A leading player in China's film industry has taken over two of the last three Warner's cinemas on the Chinese mainland, a move which indicates the world film giant is finishing its planned retreat announced last year, a publicist told China.org.cn yesterday.

Guangzhou Warner Jinyi Cinema, the last one expected to be taken over [file photo].

Warner Bros. International Cinemas (WBIC), the cinema division of Warner Bros., and Shanghai Film Group (SFG), released a statement yesterday stating that SFG will take over two WBIC Cinemas in China. Located in Shanghai and Nanjing, both cinemas are joint ventures between the two companies.

"We are extremely proud of what our international cinema business has accomplished in just four years in China and proud to have been a catalyst in turning around a market that has since seen an explosion of new multiplex cinemas across the country," Millard Ochs, the president of WBIC, said in the statement. 

"We believe that as a leading player in China's film industry, Shanghai Film Group's experience in cinema operation will help to achieve a smooth hand-over, and ensure that the cinemas keep their service standards and continue to provide an improved consumer movie experience." he added.

The equity transfer agreement was signed by the two companies on February 12, 2007. According to the agreement, SFG will buy WB's 49 percent share in Shanghai Paradise-Warner Cinema City and 51 percent in Nanjing SFG-Warner Cinema City.

The agreement is still pending the approval of the Chinese government, and the process is expected to take approximately 60 working days.

Ren Zhonglun, the president of Shanghai Film Group also commented that "WBIC has achieved great success in the past years. By taking over both joint-venture cinemas, Shanghai Film Group has shown our commitment and confidence to continue developing the Chinese cinema market. We will do our best to contribute to the prosperity of China's film market."

Insiders estimate that SFG will have to pay 20 million yuan (US$2.58 million) for each Warner cinema in the deal. But Long Xi, the publicist for WBIC, wouldn't verify that figure, calling it nothing more than media speculation.

After the hand-over, all Warner Bros. logos and other intellectual property will be removed from the cinemas, which will also no longer bear the Warner Bros. trademark. All Chinese employees of Warner cinemas will remain on staff after SFG completes the takeover.

The last cinema expected to be taken over is the joint venture located in Guangzhou between WBIC and Jinyi International Cinemas Co. Ltd., Long said. She also stated that WBIC wants to transfer the last cinema as soon as possible and the negotiation is underway, but declined to reveal the specific details and time in case of any unexpected variation.

Previously, WBIC and its partner SZITIC Commercial Property Co., Ltd sold 3 cinemas to China Film Group in March. Those were respectively located in Chongqing, Changsha, and Nanchang.

"WBIC will no longer exist in China after all the transfers are completed," Long said, "But of course we'll keep our eyes on China's film industry. If the regulations and environment change again and is best for our return, we will return."

Warner Bros. was the first foreign media company to invest its expertise and capital into the Chinese cinema industry via its unit WBIC in 2002. Its cinemas raked in over 120 million yuan (US$15.51 million) in 2005, which seemed to hint at a promising future.

However, WBIC suddenly announced last November that it would completely pull out its investments in the Chinese cinema business due to a major regulatory change, which set new rules for foreign investment in the Chinese cultural industry. The measure stipulated that Chinese mainland investors must own at least 51 percent or play a leading role in their joint ventures with foreign investors.

The publicist said despite WBIC's retreat, Warner Brothers' other businesses in China will not be affected, including native film production, a home video joint venture, consumer products, and studio stores, all of which have different legal structures, business models, and regulatory requirements.

(China.org.cn by staff reporter Zhang Rui April 11, 2007)