SEC Investigates Movie Studios Over China Dealings, Reuters Says

The Securities and Exchange Commission is investigating at least five movie studios in the U.S. about their dealings with China, Reuters reported yesterday, citing an unidentified person familiar with the matter.

The U.S. regulator has sent letters of inquiry to the studios in the past two months, including News Corp. (NWSA)’s 20th Century Fox, Walt Disney Co. and Dreamworks Animation SKG Inc. (DWA) to ask for information about potential inappropriate payments and how the companies dealt with certain government officials in China, Reuters said, citing a person it didn’t identify.

Julie Henderson, a spokeswoman for News Corp., and Shannon Olivas, a spokeswoman for DreamWorks Animation, declined to comment. Zenia Mucha, a spokeswoman for Disney, didn’t respond to requests for comment. An e-mail to the SEC’s press office after work hours wasn’t immediately returned. Wu Baoan, a spokesman for the State Administration of Radio, Film and Television, couldn’t be immediately reached for comments.

China, the world’s most populous nation, has drawn more attention from Hollywood since February, when a previous annual import quota of 20 films was loosened and the revenue-sharing formula was altered, allowing foreign studios to keep a bigger share of ticket sales. There has been a wave of U.S.-Chinese deals as Western operators seek exposure to one of the world’s fastest-growing movie markets.

Disney (DIS), the world’s largest entertainment company, said last week it plans to team up with Beijing film studio DMG Entertainment to co-produce “Iron Man 3.” DreamWorks, creator of the “Kung Fu Panda” films, formed a venture in February with three Chinese partners to develop entertainment projects.

Ticket sales in China rose about 30 percent to $2 billion last year, making it the biggest market after the U.S. and Japan, according to the Motion Picture Association of America. By comparison, worldwide box-office revenue rose 3.2 percent.

James Cameron, who directed the only two movies that have grossed more than $2 billion in worldwide ticket sales, “Titanic” and “Avatar”, said last week in Beijing he is interested in co-producing movies in China.

To contact Bloomberg News staff for this story: Michael Wei in Shanghai at mwei13@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.