Over the past decade, more and more American moviegoers have witnessed something startling: Much of what they watch is now altered to serve the interests of the Chinese Communist Party.
From the omission of Taiwan's flag from a jacket in Top Gun: Maverick to China's digital replacement with North Korea in Red Dawn, the country's political sway in movies has grown increasingly apparent. Hollywood studios now bend over backwards to appease the government gatekeeping the world's fastest-growing media market. The effects of that influence operation are obvious, but the mechanics that drive it are obscured in a vast web of corporate connections.
Within that web, however, lies one story: that of a major independent digital distributor, Cinedigm, known originally for overhauling cinemas and now in the business of distributing television and movies to storefronts and digital platforms like Netflix and iTunes. In 2017, Cinedigm was bought by a Chinese investment firm, Bison Capital, and has since remade itself as a pioneering distributor of Chinese content to American audiences.
The tangled tale of Bison and Cinedigm ties together the rise and fall of a Hollywood business, the get-rich schemes of the Chinese movie industry, and the pervasive and often shadowy influence of the Chinese Communist Party. The result is a story fit for a Hollywood retelling.
Neither Cinedigm nor a public-facing Bison subsidiary, Bison Finance Group, responded to requests for comment for this article. Several former Cinedigm affiliates approached also did not comment, with one citing a nondisclosure agreement.
Cinedigm, first incorporated in March of 2000, began as a business focused on helping movie theaters transition to then-new digital projection. Over the years, it overhauled nearly 13,000 screens and still claims a pioneering role in digital conversion.
That business, however, couldn't last—most theaters completed the switch by the early 2010s. Concurrently, Cinedigm prepared its own revamp, pivoting from digital conversion to movie distribution. In July 2011, Cinedigm sold its physical and electronic distribution business. Newly minted CEO Chris McGurk said he would be "focusing all of our energies on" software and independent content.
The new Cinedigm enjoyed early success, picking up indie darling Short Term 12, which helped launch actress Brie Larson's career. By late 2013, it was the largest distributor of independent movies and television in the United States—a position it sought to bolster with a $51 million deal with Gaiam, Inc., to buy a library of content from the WWE, NFL, Hallmark, and others.
But Cinedigm's luck couldn't last. The Gaiam deal turned sour—one former Cinedigm insider described it to the Washington Free Beacon as "the acquisition that really caused them huge harm" and "a bumble of a deal." In August 2014, Cinedigm reported lower-than-expected revenue growth; by the following year, it had brought a $30 million lawsuit against Gaiam, alleging fraud. (They eventually settled.)
Challenge compounded on challenge. The revelation of a $60 million loan sent Cinedigm's stock plunging, with an $11 million loss that quarter. Amid the tumult, two investors pressed for decisive action to save the company's rapidly sinking stock, then at risk of being delisted by the Nasdaq exchange.
By early 2017, the company was laser focused on debt. In the first nine months of the fiscal year, it had paid back over $43 million, but still reported nearly $250 million in outstanding liabilities, compared with $177 million in assets.
Cinedigm needed help—fast. Its savior, however, would dramatically alter the company's business.
Enter the Dragon
On June 29, 2017, Cinedigm struck a deal with China/Hong Kong-based investment firm Bison Capital. They traded 20 million shares—a majority of outstanding equity—for $30 million and a $10 million loan.
McGurk emphasized that the deal would both cut Cinedigm's indebtedness and "allow us to aggressively pursue the opportunities that the Bison transaction enables." Two Bison directors, Tom Bu and Peixin Xu, took seats on the board.
Cinedigm was not Bison's first foray into Hollywood. In 2014, it became the first Chinese company to invest in an American talent agency, buying a stake in Resolution Talent and Literary Agency. The deal fell through, however, after Bison failed to pay up.
This latest, successful acquisition was just part of a larger feeding frenzy, as Chinese firms scooped up Hollywood properties left and right. Legendary Entertainment, perhaps the biggest example, was bought out by Beijing-based Wanda group in January 2016.
The reason for China's buying spree, former China-based film executive Chris Fenton explained to the Free Beacon, was a coincidence of government interest and pure profit motive.
In the wake of the 2008 Beijing Summer Olympics, the Chinese government was eager to expand its influence by bolstering the film industry. It began to heap favor on movies that were produced in or relied on content created in China—like Iron Man 3, which Fenton produced and which opened first in China to the tune of $121 million in gross profits.
That piqued the interest of Chinese businesses, Fenton said. Film players saw buying American media properties as a way to earn support from the government, to whom Hollywood represented "the ultimate sort of western propaganda machine." Chinese businessmen began pitching their regulators on Hollywood buyouts and found wild support for what, to the Communist Party, was a clear propaganda coup.
Government support brought enormous wealth—Chinese companies that controlled Hollywood properties, Fenton said, enjoyed enormous market valuations. That in turn encouraged unrelated companies to buy more American media. It was a win-win—Chinese businessmen got rich, and the Communist Party got more media influence.
It's unclear if this is precisely what transpired with Cinedigm, although Bison's purchase predates Congress's 2018 crackdown on foreign investment. What is clear is that Cinedigm's acquisition prompted the film company to pivot to China.
Just months after the buyout, Cinedigm announced a "strategic alliance" with China-based Starrise Media, allowing Cinedigm to distribute American films in China—one of the few American distributors that could—and letting Starrise distribute Chinese films in America. It then inked deals with six Chinese companies at a signing ceremony, attended by McGurk, at the Beijing International Film Festival.
Cinedigm also moved to distribute Chinese content through its internet television platform. Bambu, a video-on-demand channel debuted by Cinedigm in 2019, offers American viewers a wide variety of Chinese programming, including drama, sci-fi, and even cooking shows.
Cinedigm proudly acknowledges its forays into media sharing, describing its work with Chinese firms as an "important 'Belt & Road' cooperation agreement" beneficial to both countries. It has since put its money where its mouth is: Just months ago, Cinedigm purchased 30 percent of Starrise in a stock swap—a major financial boon, according to McGurk.
"These are the two biggest entertainment markets in the world," the CEO said at the time. "This positioning as [an over-the-top]-oriented North America/China studio underscores the Company's strong growth prospects and unique competitive leverage."
Cinedigm's stock, meanwhile, has rebounded, rising from lows of 29 cents to a recent high of nearly $4 a share.
The Manchurian Candidate
The buyout brought Cinedigm a much-needed windfall and gave Bison an entrée into the U.S. media market. But it's unclear whether the China-based investment firm was wholly motivated by profit.
Bison's legal status is obscured by a web of holding companies that span the United States, Hong Kong, and the PRC. Cinedigm, for example, was purchased by Bison Entertainment Investment Ltd., a special purpose vehicle set up by Bison Capital Holding Company Ltd.—itself linked to a number of other companies, SEC records show.
Bison Capital Holding is wholly owned by Mr. Peixin Xu—one of Bison's appointees to Cinedigm's board—and his wife, both of Beijing. Xu founded Bison Capital in 2013, an extension of investment work begun as early as 2001. He leaves little footprint in the media or online, but there is enough to suggest professional connections between Xu, Bison, and the Communist Party of China.
Before he took the helm at Bison Capital, Xu was an independent director of Bona Film Group, Ltd., one of the largest film distributors in China. Bona succeeded in part thanks to its merger with China Poly Group, a state-owned asset management entity described as "a business wing of the Chinese military."
State connections appear to have carried forward to Xu's current venture, as hinted at in public records on a subsidiary, Bison Finance Group. BFG appears to be a Hong Kong-based financial services offshoot, bringing the added benefit of listing on the Hong Kong Stock exchange. Xu sits on BFG's board of directors, and his role as executive director is prominently mentioned in a 2018 biography.
For many years before it was Bison Finance Group, the company was Roadshow Holdings, a business that placed digital ads on buses. In 2017, following a year of major losses, RoadShow was acquired by a subsidiary of Bison Capital Financial Holdings, with Xu installed as executive director. Xu brought a number of colleagues with him, including BFG's well-connected chairman, Dr. Ma Weihua.
Ma has an extensive political career. In the 1990s, he served as president of the Hainan branch of the People's Bank of China, the PRC's central bank. Until 2013, he served as "Communist Party of China chief" at the China Merchants Bank, a major investment bank. He also served as a member of the Chinese People’s Political Consultative Conference, a major advisory political body, in both its 11th and 12th sessions.
The purchase of Bison Finance also suggests CCP connections. It was carried out through an intermediary company, Bliss Chance Global Ltd., which funded it by issuing HK$650 million in stock to a company called Fruitful Worldwide Ltd. Xu also lent 70 percent of the voting shares in Bison Finance Group to Fruitful. As recently as 2019, Fruitful continued to have a controlling influence in Bison Finance's ownership.
Fruitful is wholly owned by China Huarong Asset Management Co., a state-owned asset management company, Bison's annual reports indicate and other records confirm. In other words, Bison Finance Group's purchase was indirectly funded by a state-owned firm, which retains control over the majority of shares.
These connections—ties to a CCP apparatchik and a military-run corporation, funding from a government-controlled bank—are not in themselves criminal. Hollywood studios enjoy myriad tax breaks, and Treasury Secretary Steven Mnuchin is known for his deep Hollywood ties.
But the Chinese government clearly sees its influence over American media as a means of exercising what Fenton called "soft power." Shaping an American company through a private intermediary is straight out of the Communist Party's playbook, according to China expert Zack Cooper of the American Enterprise Institute.
"So much of what the Chinese have done to cultivate elite support for the Communist Party has been avoiding using folks that are directly tied to the party, and instead using the sort of broad leverage that they have, the incentive of the Chinese market in a very coercive way," Cooper said.
Cinedigm's acquisition is just one of many recent Chinese moves to consolidate influence in Hollywood, a trend that caught the attention of the U.S. China Commission as far back as 2015. Analysts then wrote that Chinese censorship was affecting and will continue to affect U.S. audiences, while constraining studios' "creative freedom."
To make movies in and for China, in other words, is to make concessions to the communist regime—to build one's business around that means all the more concessions.