Last week, an event was held in Hong Kong where, among other things, it was said that a second distribution license to import and release movies in China is being issued to the China National Culture & Art Corporation (CNCAC). Such a license could spell the demise of China Film Group‘s exclusive grip on Mainland revenue-share releasing — and create another potential partner for Hollywood. While there has been talk that a new government-approved distributor could emerge, a number of China-watchers have remained cautious on the timing, and just who the involved parties would be. One told me recently, “Many believe they can in due course obtain a second license.” Now, reported comments from an official at the Chinese state watchdog, and the revision of an announcement by Hong Kong-based China Railsmedia, which held the press conference and has business connections with the CNCAC, seem to confuse things even further.
On March 27, China Railsmedia said in a statement to the Hong Kong Stock Exchange that the CNCAC “has duly obtained the requisite license in relation to the import and distribution of foreign TV contents and foreign films in the (People’s Republic of China).” The films were to be brought into China under agreements with parties that include the CNCAC, Hong Kong-based i-marker Culture & Media Investments, Horizon Entertainment, and Railsmedia subsidiary FingerAd Media. Per the statement, the latter’s responsibilites will include raising all necessary funds, establishing strategic partnerships with cinema circuits, and setting up strategic partnerships with “world class” Hollywood and international studios. Railsmedia, which has been known as a construction services company, recently said it would be renamed China National Culture Group Limited. It also added at last week’s Hong Kong event that Chinese American executive Chris Lee, the former head of Columbia Tri Star, would come on board as president.
But on March 28, Railsmedia amended its stock market statement. It said the board “would like to clarify” the March 27 missive and replaced the previous language to read: “After CNCAC has obtained the requisite license in relation to the import and distribution of foreign TV contents and foreign films in the PRC, it enters into exclusive cooperation with i-marker.”
Now, SAPPRFT has spoken out after remaining silent on the issue in the past week. According to FilmBizAsia, an official told Sina.com on Tuesday, “We have never heard anything about the information in these reports, and we don’t know anything about [China Railsmedia]. The terms of China’s agreement with the WTO and the memorandum of understanding signed by China and the U.S. in 2012 still stand.” The memorandum referred to is the agreement to increase the foreign import quota to 34 films per annum that was inked a little over two years ago. Questions had floated as to whether a second license would mean that the import cap would be raised.
Currently, only China Film Group and Huaxia Film Distribution (which goes through CFG) can release films on a revenue-sharing basis. So, if China Railsmedia, CNCAC and partners were to secure a license, it could indeed shake up the current structure. However, folks remain very wary that this will happen in the near future. The CNCAC, which is aligned with the Ministry of Culture, is understood to have some high-level connections and could possibly circumvent SAPPRFT, sources say. But I’m also told it has “no experience in the film business. It has no cinemas and is not making any films.” Still, because this is China, the person adds, “Never say never.”
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