« REEL ASIAN IS TEN YEARS OLD | Main | EKIN CHENG IS EVERYBODY »

November 09, 2006

WARNER CAN'T STAND HEAT: LEAVES KITCHEN

Warner Brothers China multiplex

Warner Brothers, one of the major US studios that had made the most aggressive inroads in China, has thrown up its hands in disgust at the rules of doing business in China and has closed shop on its multiplex plans for the People's Republic.

Fortunately, not a lot will be affected by Warner's understandable tantrum at not getting their way in the marketplace. They'll sell their controlling interest in three current cineplexes, and either abandon or sell two half-constructed cineplexes and one planned future plex.

Of course, they could confound everybody by turning around and re-purchasing the developments themselves via joint partnerships in which they don't have a majority stake. That way they don't get the headaches but do get the money.

But...it's not a lot of money. The theaters do great business, but it's great business in China which means that the three plexes rake in about US$15 million/year in total. Not a major chunk of Warners annual income.

Warner's move was based on China's "Several Opinions on Foreign Investment in Culture Industry" issued in 2003 which allowed foreign ownership of businesses in seven major Chinese cities to reach 75%. However, it was issued on a trial basis and in December 2005 they issued an amendment stating, "Chinese mainland investors must own at least 51 percent or play a leading role in their joint ventures with foreign investors." Warners petitioned for this to be reversed and threatened to withdraw from the Chinese multiplex business if it wasn't.

It wasn't, and they did.

November 9, 2006 at 08:06 AM in News | Permalink

Comments

Post a comment