Beijing gov't locked in battle with Shanghai Film Group, other provincial studios

The weeklong National Day celebration in China marked but a brief pause in the power struggle over who will gain the rights to distrib U.S. and other foreign films on the Chinese mainland.

The Beijing government is locked in a battle with the Shanghai Film Group and other provincial studios on how to carve up the rights to the 20 films to be imported annually on a revenue-sharing basis.

While U.S. execs say the out-come is too tough to call, they hope to shed light on the intentions of the State Admini-stration of Radio, Film and Tele-vision (Sarft) when they visit Beijing Oct. 15 for a semiannual gathering of the majors’ Asian regional theatrical supervisors and Motion Picture Assn. reps.

Headed by vice minister Zhao Shi, Sarft is the department that’s been entrusted with deciding how to implement reform of the distribution system. In June, Chinese officials flagged plans to abolish the China Film Group’s monopoly on distributing imported pics.

“Sarft is agonizing over the options,” says one U.S. rep familiar with the internal debates. “They have to broaden out distri-bution while retaining at least partial (Communist) Party control and keeping all the provincial studios happy. It’s Mission: Im-possible.”

The Shanghai Group — the only regional distrib that has the resources to operate nationwide — was widely favored to get the first new distrib license.

Government two-step

But many observers now ex-pect Sarft to settle on a compro-mise that will see China Film split into two distribution companies: One would comprise its existing distrib division; the other would be a joint venture of China Film as the controlling shareholder and a number of provincial studios, including the Shanghai Group.

“Since several leaders from the central government are from Shanghai, Sarft officials are afraid that if they gave a distribution license to the Shanghai Group, they could not control” the distrib, says one Beijing official.

In an unusually frank assess-ment, that official acknowledges films traditionally have been viewed by the government as propaganda tools.

“Because of the ideological system in China, officials only care for their positions — not business,” he says. “The movie business is always related to education and ideology, so the film market is hopeless.”

But with China due to join the World Trade Organization early next year, the pace of reform is expected to accelerate.

“The state-run enterprises will die sooner or later,” the Beijing official ventures — a pronounce-ment that would have been con-demned as heretical a few years ago.

Others hope the retirements next March of a host of party leaders — including Ding Guan’gen, publicity chief of the powerful Propaganda Dept. (which oversees Sarft) — will usher in a more outward-looking era.

Looking toward new era

“When Ding leaves the scene, the (local) film industry might have a chance of recovering,” one Beijing producer says.

Some observers tip that Sarft itself will be dismantled after Ding, with responsibility for films probably shifting to the Culture Ministry (which already oversees homevideo) as a separate broadcasting ministry is created.

Even now, the government is embarking on several moves to strengthen the industry. It’s devis-ing plans to organize at least two cinema circuits in every major city, and has promised local production companies they’ll receive a 40% share of the box office, according to one producer.

And in a market where piracy is rife, the government is soon expected to announce the incentive of a 50,000 yuan ($6,000) reward to encourage people to report to police the names of distribs and retailers of counterfeit CDs and DVDS.

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