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Film Fund Eases Distributors vs. Theaters Dispute

2012-11-26 14:15:28        Chinese Films

China's film authorities announced yesterday that they will reward subsidies to film companies and theaters; good news for those involved in the ongoing dispute of whether or not to raise profit shares for distributors.

Last week, five of China's most powerful film distribution and production companies collectively asked to raise their shares in the box-office revenues from the current 43 percent to 45 percent. However, many theater chains were angered by this sudden demand and opted to fight back, denying the demand and calling film companies "rude." But according to media reports, one dozen theaters chains have now compromised. Negotiations are still ongoing.

However, the National Film Development Funds Management Committee (NFDFMC) issued four notices to all relevant parties yesterday afternoon, stating they will reward both production companies and theaters in various forms.

The first notice said they will reward 3D and IMAX films. If any domestic 3D film (without other formats available) grosses 50 million (US$8.02 million) - 100 million yuan (US$16.05 million), the committee will reward its production company 1 million yuan (US$160,573); if the box office gross is between 100 million - 300 million (US$48.17 million), the reward is 2 million (US$321,146); at 300 million - 500 million (US$80.28 million), the reward is 5 million (US$802,865); and if the box office gross surpasses 500 million, then the reward will be 10 million (US$1.6 million).

If any domestic IMAX film (without other formats available) grosses 25 million (US$4 million) - 100 million, the reward is 1 million yuan; if the gross is over 100 million, the reward standards are the same as the abovementioned ones for 3D productions.

That is to say, the highest grossing home-made movie of this year, "Painted Skin: The Resurrection" which grossed over 700 million (US$112 million), can get 10 million yuan in return from film funds.

The second notice was for theaters: If the domestic films' box office revenues stand at 50 percent and above of the total annual gross of a theater chain, the fund committee will reimburse all the money a theater previously handed over to them. If the percentage is between 45 percent and 50 percent, the committee will reimburse 80 percent of the funds a theater has handed over. If it's below 45 percent, but the domestic films revenue is still more than last year's, the fund will be reimbursed by 50 percent.

Policies described in the other two notices also benefit new theaters in both rural and western areas, as well as theaters which install digital projectors before Dec. 31, 2012.

All the policies in the four notices will be effective from Jan. 1, 2013.

Since 1996, Chinese film production companies and distributors and theater chains have to hand over 5 percent of all gross revenues earned to a special "National Film Development Funds," which was set up by the State Administration of Radio, Film and Television (SARFT) and Ministry of Finance.

Authorities will use this fund to finance more films, many of which are low-budget. In the first 8 years since the fund was set up, it financed 202 films. However, the Chinese film industry went through several reforms in 2002, and there are many enterprises with the money for funding films, so the special fund was fully allocated to the development and construction of new theaters.

Last August, director Feng Xiaogang openly expressed his dissatisfaction with the "5 percent" fund. He said Huayi Brothers Media, the film company he had shares in, had to hand over 40 million yuan (US$6.42 million) to the special fund in 2010, which almost made up for 50 percent of company's annual net revenue. Feng also pointed out that those film authorities had never told society how and where they were using the funds.

One industry veteran has said the new policies are very good news and will help both sides of the dispute settle down. The profit shares dispute is expected to be resolved soon before the most important new year film season starts on Nov. 29, when Feng Xiaogang's historical epic "Back to 1942" and Lu Chuan's blockbuster "The Last Supper" will open at theaters across China.


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