SEC probing DWA, Disney over business in China

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DreamWorks Animation SKG

DreamWorks Animation SKG

DreamWorks Animation and Disney have received letters of inquiry from the United States Securities and Exchange Commission over their business activities in China, according to an unnamed person familiar with the matter.

The SEC wrote to at least five movie studios in the past two months, including 20th Century Fox, said the source, who was not authorized to speak publicly about the letters.

The letters ask about possibly inappropriate payments and how the companies dealt with certain Chinese government officials.

Representatives of DreamWorks, Disney and News Corp. — the owner of 20th Century Fox — declined to comment. An SEC spokesman wouldn’t comment, either.

The state-owned China Film Group, which has long had a firm hold on the Chinese film market, didn’t answer repeated requests for comment.

Although China Film Group had a quota of foreign films of 20 per year, it relaxed some restrictions in February after Chinese leader-in-waiting Xi Jinping visited Washington for a week. The agreement exempts 14 premium-format films, such as IMAX or 3D, from the quota, along with those films’ 2D versions.

Also in February, DWA announced that it had reached a deal to build a production studio in Shanghai with some of China’s largest media firms. Last year, the studio’s Kung Fu Panda 2 became the highest-grossing animated movie in China, raising about $100 million at the box office.

The inquiry comes in the face of intensified SEC and United States Justice Department scrutiny into potential violations of the 1970s-vintage Foreign Corrupt Practices Act, which forbids American companies and individuals from bribing foreign government officials.

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About Paul Anderson

Paul is an old-timer here at BCDB- his contributions go back to before the site! Paul is widely regarded as a Disney historian, and is also on staff at the Disney Museum in San Francisco. Paul is also a contributing historian for D23, the Disney Club. Paul has published several books and magazine articles on Disney history, too. You are welcome to drop Paul a line here.

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