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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