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Economy

Coming soon to Saudi malls -- Wanda controlled cinemas

End of 35-year ban could be worth $24bn and AMC swoops in for the opening act

A billboard featuring Hollywood star John Travolta is displayed in Riyadh.   © Reuters

DUBAI, United Arab Emirates -- Saudi citizens will soon be able to go to the movies without crossing a national border, as Crown Prince Mohammed bin Salman shakes up the kingdom's economy and society. And the end of a 35-year ban on cinemas has already produced a high-powered partnership: between U.S.-based, Chinese-owned theater chain AMC Entertainment Holdings and a sovereign wealth fund Riyadh wants to develop into the world's largest.

By 2030, the Saudi government anticipates there will be 200 movie theaters in the country, with 2,000 screens; the first could open this March. Today, there are no commercial cinemas in the kingdom.

Shopping malls under construction in the capital and other cities have already set aside space. The deregulation is expected to generate some 30,000 jobs and economic effects worth an estimated $24 billion.

Saudis are no strangers to Hollywood. Many watch films online, or catch them in neighboring countries like Bahrain and the United Arab Emirates -- which are more accessible than ever thanks to budget airlines. But Riyadh announced late last year that it would grant commercial cinema licenses as part of the crown prince's sweeping reforms, which are meant to diversify the oil-reliant economy while attracting international tourists and talent.

Following the announcement, AMC and Saudi Arabia's Public Investment Fund were quick to reveal plans for a joint venture that will build and operate theaters. "This announcement is a historic moment for the theatrical exhibition industry and a tremendous opportunity to connect AMC's movie products with the Kingdom of Saudi Arabia's more than 30 million citizens, many of whom we know are movie fans based on their regular visits to cinemas in neighboring countries," AMC CEO Adam Aron said in a statement.

A shopping mall operator in Dubai and other companies have also shown interest in the nascent Saudi cinema market.

The PIF and AMC -- which is controlled by Dalian Wanda Group and runs 1,000 theaters with 11,000 screens worldwide, mainly under the Odeon brand -- have yet to reveal the details of their business plan.

But movies are just one aspect of the crown prince's emphasis on entertainment as a growth industry, under a new entity called the General Entertainment Authority.

Clerical pushback

Cinemas, along with other forms of entertainment, were banned after the country took a turn toward ultraconservatism following the the seizure of the Grand Mosque of Mecca by militants in 1979.

The lack of public cinemas fueled sales of super-sized televisions -- 80-inch and 90-inch models -- for home use.

Concerts in Riyadh are no longer uncommon. The country is moving ahead with an "entertainment city" project that will include a safari park. And there are plans afoot to construct a high-tech business and entertainment hub, called Neom, on the Red Sea coast at a cost of $500 billion.

All this is rubbing some in the Saudi religious establishment the wrong way. A high-ranking cleric warned last year that cinemas would corrupt morals if they are allowed in the kingdom. Saudi sensibilities are likely to prompt the production of films that will be considered acceptable there. 

At any rate, as the movie industry gears up to explore this new frontier, Saudi Arabia is heading toward an economic watershed in 2018: the planned sale of shares in Saudi Arabian Oil, or Saudi Aramco, the national oil company. 

The kingdom intends to use funds from the sale -- the core of the crown prince's economic reform drive -- to build the PIF into the No. 1 sovereign wealth fund. This should accelerate the transition from an oil-dependent economy to one driven by investment, allowing the crown prince to continue his big rewrite of the national script. 

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