Warners' China screens falling to state-run CFG

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State-run China Film Group will take over three cinemas designed and built in China by Warner Bros. International Cinemas, the companies said Thursday in a statement from Shanghai (HR 3/2).

The takeover follows WBIC's divestment from the Chinese exhibition business after four years due to changes in Beijing's regulations governing foreign ownership.

In November, WBIC, which has run China's top-grossing cinema for the past three years, abandoned plans to expand on the seven cinemas it began to open across China in 2002. That expansion had been spurred at the time by a policy that allowed foreign cinema operators 75% ownership in select cities (HR 11/9).

But a 2005 change in Beijing policy required WBIC and other overseas theater builders trying to invest in China to cede control to domestic partners.

Under the deal announced Thursday, CFG will take over the WBIC cinemas in Chongqing, a municipality of more than 30 million people in southwest China; Changsha, the capital of central China's Hunan Province; and Nanchang, the capital of south China's Jiangxi Province.

China has 36 cinema circuits that operate about 3,000 cinemas with a total screen count less than one-tenth the number serving the U.S.
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