Making good on a promise to get tough with exhibitors who manipulate box office figures, Chinese authorities have banned nine movie theaters from screening new films. The state-controlled Xinhua news agency says cinemas in such areas as Shandong Province and northern Shanxi have been found reporting fake numbers to the government, selling hand-written tickets (or none at all) or interfering with official box office inspections. The news was issued in a statement from the China Film Producers Association and the China Film Distribution and Screening Association, two semi-official bodies that fall under the purview of the State Administration of Press, Publication, Radio, Film and Television. The suspensions are a reaction to what’s believed to be a long-held industry practice of hiding income from the government which takes a 3% value-added tax on revenues as well as a 5% film fund tax. Increased scrutiny should be welcome news to Hollywood studios who are entitled to a 25% revenue share with exhibitors. China’s reported box office in 2013 was $3.6B, but industry experts believe the real figure is at least 10% higher.
SAPPRFT last month issued a memo entitled “A Notification Regarding the Strengthening of Film Ticketing System’s Management Practices.” The notice spelled out new regulations that demanded all commercial cinemas upgrade their software to a national digital ticketing platform before May 1. Distributors were also told they should conduct routine inspections with irregularities reported to the authorities, and a hotline for the public was also established. According to today’s statement, one of the cinemas in question showed no audience at all in its computer system despite regularly attended screenings. Six of the movie theaters have been told they must rectify their reporting before showing new movies and three have been suspended for a month.
“There is nothing we can do but comply with the order. I think box office fraud is far more prevalent among cinema chains,” Liu Chunlei, manager of Shanxi’s Shidaihuana Cinema, told Xinhua. His theater can still screen current titles, but will now be forced to do without Robocop which opens tomorrow.