Tibet Film May Derail Disney’s Efforts to Expand Into China

Chinese officials have told Walt Disney Co. they are unhappy with the company’s involvement in a new film about Tibet, and it may hurt the company’s plans to expand into China.

Disney has an option on the domestic distribution of the Martin Scorsese movie, “Kundun,” which takes a sympathetic view of a movement to declare Tibet an independent nation. The project reportedly moved from MCA Inc. to Disney with Scorsese after his longtime agent, Michael Ovitz, was named president of Disney.

Sources at Disney said Chinese government officials have expressed concerns about the film, but denied reports that China has gone so far as to threaten to quash Disney’s expansion plans in China. Disney sources also denied reports that Chinese officials canceled a trip to Southern California to meet with company executives, noting that the officials visited Disney recently.

Still, other observers said the movie could have a far-reaching impact on Disney’s efforts to develop business in China, considered by Hollywood to be the greatest untapped market in the world.

“If Disney distributes it, China won’t be happy, and that means Disney’s business in China will be terminated,” said Yang Huiming, Beijing representative of the Motion Picture Assn., the film industry’s main lobbying group. “It’s very serious.”

Tibet’s spiritual leader, the Dalai Lama, went into exile after China, asserting Tibet to be an integral part of the nation, annexed the region in 1951. “The ministry is resolutely opposed to its production because the film is intended to glorify the Lama, so this is an interference in China’s internal affairs,” said Luan Guozhi, an official in the external affairs division of the film bureau under China’s Ministry of Radio, Film and Television.

Disney sources characterized the film as an independent movie produced by Refuge Productions, but confirmed the company has “some financing” in the movie. The Hollywood trades listed it as a co-production between Refuge and Disney’s Touchstone Pictures. The film was developed at Disney under Scorsese’s production deal there. Earlier this year, Disney was selling off foreign rights to the film at the Cannes Film Festival.

A Disney spokesman declined to comment on Friday. The Financial Times first reported China’s concerns in Friday’s editions of the paper.

The dispute comes as the U.S. presses China to further open its markets to foreign goods. The U.S. trade deficit with China reached a record $4.7 billion in September, second only to Japan.

Foreign film imports are a particularly sensitive topic in China, where box-office revenues totaled $240 million in 1995 and could reach $1.2 billion in the next two years.

China, which annually imports fewer than a dozen foreign films, agreed in June to drop a fixed numerical ceiling on the number of U.S. movies that can be imported each year. Even so, it retained the right to block the import of U.S. films it deems politically or morally incorrect. Beijing works hard to present its citizens with a sanitized version of the nation’s history.

In addition to its films, Disney also sells its merchandise, which includes everything from T-shirts to toys of Disney characters, in China. Disney said in August that it plans to sell an illustrated “Toy Story” book with a Chinese partner.

The Disney warning “doesn’t surprise me, given the current climate in the film industry,” said Willie Brent, publisher of China Entertainment Network, a monthly Internet publication.

“It’s gotten better in the past two years as far as importing foreign films, but at the same time, the government, and especially the propaganda department, has really stepped in and put a stranglehold on the industry,” Brent said.