Why No Solution to “Box Office Stealing” under the Current Laws in China?


728da9773912b31bf66a46478618367adbb44aed2e73c966(By You Yunting) Abstract: the author was interviewed: is “box office stealing” mainly a result of a defect in GAPP’s legislature (the General Administration of Press and Publication) and SARFT (State Administration of Radio, Film and Television)? For this issue, the author’s opinion is that the administration and governance over the film industry is the real reason this problem arises, because there is really no way this would happen otherwise, and its unlikely those right holders would try to protect their rights, making the aggressive parties even more aggressive. Thus we would only see the bad drives out the good.

Text: Recently, the box office hit film “So Young” in China claimed it’s box office sales had totaled RMB 300 million in the first six days of its showing. On the other hand, Mr. Wang Changtian, the CEO of ENLIGHT MEDIA stated on its Weibo that: “Many audiences have reported box office stealing, and yes, as estimated by an insider, almost 20% of the box office is facing this problem of stealing and hiding. Thus it could be calculated that the affected box office in the last year could total RMB 4 billion, and ENLIGHT MEDIA takes RMB 400 million of that. The recent hit “So Young” has been even more shameless, and what they have done is essentially robbery.” So it seems that Weibo has yet again raised a heated discussion on the Internet over the widely seen “box office stealing” problem in domestic cinemas and film circuits.

We would like to first explain what “box office stealing” actually is: the movies released in China adopt a benefits sharing system, which is calculated on the basis of data stored in a computer system which tracks and keeps record of ticket sales. A China-made film or jointly invested film’s income, in order to reduce the fundamental fees and taxes by the State, a film theater could get almost 50% of the rest; with 10% for the publisher and circuit and 40% for the producer. Imported US movies command a much lower share of the box office, but that is changing all the time. Early on, the benefits shared with imported movies was higher, but later it decreased substantially. (data from http://www.zhihu.com/question/20073704). Generally, a hit movie will share less of its profits with a cinema, whereas a non-hit film would likely share more of its profits with a cinema. Once the cinema’s count  of the income of one movie to another’s count or something similar is established, it is without question that the cinema would end up with a larger piece of the pie, so to speak, and this is essentially the issue with “box office stealing.”

The main methods of the box office stealing include :

1. A handmade ticket, which would not be recorded by the accountant.

2. To sell Movie A but giving the ticket of Movie B.

3. To adopt a dual system, and therefore the actually sold and reported sales are two different records.

4. No ticket given for a group purchase, and the cinema would directly settle with the charge of the group purchase.

5. To sell other products with the ticket. Previously, we have seen cinemas have sold the price of beverage and snack into the price of the ticket, and thus makes the ticket price overly high. That measure has occupied sharing of the benefits which shall be paid to the producer and the publisher.

If in fully competitive market, it would be beyond imagination that “box office stealing” could happen, since it involves some basic fundamental legal problems:

I. Breach of contractual agreement. The film is a copyrighted work, and if a cinema would like to show it to the public, it should first gain a license from the producer and publisher. Naturally, the license would be agreed in a contract, and once the cinema calculated the box office sales of movie A to movie B, that would be considered a kind of break, and the cinema would have to assume responsibility for the breach of contract.

II. Commerce Fraud. For the producer and publisher, they could either chase the breach liability or the liability of commercial fraudulence, since the property right of the producer or the publisher has been infringed.

III. Criminal Cheating. Pursuant to the Criminal Law of China, cheating refers to illegal property occupation through making up facts or concealing the truth, and thus to defraud public of private property by a great number. Box office stealing could meet the elements of criminal cheating from the aspect of making up facts or concealing truth, and once the number of the cheated has reached the legal amount, it would constitute a crime.

IV. Tax evasion. The taxation authority controls the ticket selling system, and once any tickets are not sold through that system, it could be easily seen that the seller would be evading its duty of taxation, and once the facts involved are severe, the crime of tax evasion could be found.

V. Corruption and duty embezzlement. To make a profit in troubled situation is quite common in China, and that kind of box office stealing would not be recorded in the account, which at the same time gives a good chance for the cinema staff to make a small fortune. As said in some reports: the manager of a cinema could sometimes gain more than RMB 1 million using this underhanded method. In that situation, when the cinema is a state-run theatre, its manager would certainly be found guilty of corruption, and as for a manager of civil-invested theatre, they would be guilty of duty embezzlement.

Some readers might ask: why can’t “box office stealing” be stopped even though it has violated so many laws and damaged so many commercial interests and state interests? The best answer the author can offer is this: because the movie industry is not a fully competitive industry, the administrative governance is not overly professional, and all of the above-stated factors play an more influential role in “box office stealing.” In most cases, it is not the right holder who would not like to protect their rights, but limited by many subjective reasons. For a clever businessmen like Wang Changtian, the only thing thehy could do is express their dissatisfaction on the Internet, even though no actual legal action or reports will be made against the guilty parties for theft.

I. To make the victims of “box office stealing” taka back their action in the name of red movies. Like the conflict between the films Beginning of the Great Revival and My Kingdom several years ago: despite the producer of the Beginning of the Great Revival having denied the claim, it is beyond question why the cinema dared to sell My Kingdom’s ticket in the Beginning of the Great Revival’s name, because the film was released shortly before the founding anniversary of the CPC, and that made the victim of the “box office stealing” recant their behavior, otherwise they would be accused of damaging the anniversary of the party, which at the end would make it difficult for a company to survive under rigorous supervision of the authorities.

II. The rare resources afforded to cinemas in China have made the “box office stealing” a powerful hand. In China, establishing a movie theatre requires approval from authorities above the county level. In the mean time, the movie showing industry has appeared to be closed to strong professionals, and for the producing party of the box office stealing, the inflictor is the cinema he would have to deal with in the next time, and on the other hand the government would not punish the cinema or anyone involved in the case, and therefore the victim would consider the negative influence when plan to start their right protection actions.

At last, the journalist interviewed the author on “box office stealing”: is “box office stealing” mainly the result of a defect of the legislature of GAPP (the General Administration of Press and Publication) and SARFT (State Administration of Radio, Film and Television)? As for this question, the author’s opinion is that their administration and governance over the film industry is the real reason for this problem, as it could not survive the fittest, which would make those box offices stolen dare not to fully protect their rights, while those aggressors have been seen more aggressive. Thus we would only see the bad drives out the good. And that problem could spread out to even a second or possibly third tier city.

Lawyer Contacts

You Yunting86-21-52134918  youyunting@debund.com/yytbest@gmail.com

Disclaimer of Bridge IP Law Commentary

Leave a Reply

Your email address will not be published. Required fields are marked *