Abu Dhabi Looks to Stake Claim in Hollywood

Abu Dhabi, the oil-rich city-state capital of the United Arab Emirates, continues to use its sovereign wealth fund to buy American assets and expand its influence in the U.S. Its next target: Hollywood.

Government-owned Abu Dhabi Media Company launched its new company, Imagenation Abu Dhabi, which plans to make a $1 billion deal with Time Warner to finance Hollywood and international films over the next five years. The company intends to become a major force in Hollywood, planning to produce at least eight feature-length films a year.

The once bountiful flow of Wall Street cash to Hollywood was reduced to a trickle as the U.S. became mired in recession and tightening credit standards. The absence of Wall Street funds created the void that Abu Dhabi is looking to fill. Questions regarding sensitive cultural and religious issues remain, along with the fact that Abu Dhabi Media Company is government controlled. Making deals with state controlled media is typically frowned upon in the U.S.

The Abu Dhabi Investment Authority is the largest sovereign wealth fund in the world. It possesses over $1 trillion, most of which it has amassed from oil revenues. Of course, as the worlds leading consumer of oil, some of that money is undoubtedly from America. Just this year alone, Abu Dhabi, rich from American dollars, purchased the iconic Chrysler Building and General Motors Building in New York City. As of July, they have spent $1.8 billion on real estate. This tiny nation of just over five million has managed to buy U.S. debt, realty and businesses with America's own money.

America’s oil money is coming back in the form of strategic foreign investment. These oil-funded acquisitions send all of America’s wealth, patents, tax revenue and now apparently creative ownership of media abroad, reducing America’s ability to compete in the global market place.

Source Reuters:

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