agreement with Wang Jianlin's Dalian Wanda Group decided upon in November.
"Eldridge's affiliate terminated the agreement this week after Wanda failed to honor its contractual obligations," the holding company said in a statement. "Eldridge's affiliate also has filed with the Delaware Chancery Court to compel release of the balance of escrowed funds to which it is contractually entitled given Wanda's failure to consummate the sale."
The potential break up fee is reportedly close to $25 million, in addition to $25 million Wanda paid Eldridge in January for extending the close date. That brings the cost of the failed agreement to at least $50 million for Wanda.
The deal had been rumored to be in trouble since January. Skeptics doubted the hefty price tag for the production company, which airs live shows such as the Golden Globes, the Billboard Music Awards and the American Music Awards. Others questioned Wanda's cash flow, considering the real estate and entertainment conglomerate's string of high-profile and costly acquisitions, including its 2016 purchase of film production and co-financing outfit Legendary Entertainment for $3.5 billion.
More pressing still seemed to be the geopolitical climate: Under the new Trump administration, Chinese investment in U.S. companies appeared to be under more scrutiny. In China, too, there were cash flight concerns that the country's reserves would be depleted if businesses focused on buying properties internationally with the weakening yuan.
Representatives for Wanda did not immediately respond to requests for comment.
The purchase of Dick Clark Productions would have been Wanda's first foray into unscripted and live event production in the U.S. It already has a strong presence in the States: It owns cinematic giant AMC Entertainment, which it snapped up in 2012 for $2.6 billion as part of an effort to diversify into a vertically integrated entertainment company.
Wanda has made a concerted effort in the last year to muscle in on a global industry Wang considers to be dominated by a “few American movie companies.”
“You can’t look at it purely in terms of economics,” Stanley Rosen, a professor of political science at the University of Southern California specializing in Chinese politics and the Chinese film industry told FORBES. “He’s buying credibility...He has been very vocal in saying he wants to be a global player and make China a global player.”
But Wanda's core business, real estate, has come under pressure as mall foot traffic slows and China's economy balances out. The company's overall group revenue reported a 14% revenue drop in 2016; the first decline in more than a decade.
It remains to be seen whether the company will continue its onward march into Hollywood.