Murdoch urges China to open up its film market

Hoping the record-breaking Chinese revenues from "Avatar" can be replicated many times over, Rupert Murdoch urged China on Sunday to further open up its movie market.

On Saturday, Murdoch and his Chinese-born wife, Wendi Deng, walked the red carpet at the Shanghai International Film Festival's opening ceremony alongside Hollywood stars including Susan Sarandon and Matt Dillon. A day later, pageantry gave away to tough talk.

Speaking before a panel discussion on film finance attended by a top Chinese film regulator, the Australian-born media mogul said despite rapid growth, the Chinese cinematic market was still underdeveloped.

Murdoch said the numbers were breathtaking: Chinese box office revenues surged from just $150 million in 2005 to $1.5 billion last year, and a theater-building rush is expected to raise the number of movie screens in China from the current 6,200 to 20,000 in five years. Most of the new screens use 3-D compatible digital projectors.

"The truth is there is no more exciting market in the world than this one," he said.

Murdoch has seen the dividends firsthand. The 2009 3-D sci-fi epic "Avatar" - released by Fox, a unit of Murdoch's News Corp. - brought in a whopping $204 million in China, second only to the movie's American box office take.

However, the News Corp. chairman went on to say that "the promise" of China's investment in screen infrastructure "has not been fully realized because market access remains so restricted."

China maintains import restrictions that effectively limit the country to 20 foreign blockbusters a year. Film imports are still controlled by the state-owned China Film Group - despite a December 2009 ruling from the World Trade Organization urging Beijing to allow foreign studios to distribute their own movies in the country.

"This presents significant challenges," Murdoch said, adding that limited access to foreign content encourages piracy.

"In the long run, it will only limit the opportunity for China to grow its cinema market. As China's theatrical market tries to continue to grow, it is critical to fill the pipeline with more local films as well as more films imported from other countries," he said.

Veteran Hollywood producer Mike Medavoy agreed.

"We, the American market and American filmmakers and the rest of the world need the Chinese market to open up," he said. Major productions "cost a lot of money and therefore you need outside revenues, and revenues will come out of China."

The Chinese regulator attending Sunday's session, Zhang Pimin, didn't immediately respond to Murdoch's speech. In his own speech, Zhang, vice minister of the State Administration of Radio, Film and Television, didn't address market access but said the Chinese government wants to encourage Chinese filmmakers to raise funds from capital markets. Chinese studios have only recently began to go public, with Huayi Brothers Media Co. listing on the Shenzhen Stock Exchange and Bona Film Group listing on Nasdaq.

Murdoch's wife, however, was more diplomatic. Producer Wendi Deng is getting ready to release the drama "Snow Flower and the Secret Fan" in China on June 24. Chinese-American director Wayne Wang's adaptation of the Lisa See novel by the same name will be distributed in North America by News Corp.'s Fox Searchlight Pictures - but the production was mainly funded by Chinese investors.

Asked by the host about the chllenges of shooting in China, Deng jokingly said the list was too long and instead thanked her investors: Huayi Brothers, Shanghai Film Group and IDG Capital Partners. "I was lucky that when I really liked this project, I had a worldly team and they were willing to invest," Deng said in her native language, andarin.

Asked by an audience member about the benefits of shooting in China, Deng quickly praised China's lower costs, which enabled "Snow Flower" filmmakers to build an epic set in the Hengdian studios in eastern China.

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