SEC Launch Inquiry Into Hollywood Bribes In China
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The Securities and Exchange Commission in the United States are investigating the financial dealings of some of Hollywood’s biggest movie studios in China after information leaked that studio executives may have been making illegal payments to government officials in order to gain a stronger foothold into the Chinese market.
The Securities and Exchange Commission in the United States are investigating the financial dealings of some of Hollywood’s biggest movie studios in China after information leaked that studio executives may have been making illegal payments to government officials in order to gain a stronger foothold into the Chinese market.
20th Century Fox, the Walt Disney Company and DreamWorks Animation are reported to be among the first major five companies that have been contacted by the S.E.C. on Tuesday, reported the New York Times – with a number of the larger, and some smaller, studios expected to soon receive notification, or at least be made aware, about the inquiry soon.
Though neither the SEC nor the movie studios chose to comment on the investigation, the NYT’s source, who spoke on condition of anonymity, claimed that the inquiry had been launched after the government agency became wary of recent activity by movie studios in China – including a recent landmark deal by Dreamworks to build a production studio in Shanghai.
Both the S.E.C. and the U.S. Justice Department have intensified investigations into American companies over the last year for violating the Foreign Corrupt Practices Act. The F.C.P.A. dictates that U.S. corporations cannot make illegal payments to foreign government officials or other authorities in order to ease the way for operations in their countries. Among other high-profile companies currently being investigated includes Avon Products and Hewlett-Packard Co. News Corp for alleged bribery in the U.K.
But the race for Chinese movie ticket sales is still expected to go on, particularly as cinema attendance in North America fell last year to its lowest level since 1994, while the Chinese market continues on a burgeoning path.
[quote]By 2015, movie ticket revenue in China is expected to reach $5 billion, up from $2.1 billion last year. The Chinese government has said it expects 20,000 screens to be operating by 2015 and 40,000 by 2040, bringing it on par with movie exhibition in North America.[/quote]Related: China Bans Foreign Shows From Prime Time Television Slots
Related: China Starts US Television Channel “To Propagate Information About China Overseas”
And though China allows only 20 foreign-produced films to be shown in its nations’ cinemas annually, a deal between US. Vice President Joe Biden and Chinese second-in-command Xi Jinping now mean 14 additional premium format films, such as IMAX or 3D, can be exempted from the quota.
Under the terms of the deal, which was brokered by the CEOs of both Dreamworks and Disney (Jeffrey Katzenberg and Robert A. Iger), Hollywood movie studios would also get a higher cut of box-office revenue in China – from 15 percent to 25 percent.
