Legal Roundup: Media Crackdown Convergence

  • Stricter censorship of online and television content converges
  • New online publishing standards seek to close loopholes
  • The Mermaid gets extended theatrical run
  • Wanda’s AMC Entertainment U.S.’s No. 1 cinema chain with Carmike buy

Last weekend CFI reported on the announcement from the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) that online series would be subject to the same approval and censorship processes as regular television programming, which came just days after a popular online series with gay characters was pulled from the Internet.

This week the crackdown intensified with the release of new content rules that specify in great detail what cannot be shown on TV. The new list of banned themes and behaviors totals 50 items, some very specific, and includes representations of homosexuality, prostitution, smoking, and “extreme vengeance” (read here in Chinese.) This represents a major expansion of the previously published list, which covered only 11 fairly broad banned topics.

Overseas movie award shows could also find a place on the new list. Less than a week after the online streaming and television broadcasts of the Hong Kong Film Awards and Taiwan’s Golden Horse Awards were nixed, the live stream of the Academy Awards on Baidu’s iQiyi was canceled at the last minute and a state-run website took over the stream, subject to reported delays and several “technical difficulties.”

Debate on New Online Publishing Regulations

The new regulations that place explicit limitations on the online activities of foreign and foreign-invested companies are still generating a fair amount of discussion and debate among experts.

Attorney Steve Dickinson, writing for CFI partner site China Law Blog, says there’s not much new to see here, as foreign entities have already long faced an absolute bar on publishing activities of any sort in China, both online and offline. The real impact of the regulation, as Dickinson sees it, will be to crack down on certain types of corporate structures designed to evade the existing restrictions, as well as raising many as-yet unanswered questions, such as how the rules will affect “publishing-type” activities that may be ancillary to a company’s business, but that are not a core part of the business.

Even though the new regulations don’t take effect until March 10, and there are many questions about how strictly they’re likely to be enforced, one company took the unusual step of publicly stating that it will not be affected by the new rules. You On Demand, a NASDAQ-listed video-on-demand service that offers U.S. content in China, issued a press release on the matter, in which chairman Bruno Wu said that there was basically nothing to see here as far as You on Demand is concerned, and that, in fact, “these strengthened regulations will evolve into new business opportunities” for the company. CEO Mingcheng Tao stated that You on Demand “is not, and has never been, a company that exploits gray areas in the Chinese regulations and therefore, our business operations are not affected by announcements from government authorities on the implementation of rules that were already in place.” So there you go.

Regulator Gives The Mermaid Two Thumbs Up With Another Three Months in Theaters

Chinese authorities in charge of the screening calendar took the unusual step of granting The Mermaid a three-month extension on its theatrical run, virtually guaranteeing that it will retain its crown as king (or queen) of the Chinese box-office for some time to come. Though highly unusual, the move is not unprecedented in recent box office history, as Monster Hunt received a one-month extension last year that helped push its gross past that of Furious 7 to nab the highest-grossing title. Avatar also received permission to play for close to four months back in 2010. It would be hard to imagine an imported film receiving such preferential treatment again anytime soon, though.

With Sequel, Ip Man Will Again Face Piracy

Ip Man 3 was finally released in mainland China this weekend, two months after it debuted in most of Asia. The delay has allowed pirated copies to circulate online, and the quality of unauthorized copies is expected to improve with the upcoming Blu-ray release of the film in other Asian markets, including Hong Kong. The mainland China release of last Ip Man film in 2010 saw a rare joint action brought by the China Film Copyright Protection Association and the studio against a file-sharing site.

Regardless of how much the film makes at the box office, the investors who bought a 55% share  of the mainland China box office net for RMB 110 million ($16.7 million) are sure to come out on top, as Chinese media report that they have secured an RMB 1 billion ($150 million) minimum box office guarantee. (Read here in Chinese)

Deal News Highlights

Because Dalian Wanda Group chairman Wang Jianlin and his companies weren’t in the news enough last week, this week the Wanda-owned AMC Entertainment announced that it would purchase Carmike Cinemas for $1.1 billion, which will make AMC America’s largest theater operator with a total of 8,380 screens in more than 600 theaters under its control.

Alibaba has also had a lot going on this week. Chairman Jack Ma and vice chairman Joe Tsai will spend $500 million of their own on the company as part of a $4 billion share repurchase plan announced last year. There is also a fair amount of speculation going around that Alibaba’s intent in raising another $4 billion through debt is to buy back Yahoo’s stake in the company, although any Yahoo sale could carry a major tax risk. And Alibaba is possibly also looking to expand its news media influence with an investment in the influential and fairly independent Caixin Media by one of its subsidiaries.