American trade policy a factor

In its most drastic measure ever against Hollywood, Chinese authorities have banned the release of American pics for at least three months.

Ban began Saturday and will continue until the end of February at least, but Chinese sources say it could continue until May.

Central-government order came from echelons higher up than the State Administration for Film Radio and Television or the Film Bureau, which normally handle movie industry policy and application. Ruling likely emanated within the Propaganda Ministry.

The Asian and Chinese arms of the studios have not been given any release slots in the first two months of 2008.

U.S. studio distribution execs had no comment, but speculation is that the ban will last until after the Chinese New Year celebration in early February. Key factors in the decision are said to be disagreements with U.S. trade policy and the recent success of American pics at the expense of local films.

Distribs have noted privately that the Chinese government often changes the blackout periods on a whim.

Normally, the majors would by now have had approval for films that qualify under the quota system, which permits 20 foreign films per year to be released on a revenue-sharing basis. They also report that the Film Bureau’s censorship committee is not even interested in screening their movies.

Four films that would normally have expected to be cleared for release in January or February have been locked out: Disney’s “Enchanted,” DreamWorks’ “Bee Movie,” Paramount’s “Stardust” and Warner’s “Beowulf.”

And Sony’s “The Pursuit of Happyness” has been cleared by censors but also finds itself shut out.

The ban was not announced in writing, but some Chinese exhibitors became aware of the policy last week at an exhib convention held in Zhuhai, Guangdong Province, on the eve of this week’s CineAsia confab in Macau.

Reasons for the drastic action are threefold and appear to be a mixture of major politics and industry issues.

First, the ban is another example of the growing rift between China and the U.S. as the former becomes an economic, military and political powerhouse. China recently expressed its displeasure over the U.S. sale of weapons to Taiwan and objected to Congress honoring the Dalai Lama.

That resulted in a diplomatic spat, with the Kitty Hawk aircraft carrier barred from visiting Hong Kong for Thanksgiving and U.S. minesweepers denied shelter in a storm. U.S. responded by sailing the warship through the Taiwan Strait.

“Movies are being targeted first because they are so visible,” one source told Daily Variety. “But there may be actions in other areas too.”

Second, the film ban is seen in some quarters as retaliation against the Motion Picture Assn.’s studio members for persuading the Office of the U.S. Trade Representative to take action against China through the World Trade Organization over intellectual property protection and market access (Daily Variety, April, 11).

While the IP and piracy case came as little surprise, China was outraged that film import quotas, blackout periods (when only local films show) and other restrictions might be picked over by the WTO.

The U.S. filed the initial action in April, but the two sides failed to find a compromise and the cases were escalated to full disputes in September (Daily Variety, Sept. 26).

A third reason for the ban is that such blackouts are one of China’s regular exercises in massaging figures so that local films have at least half the box office.

This looks to be the least weighty explanation as the target is based on the calendar year, and 50% market share is going to be hard to achieve in 2007. Hollywood pics had an exceptionally boffo summer, led by “Transformers,” “Pirates of the Caribbean 3″ and “Spider-Man 3.” Chinese perf for “Transformers” was the film’s third- biggest internationally; pic ranks second on the all-time list in China behind “Titanic.”

Normally, the Film Bureau and near-monopoly distributor China Film Group ensure that the quota of new Hollywood releases is exhausted by the beginning of December so that only Chinese films occupy screens during the busiest month of the year. However, exhibitors and distributors say the Christmas blackout came early this year and was accompanied by additional restrictions.

This year has already been a busy one for blackouts. The Sept. 15-Oct. 30 period was one for patriotic fare known as the Outstanding Golden Domestic Film Exhibition Month. There were other freezes from June 20-July 11 and July 21-Aug. 12, and the biz had been working on the assumption that December would be for Chinese pics only. But this lengthy blackout comes as a surprise.

“The Bourne Ultimatum” and “Live Free or Die Hard” were forced to compete against each other when they were both given a Nov. 12 release date and then limited to 150 prints each. That compares with a typical outing on 500 prints for most Hollywood movies in China.

Chinese movie “Warlords” will get a 900-print release next week, while Feng Xiaogang’s patriotic war pic “The Assembly” will go out on more than 800 screens.

When contacted by Daily Variety, China Film was circumspect and denied the existence of a ban. “There’s no such thing. We’ve never heard anything about this,” a spokesman said.

The studios are each monitoring the situation. But they are unlikely to take individual action and will more likely react collectively if necessary. However, even the MPA is in a weak position.

First, it will have difficulty proving that the ban exists as official policy rather than as a result of bottlenecks in the releasing or censorship process. Controversial decrees are sometimes read out in front of meetings to avoid putting them in writing.

Second, the ban may simply be lifted later in the year when the films’ freshness has been eroded and some of the demand is satisfied by pirate DVDs. The Hollywood movies may get outings during the Olympic Games in August, when the public gaze is focused elsewhere.

Moreover, the studio releasing arms may not be completely inactive in the case of a Hollywood ban.

“This is only about American films, not films from other countries handled by these companies,” one source said.

Universal, for instance, has previously presented pics made by Working Title as British, rather than American. Also Hollywood films made as Chinese co-productions, such as “The Mummy: Tomb of the Dragon Emperor,” which lensed in China and has Chinese cast and crew, could potentially escape restriction.

Best hope for Hollywood is that Chinese authorities realize that a prolonged Hollywood ban may damage China’s position in the WTO cases — or if Chinese exhibs complain that the lack of blockbuster movies is hitting their profits.

(Clifford Coonan in Beijing and Dave McNary in Hollywood contributed to this report.)

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