Hollywood Hired Accounting Firm To Audit The China's Box Office


Hollywood's audit is part of a market-access agreement Chinese officials reached with the MPAA nearly two years ago, details of which haven't been disclosed to the public.

The MPAA is understood to have brought in an global firm to review sales of selected films, with the results expected as soon as the third quarter, says Bloomberg, which was the first to report the news. The reliability of box office accounting from the country is crucial for studios that increasingly have built their film slates to appeal to the Chinese market.

The results could help establish how much progress Chinese regulators have made in combating once rampant ticket sales fraud in the country, an issue that US studio executives have complained about in private for years. Case in point: This year's "The Fate of the Furious" made about $167 million more in China than it did domestically. An MPAA spokesman and representatives for the major studios declined to comment.

Besides underreporting ticket sales, Chinese movie theaters have reportedly given away tickets in bulk and even attributed one movie's profits to another film. As recently as 2013, industry experts believed that at least 10 percent of all Chinese box-office sales were lost to fraud. The audit is allowed as part of a 2012 memorandum of understanding between the USA and China regarding the film industry. The concession was one of two agreements won from negotiations shrouded in secrecy during Chinese president Xi Jinping's state visit to the US that year.

China sets annual quotas on the number of foreign "imported" films screened in commercial movie theaters each year, and grants studios only 25 percent of the box-office revenue as their take.

China is one of the fastest growing movie markets in the world.

Beijing has taken plenty of steps to clean up the exhibition sector on its own as well. In March, 326 cinemas were named, shamed, and punished for box office fraud as officials began to enforce the country's new film law.

The audit will likely be completed by the end of the third quarter of this year, just before a year-end deadline for the U.S.to renegotiate its film trade deal with China, the Journal said.

Eyes of Hollywood biggest studios on the growth of china, where in coming year consumers of china will spend much more on Hollywood movies as compare to U.S.