Chinese film producers seek higher share of profits
Staff Reporter 2012-12-24 10:26
The Chinese blockbuster Back to 1942 premieres in Beijing. (Photo/Xinhua
Following the poor box office performance of Chinese films in 2012, domestic film distributors have issued an ultimatum to cinema owners to raise their share of profits from ticket sales, reports the Chinese-language CBN Weekly magazine.
Five of China's most powerful film distribution and production companies — state-owned China Film Group, Huayi Brothers Media Group, Bona Film Group, Stellar Mega Films and Enlight Pictures — jointly issued a notice last month, asking cinema owners to raise their share of box-office revenues from the current 43% to 45%.
Many theater chains, however, have been angered by the demand and have opted to fight back, with more than 10 theater chains forging an alliance to protect their interests.
The five distribution giants made the demand after incurring steep production costs owing to the increased overheads of filmmaking, including fees paid to leading actors, actresses and film directors.
China's A-list stars normally command more than half of the funds invested in a film, while the costs of shooting, equipment and post-production usually account for 40% of the total investment. The production cost for 3D movies is said to be even higher.
"In order to boost creation and production, improve quality and gradually smooth over the economic relationship between the stages of producing, distributing and screening a film, we five companies have reached the consensus that the profit share proportion for distributors should not be lower than 45% — against the theaters' 55%," the companies said in the statement.
The profit share percentage applies to net revenue distribution after taxes. The earlier ratio had been fixed at 43:57.
Currently, cinema owners have to pay 3.3% of gross box office revenue in taxes and another 5% to the Chinese government's film fund, after which they pay between 38% and 43% to film distributors and studios.
Data showed that in the first half of 2012, China's box office sales reached 7.7 billion yuan (US$1.2 billion), including 2.5 billion yuan (US$401.6 million) from Chinese-made films.
