Shanghai breaks through

Upstart takes on former monopoly

SYDNEY — When the Shanghai Film & TV Group was given the rights to distribute “Jurassic Park III” in January, China-watchers in Hollywood saw this as a fascinating test of the group’s capacity to coordinate a nationwide release.

The dinopic has grossed $1.5 million, a decent result considering pirated videos had been available for months — and just 12 days after “Jurassic” preemed, China Film launched “Harry Potter and the Sorcerer’s Stone.” (The boy wizard has since racked up a healthy $6.7 million.)

But the Shanghai Group must have proved something to the authorities, who have decided that Shanghai will be the host city for the country’s planned second distrib of U.S. and other foreign films, marking an end to China Film’s monopoly.

Biggest share

Moreover, the Shanghai Group has emerged as the largest single shareholder, with a 15% stake, and its president, Zhu Yongde, will chair the as-yet-unnamed company. China Film, which had been lobbying for a stake of up to 30%, is expected to be limited to just 8%. The other investors include Changchun Film Group, Xi’an Film Group, E’Mei Film Group and Xiaoxiang Film Group, and, as the sole exhib rep, the Urban Theater Development Assn., based in Chengdu.

The second distrib will take shape in May and begin operating by July 1, according to sources at China Film in Beijing. Zhu was overseas last week, but a Shanghai insider says the distrib deal is part of a larger move to make Shanghai’s film entities more integrated. For example, indie distrib Shanghai Paradise will be combined with Dongfang, which already belongs to the Group.

“The restructuring will effect everything from production through to cinemas, and will include distribution on a national scale,” says the Shanghai source.

The State Administration of Radio, Film & Television has ruled that the 20 foreign films imported annually on a revenue-sharing basis will be shared equally between China Film and the new distrib. One U.S. rep believes there will be some kind of internal bidding system to determine how to apportion the pics, but questions how transparent it will be.

Despite the reforms, some filmmakers in Beijing are dubious about how quickly and effectively the inefficient exhib/distrib structure can be modernized. “The main problem is all the regional distribution companies, which are really not necessary, and belong to the Communist/Socialist system,” says one Beijing producer. “They employ about 100,000 people, and the government doesn’t know what to do with them.”

Another hurdle is rampant under-reporting of B.O. figures by some cinemas and local distribs, that person says, adding, “That’s why even China Film with its monopoly couldn’t make money for Hollywood.”

(Arthur Jones in Shanghai contributed to this report)

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