China to up foreign cap on plex stakes

Film Bureau wants to see at least 200 new screens built

SYDNEY — Recognizing China sorely needs hundreds of new screens to boost the stagnant B. O. and to stimulate the ailing production industry; Beijing officials have signaled the government will allow Western exhibs to take majority stakes in new multiplexes.

Highly-placed execs in the Chinese film bureaucracy have told reps of the U.S. majors the 49% cap on foreigners’ stakes in cinemas will be lifted to 75%, initially in the market’s seven biggest cities including Beijing and Shanghai.

Conservative elements within the government were reluctant to raise the limit but Hollywood reps now say China’s powerful Propaganda Ministry has finally accepted U.S. and other foreign players won’t invest significant sums unless they allowed to take controlling stakes.

The decision to bump up the cap needs to be ratified in new regs in a country where political machinations often make the outcomes difficult to predict, prompting one U.S, exhib to tell Daily Variety: “We want to see that in writing.”

Some U.S. execs Beijing officials have indicated the 75% ceiling will be introduced as an “experiment,” but most believe this can’t be undone or reduced once offshore players have built cinemas which they will control.

Moreover, the Commerce Dept. is pressing for no limits on foreign ownership in exhibition.

The China Film Bureau has told Hollywood reps it wants to see at least 200 new screens built in the next few years–and it knows that won’t happen without hefty investment from the U.S. or other international players.

Thus far Warner Bros. is the only U.S. major active in China, with a minority share in a Beijing multiplex and plans to develop several more multiplexes.

In another heartening development, the Film Bureau has awarded three Hollywood films to Hua Xia, China’s new second distrib, whose launch marked the end of Chins Films’ long-standing monopoly on handling U.S. and other foreign films.

Hua Xia’s will release its first U.S. pic, “Terminator 3: Rise of the Machines” Aug. 29, followed by “The Hulk” and “Johnny English.”

The Film Bureau is determined to ensure Hua Xia gets off to a good start, providing genuine competition to China Film, according to one U.S. studio exec who monitors China.