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October 13, 2016

October 7th News Report from your Los Angeles Representative

Weekly Update from Kelly Graham-Scherer, Los Angeles Representative

Happy Thanksgiving everyone,

I hope you are having a wonderful time with friends and family this weekend. My apologies for not distributing this report on Friday as I usually do: a stomach bug left me incapacitated all day.

For many months now I have documented in this space the rise of the Chinese box office and subsequent Chinese interest and investment in Hollywood: for the past week the Los Angeles trades have been buzzing over a number of major developments on that front.

Last weekend, the ambitions of China's richest man, Wang Jianlin, got the front page treatment from the Los Angeles Times. The story detailed increasing trepidation over his Dalian Wanda Group's aggressive expansion into the U.S. film industry, including ownership of Legendary, the nation's second-largest theater chain AMC, investments in Sony Pictures and plans to buy the iconic Dick Clark Productions. As detailed below, the brash executive has proclaimed his desire to acquire one of the six major Hollywood studios and vowed to "change the world where rules are set by foreigners."

Fresh on the heels of that detailed feature came last Monday's announcement that Wang Jialin would visit Hollywood October 17. As detailed in the Hollywood Reporter below, at an event that is sure to bring out a who's who of Hollywood studio heads, celebs and local politicians, China's richest man is expected to discuss his massive Qingdao movie studio complex, currently under construction in eastern China.

Just a few days after that announcement it was reported that a Texas Congressman has asked the U.S. Department of Justice to examine Chinese ownership of entertainment and media companies, citing a rise in foreign investment. As detailed in Variety below, the request hinges on whether Chinese companies doing business in Hollywood should be forced to register under the Foreign Agents Registration Act (FARA), which regulates lobbying by foreign governments.

But China's influence in Hollywood wasn't the only thing that made the news last week: a study concluded that the $100 million in California taxes used for film and television tax credits every year between 2009 and 2014 didn't produce the economic returns the state hoped for, boosting California’s economic output by no more than a few hundredths of a percentage point. The full story, which got less traction than I expected, is reprinted from the Hollywood Reporter below.

The state of New Mexico's film and television tax credits have made it a fairly strong competitor for service production over the past several years, but a new bill could change that. As reported below in the Santa Fe New Mexican, a House committee has recommended the passage of a bill that would cut in half the current annual $50 million cap for all credits paid to film and TV production companies.

It wouldn't be a clippings report without articles about Netflix and this week there were two of significance. As reported in the LA Times below, Canada is not the only jurisdiction debating the implementation of a Netflix tax. Pasadena city officials are mulling whether to tax subscribers of Netflix, Hulu and other video streaming companies using an existing municipal utility tax code that initially was designed for taxing cable-television users and dozens of other California cities have similar codes that might enable them to consider the tax.

The Times also reported that long-simmering tensions between Netflix and the traditional movie theater industry may be coming to a boil once again. The National Assn. of Theatre Owners last Wednesday expressed concerns about the streaming giant’s plan to release upcoming original movies online and in 15 high-end locations, including New York and Los Angeles, at the same time through a deal with luxury exhibitor IPic Entertainment.

Finally this week, diversity in the film and television industry continues to be a hot-button issue and the Times spoke with SAG-AFTRA president Gabrielle Carteris about her thoughts on the issue and others currently affecting performers.

Warmest regards,

Kelly Graham-Scherer
Los Angeles Representative
Toronto/ Ontario Film Office

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