Charles Rivkin, in one of his first appearances since becoming CEO of the Motion Picture Association of America nearly two months ago, took a cautious and conciliatory tone toward trade with China during his opening day speech at the 2017 U.S. – China Film Summit in Los Angeles.
“We must continue to open the Chinese market,” said Rivkin, “and expand trade between our two industries. “
Rivkin made a brief reference to the crucial renegotiation of the 2012 Memorandum of Understanding (MOU) that began this past March between U.S. trade representatives and the Chinese government, but gave no indication of how it is going.
He said the historic 2012 agreement hammered out by then-Vice President Joe Biden and then-Chinese Vice President Xi Jinping “has been instrumental” in expanding the relationship, and expressed hope that the “renegotiations currently underway will build on this foundation.”
In the intervening five years China’s hunger for films has grown along with the number of modern theaters.
“Last year,” said Rivkin, “the (Chinese) box office hit $6.6 billion, making it the largest market outside of the United States – and one that continues to grow. In cities, large and small, the country is adding 20 more cinema screens every day, and box office revenues are on pace to surpass $8 billion by the end of the year.”
That is the case even though distribution of American movies is still highly regulated and limited, while Chinese films are given a priority position in the home-grown cinemas.
In the 2012 negotiation (which took three years to finalize), the Chinese increased the number of U.S. films that it would distribute to a base of 34 (20 regular titles and 14 Imax or 3D) – a small share of the movies the U.S. produces annually – and agreed to pay foreign rights holders 25 percent of the gross box office, which is quite low compared to global standards.
This time around the American movie industry is seeking better access to the Chinese market, an increased quota of releases, less stifling censorship, more notice about when films will be released (so they can be better marketed), more generous financial terms and a better deal in the home video aftermarkets, where U.S. movies and TV shows struggle just to be seen.
However, nine months after the MOU talks started there seems to be little to suggest things are going to improve significantly.
After several years in which the Chinese showed their love for American movies and began to invest heavily in Hollywood, the Chinese government slammed on the brakes, mostly to limit the capital outflow.
The result was a number of pending transactions by Chinese buyers evaporated, and existing players like Wanda (which now owns AMC Theaters and Legendary Productions) had to scale back significantly, and in some instances, sell off assets, including the biggest movie studio in China.
The arrival of the Trump administration also is a problem.
The U.S. trade representatives involved in the renegotiations include a China critic from the Reagan era and a trade expert who is the author of a book called, “Death By China.” Under Trump, the era of free trade is over.
The job of being head of the MPAA, which represents the six big Hollywood studios, has changed greatly since the era of Jack Valenti, when the industry was a significant lobbying force in Washington.
Today the studios are all part of giant conglomerates, and that consolidation continues. AT&T, for instance, is on track to acquire Time Warner and its studios.
The CEO of the MPAA now has to walk carefully in a minefield of issues, where the members often have very different agendas. Those that own TV studios or cable networks may see it differently than those who depend on international business.