H'wood enters China fray

Glickman: Studios support U.S. in WTO row

Hollywood is threatening to raise the stakes in the war of words over piracy and trade restrictions in China, with MPA CEO Dan Glickman saying that the studios back the recent U.S. complaint over Chinese product piracy and could choose to boycott the fast-developing media market in protest against barriers to entry.

In an interview, Glickman said it was "always a possibility" that Hollywood could divest from China in response to the quota that effectively limits to 20 the number of imported films allowed into the nation each year and policies that bar majority foreign ownership of movie theaters.

"All of our companies support the U.S. government's action, and China ought to know that," he said late Monday night while en route to Washington from Los Angeles.

Glickman's comments came as China's top trade envoy warned Washington on Tuesday that the complaints the U.S. filed to the World Trade Organization on April 9 could harm relations. The U.S. accuses Beijing of violating trade commitments by failing to stop widespread product piracy and blocking imports of U.S.-produced media.

"The adverse impact generated by this would be huge," China's Vice Premier Wu Yi said in Beijing at the opening of a government forum on intellectual property rights protection. Wu decried Washington's move as ignoring China's progress in fighting product piracy and said it violated an agreement by leaders of the countries to settle such disputes through dialogue.

Beijing will "actively respond" to the cases in the WTO, she said. "We will fight to the last minute."

Meanwhile, questions arose whether "Spider-Man 3" pirated discs had already hit the streets of Beijing. A Reuters report said that pirated DVDs of the new film had gone on sale in street markets for $1 each, although the report added that a purchased DVD "does not work — a common problem with Chinese-made DVDs, which are often made with poor equipment in dingy back rooms."

Sony Pictures Entertainment responded quickly, saying that the DVDs being sold were actually copies of "Spider-Man 2" that had been repackaged.

"Our investigation in China has revealed no case of the film being pirated to date," Sony said, adding, "After an initial investigation of online sites worldwide, we have so far found no pirated copies of 'Spider-Man 3' on the Internet."

"Spider-Man 3" debuts May 3 in China, the day before it bows in the U.S., in part to defeat the efforts of the pirates (HR 3/30).

Glickman, when asked if the Hollywood studios might have more leverage with Beijing if they chose to withhold hits from China — where they are regularly among the top boxoffice earners for state-run film distributors — said U.S. domestic antitrust laws prevent MPA member companies from working in a united front.

"There is no unified MPA policy in this area, and each member company is going to work its own arrangements in China in terms of distribution and investment," Glickman said. "However, each member company is aware of what the others are doing and makes judicious business decisions."

In November, Warner Bros. International Cinemas pulled out of China after four years following changes to regulations that had allowed it to hold a majority stake in the theaters it built.

Glickman added that U.S. trade negotiators have asked the MPA for data about piracy in China, where the lobby estimates show that 93% of the movies sold on disc are illegal. "The MPA is actively engaged in this case," he said.

"China has a great opportunity over the next 15 months, between now and 2008 Beijing Olympics, to prove that it is not a dying place for intellectual property rights," Glickman said.

The Associated Press and Reuters contributed to this report.
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