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Studios' dealings in China said to be subject of SEC questions

April 25, 2012
(Times Community…)

The Securities and Exchange Commission has sent letters to at least four major Hollywood studios, including Walt Disney Studios and DreamWorks Animation, over dealings in China, a person familiar with the matter but not authorized to speak publicly confirmed Tuesday.

The letters center on the studios' dealings with China Film Group, the state-run company whose responsibilities include determining which foreign movies get access to a limited number of slots each year for revenue-sharing deals in the red hot Chinese movie market, now the second-largest movie market in the world behind the United States.

The SEC letters were confidential, meaning the studios are not supposed to discuss them publicly or disclose their existence to investors, another knowledgeable person said. Both the SEC and the Motion Picture Assn. of America declined to comment.

China has until recently permitted the import of only 20 foreign movies each year, most from Hollywood, under terms that allowed the studios to collect up to 17.5% of the box-office revenue. In February, China agreed to start letting in an additional 14 foreign movies per year, and increase their box-office revenue share to a maximum of 25%.

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-- Richard Verrier, Ben Fritz, Jim Puzzanghera and John Horn, Los Angeles Times

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