P. John Burke Quoted by The Wrap on Impact of Chinese Gov’t Capital Controls on Film Investment
Akin Gump entertainment practice head P. John Burke was quoted by digital entertainment and media news outlet The Wrap for its article “Chinese Companies Return to Cannes – But Will They Bring Their Checkbooks?” The article reports reduced Chinese overseas investment in film following that nation’s institution of strict capital controls limiting Chinese investment in overseas companies, as well as disappointing general box office performance in 2016 in the PRC.
Regarding purchases by Chinese distribution companies of individual film rights, Burke said, “I can imagine that the restrictions might disadvantage Chinese distributors looking to buy Chinese rights. If you’re a seller, you’re going to be concerned with their ability to access U.S. dollars to make payments.”
He noted that such individual film deals are not subject to the same investment restrictions because they are project-oriented rather than company-based. However, the months-long drought in China-Hollywood deals could put Chinese buyers in less-advantageous positions. Burke said, “To protect against uncertainty, sellers may require [Chinese buyers] to pay up front or back it up with a letter of credit payable when the picture gets delivered.”