Quota fix leaves H’wood hanging

Studios vow to wow China gradually

December’s CineAsia meet was the perfect place for the Hollywood studios to unveil their 2006 movie slates to Chinese authorities. Senior studio bosses were in Beijing talking up production deals, while the bigwigs from China Film, the State Administration of Radio, Film & TV and the Film Bureau were all in attendance, making the most of the centenary of Chinese cinema.

But securing a berth for a movie among the score of pictures that will enjoy a quota release is a process that requires more subtlety than a noisy pitch at a trade show.

Studios realize that, for now, it’s not worth it to try to buck the system. “We all recognize that motion pictures and studios are not stand-alone operations. We are part of wider entertainment conglomerates and we are not going to jeopardize getting the whole operation into China for the sake of a couple of movies,” says a studio’s China rep.

“We recognize that films are controlled, but our other products are not.” And there is massively greater profit to be made from theme parks or high-margin consumer goods than from movies.

China’s quota system is riddled with exceptions and uneven application. For instance, 21 films from MPA studios were released on a revenue-sharing basis in 2005, not the strict 20 that many believe applies.

Each of the studios makes it a year-round task to keep China Film, the country’s only authorized importer, informed of what is on their lineup and abreast of any scheduling changes.

There are probably three criteria, each subject to a degree of debate, that determine whether a film will obtain a quota release.

First is commercial viability. With only about 20 foreign pictures per year coming in for revenue-sharing distribution (others can also be screened on a flat-fee basis) China Film is keen to select only those pics that will keep turnstiles clicking.

Next up is subject matter. Authorities are keen to avoid anything politically sensitive, not just to its own people, but to other communist countries.

Third comes censorship, which takes place through the Film Bureau. While overt sex and drug references are obviously taboo, as is all horror, the biggest problem here is that China has no rating system and that all movies, domestic and foreign, must either qualify as suitable for auds of all ages or not at all.

“Commercial viability is actually the biggest obstacle,” says the China chief of one U.S. studio. “That is always going to be very subjective, but what counts is not our view but the opinions of China Film’s import department and the two state distributors (China Film and Huaxia).”

Hollywood’s ambassadors have learned not to bother presenting films of genres that China Film does not expect Chinese auds to go for. In addition to horror, most U.S. comedy is out, although family-oriented laffers such as “Cheaper by the Dozen” and “Big Momma’s House” were successfully released, and both have sequels hoping for play in 2006.

Chinese auds clearly embrace the biggest-name stars, biggest-budget pictures and most onscreen spectacle. Hence “War of the Worlds” and “Mr. & Mrs. Smith” were successful last year. And while there is no local Chinese sci-fi output, pics like “Star Wars” are cleared for theatrical takeoff.

Some reactions are unpredictable. While much of the world took “Charlie and the Chocolate Factory” to be a surefire hit, China Film was less convinced. Pic got revenue-share status, but was permitted only imited and Imax releases.

There are other logistical issues to consider, too. Although the importers may watch subtitled prints, all trailers have to be in Mandarin Chinese, and the three-stage submission process must be completed six or seven weeks ahead of scheduled release. That is particularly tricky for any movie hoping for a day-and-date release, as the dubbed screening tape seen by the censors is expected to be the same final version as screens in Chinese theaters.

Censorship is probably the least understood part of the process. There are no published guidelines as to what will or will not pass, but neither do the censors simply hand down judgments. In many cases, they will suggest cuts that would allow a film to pass. Hong Kong helmer Peter Chan Ho-sun, who recently made “Perhaps Love,” admitted: “They see it as their job to get films passed.”

The China rep for another U.S. studio says: “Once the Film Bureau screens the movie, it will send a note to CFG authorizing the import. Some 80%-90% of the time you will get the release if the film has passed the first two screenings (for China Film and the distributors).”

Others report trends in censorship that reflect political flows. One producer told Variety China’s current friendly overtures toward Taiwan meant anti-Taiwanese references had to be cut from his film, although similar ones have been commonplace in Chinese movies for years.

Others report the Film Bureau actually passes considerably more foreign films than the 20 quota slots available. That is when the influence of distribs CFG and Huaxia has the greatest impact. Not only does a movie have to be acceptable to bureaucrats, censors and the perceived auds, it also has to be available at the right time. China operates a blackout period in high summer, when the biggest Chinese movies get free rein.

There is a less-talked-about moratorium in December, too. This is to give local films the maximum play from the many corporate programs that provide employees with free or discounted cinema tickets. These expire at the end of the calendar year and are used heavily in December.

“China is not like any other market in the world,” says one studio rep. “But there is no point in our complaining or making a big fuss about the quotas. They come with the country.” It was notable that Motion Picture Assn. of America prexy Dan Glickman used his December speech in the Great Hall of the People to call for China to open its markets, but the word quota scarcely crossed his lips. Instead the emphasis was on reciprocity, protection of intellectual property and anti-piracy.

The revenue-sharing scheme delivers a modest 13% of the gross box office to the foreign rights owner, up to a theoretical maximum of 17%. So even the biggest U.S. hit of the year, “Harry Potter and the Goblet of Fire,” which could gross Yuan 90 million ($11 million), will net Warner Bros no more than a couple of million dollars, albeit tax free.

The quota system’s exceptions and uneven application give rise to a degree of negotiation and plenty of speculation. Of the 20 slots normally available, 16 are usually earmarked for U.S. movies, the others going to pictures of other nationalities. But with their permanent diplomatic missions, the U.S. studios usually do better than that.

UIP presents films by Universal subsidiary Working Title as British and this year secured berths for “Wimbledon” and “Thunderbirds” in addition to Working Title/Mirage Entertainment’s “The Interpreter” and Par’s “War of the Worlds.” Warner Bros. delivered “A Very Long Engagement,” the only non English-language pic to get a quota release in 2005. Given the state of Sino-Japanese political relations, it seems unlikely that a Japanese film will qualify for revenue-share release any time soon, though animal drama “Quill” went out on a flat fee basis this year.

Insiders deny there is any favoritism to studios, and say that no studio is guaranteed a minimum number of releases. Fox once had six in a single year, but numbers mostly even themselves out. Studios accounted for three of the eight U.S. pictures which took the flat-fee route, including “The Terminal.” DreamWorks was counted separately from the studios, and despite Par’s acquisition of DreamWorks, that status might not change any time soon. Outfit is repped in China by Korean major CJ Entertainment under a long-term contract — and China appears to have a separate quota for animated features, anyway.

Given this maze it is no wonder one studio’s Asia chief says: “In my other territories I know what I’m doing through 2007. In China, it is much harder to plan ahead.”

Pictures known to have secured berths for 2006 so far include UIP’s “King Kong,” after much wrangling over a Film Board recommended edit; Sony’s “Memoirs of a Geisha,” after a suggested date shift to February; and Buena Vista’s “Chronicles of Narnia: The Lion, the Witch and the Wardrobe.”

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