Disney’s Bob Iger Wants Chinese Ambassadorship, Politics Responds

NEWS ANALYSIS — News that Walt Disney Executive Chairman Bob Iger is up for being named U.S. Ambassador to China by President-Elect Joe Biden has produced strong pushback from conservative circles, which allege the executive’s cozy relationship with Chinese government officials is the wrong signal for the United States going forward.

Should Iger be named to the position, it would represent a crowning cap to a 46-year corporate career that has seen Disney embrace China across its business segments under Iger and current CEO Bob Chapek.

In addition to operating two amusement parks in China — Shanghai Disneyland and Hong Kong Disneyland — Disney is one of the world’s largest licensing operators, with much of its merchandise manufactured and sold in China.  J.P. Morgan analyst Alexia Quadrani contends that before the coronavirus pandemic, the two amusement parks contributed $1 billion in revenue and about $50 million in operating profit to Disney annually.

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In 2018, about 66 Disney-licensed products were sold in China every second, according to Kermid Rahman, VP and GM of Marvel and Consumer Products Commercialization for The Walt Disney Company Greater China and Korea. Speaking to China Daily, Rahman said the Disney, Pixar, Marvel and Star Wars brands worked with more than 600 licensees throughout China.

In Iger’s recently published memoir, The Ride of a Lifetime, the executive recounted myriad interactions with Chinese officials, including President Xi Jinping.

“The creation of the [theme] park was an education in geopolitics, and a constant balancing act between the possibilities of global expansion and the perils of cultural imperialism,” Iger wrote. “The overwhelming challenge, which I repeated to our team so often it became a mantra for everyone working on the project, was to create an experience that was ‘authentically Disney and distinctly Chinese.'”

The latter is what some critics say underscores Disney’s growing subservience to the Chinese government in return for financial gain.

Indeed, on the theatrical side, Disney filmed some of its recent live-action movie Mulan in China’s Xinjiang province, a region where human rights groups allege ethnic Uyghur Muslims have been subjected to abuse by the erstwhile Communist government.

In recent years, Disney-owned ESPN reportedly came under fire for not calling out the NBA’s strained relationship with China regarding a coach’s comments about pro-democracy protests in Hong Kong.

With the outgoing Trump Administration at odds with China regarding trade, intellectual property and high-tech issues — underscored by a 2019 trade deficit that topped $345 billion — Iger’s potential ambassadorship has been put in the political crosshairs.

Earlier this year, former U.S. Attorney General William Barr warned that “if Disney and other American corporations continue to bow to Beijing, they risk undermining their own future competitiveness and prosperity as well as the classical liberal order that has allowed them to thrive.”

“The Biden administration shouldn’t put Iger — or any other entertainment industry bigwig, for that matter — in charge of diplomatic relations with China,” Sunny Bunch wrote in The Washington Post. 

“Iger … is qualified to negotiate with Beijing, but for all the wrong reasons — cozy ties, long relationships, and tolerance for the government’s terrible conduct,” Emily Jashinsky wrote in The Federalist.

Fox News host Laura Ingraham Dec. 16 suggested Iger’s selection would be keeping with what she alleges will be the Biden Administration’s “soft-on-Beijing policy.”

“The [local] government there got a special thanks credit in the film [Mulan],” Ingraham said.

Ampere: China, Asian Market Projected to Lead Theatrical Comeback in 2021

Without a vaccine and/or decline in coronavirus infections, the theatrical market in the U.S. and other western markets is expected to remain challenged in 2021. New data from Ampere Analysis contends global box office dropped 75% in 2020 to $11 billion, from $44 billion in 2019. The London-based firm suggests China and other Asian markets less impacted by the pandemic will spearhead theatrical’s return next year to $33 billion in ticket sales.

Ampere’s latest forecasts in Asia Pacific show revenue reaching $15 billion by 2021 and $25 billion by 2025 to match pre-pandemic levels. China is responsible for the lion’s share of this recovery. Q1 is the market’s most lucrative quarter, and the pandemic is therefore likely to stymie growth in 2021 too. However, the success of recent movie releases in China suggests that consumers are cautiously returning to theaters. These markets are less reliant on U.S. content and Ampere anticipates that continued local investment in production will further buoy recovery and growth.

 

“2020 was the year that the Chinese box office was expected to overtake the U.S.,” research director Richard Cooper said in a statement. “The pandemic halted that, and instead we will see these two markets vying for the global number one slot in 2021. By the following year however, China will move into the lead, to double the size of the U.S. market by 2025.”

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It’s a different story in the Western markets, where cinema closures and the reductions in the number of accessible screens are set to continue. This will limit access to movie theaters, accelerating the downturn already evident in markets such as Germany, France and the United States.

The Asia Pacific markets have become less reliant on foreign movie content over the past few years for their revenue. The void left by the absence of U.S. releases as a result of the pandemic has provided a golden opportunity to promote local content. As a result, a number of high-profile releases in Asia in Q3 and Q4 have begun to resuscitate the local theatrical sector. In Japan, Demon Slayer the Movie: Mugen Train broke all records, earning $140 million to-date at the box office. In China, local titles My People, My Homeland and The Eight Hundred have grossed $460 million and $416 million, respectively, in China alone, far outstripping the revenue generated by China’s top-performing U.S. releases Tenet ($51 million) and Mulan ($41 million).

“This sector is characterized by very different performance depending on location. In the West, theatrical revenue is under serious pressure, while in Asia, we expect the market to bounce back rapidly, driven by the rise of locally produced content. Many of the Hollywood studios are shifting their business models to react and adapt to this geographic change, experimenting with digital release strategies in Western markets and testing the viability of bypassing theatrical release. As a consequence, Asia will emerge as the predominant theatrical market by 2025.”

Tubi Enters AVOD Deal With China’s Wanda Pictures

Ad-supported VOD platform Tubi Oct. 19 announced it has entered a content deal with Chinese film and television studio Wanda Pictures. The partnership will launch with original and exclusive English-dubbed versions of Detective Chinatown 2, the sixth-highest grossing movie of all time in China. The deal also includes an anime film set in the e-sports world, The King’s Avatar: For the Glory. Both films will soon be available on Tubi in the U.S. and Canada, with The King’s Avatar: For The Glory also available in Spanish in the United States and Mexico.

Fox Corp. jumpstarted its foray into AVOD with the $440 million acquisition of San Francisco-based Tubi earlier this year.

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“We are thrilled to be aligning with Wanda Pictures as we look to expand our offering with storytelling from international territories,” Adam Lewinson, chief content officer at Tubi, said in a statement.

Detective Chinatown 2, written and directed by Chen Sicheng and starring Wang Baoqiang, Liu Haoran, Xiao Yang and Natasha Liu Bordizzo, has grossed more than $540 million worldwide. The sequel to the 2015 hit is the first film created and managed by Chinese companies to be filmed domestically in collaboration with local unions. DC 2 is a winner of the 34th Hundred Flowers Award.

The King’s Avatar: For The Glory, written by Youcong Li and directed by Zhiwei Deng and Juansheng Shi, is an animated feature about a skilled group of young gamers who form an electronic sports team and compete for the national championship. The film stars Ketsu, Bian Jiang, Xia Lei and Xi Zi.  

Tubi claims more than 33 million average monthly users generating more than 200 million hours of content streamed since June. The platform has more than 23,000 movies and television shows from over 250 content partners, including nearly every major Hollywood studio.

Federal Government Appeals TikTok Ban Injunction

The Justice Department Oct. 8 filed an appeal with the U.S. Court of Appeals for the D.C. Circuit, saying the preliminary injunction issued last month delaying a ban of Chinese-owned social media video app TikTok should be lifted.

The injunction issued Sept. 27 by Judge Carl Nichols in the U.S. District Court for the District of Columbia prevented the Trump Administration from banning use of the TikTok app in the U.S. Trump alleges TikTok, which is owned by ByteDance, remains a security threat by collecting data on U.S. users and storing it on Chinese-based servers.

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The ban, which also includes the WeChat app owned by Chinese media giant Tencent, is part of the administration’s ongoing Cold War with China that is partly based on politics and commercial trade between the world’s two largest economies.

Trump in August issued an executive order mandating the ban unless TikTok sold its U.S. operations. An acquisition deal involving chip maker Oracle and Walmart for 20% in a newly configured ByteDance parent remains in the works, but has not been finalized.

Trump’s ban could affect the 100 million Americans who use TikTok for social messaging and commercial influencing. At the same time, China has been blocking its citizens from using American apps such as Facebook, Twitter — and Netflix.

While Netflix is not a social media service, the world’s largest SVOD platform remains largely a non-player in China. In 2017, Netflix licensed select original content to iQiyi in the erstwhile communist country. That agreement reportedly ended last year due to limited consumer response, according to iQiyi CEO Gong Yu.

“We had an agreement with Netflix two years ago, but because of the verification system and users’ tastes, the effect wasn’t that great, so we didn’t continue the partnership,” Yu said in a media interview last year translated by CNBC.

Ampere: Pay-TV Added 3.1 Million Subs Globally in Q2

The pay-TV market may be in decline — especially in the United States — but globally, the industry saw an addition of 3.1 million subscribers in the second quarter (ended June 30), according to new data from Ampere Analysis.

The London-based research firm said that despite the loss of live sports due to the coronavirus pandemic — a major draw for pay-TV — emerging markets have seen subscriber gains, spearheaded by China adding 3.1 million subs, and offset by a loss of 1.1 million subs in the rest of the world.

The data is based on a “bellwether” of the top 70 reporting pay-TV operators, which represent more than half of the world’s 1.1 billion pay-TV subscribers.

The U.S. continued to be the loss leader, with 1.4 million subs decline in the quarter across bellwether companies — despite sub upticks from Charter and Dish Network. Other loss leaders included Australia, with Foxtel being hit particularly hard by the lack of sports in Q2; and Denmark, which has been suffering ongoing pay-TV losses since Q4 2016.

“While some countries are seeing pay-TV subscriptions suffer due to the pandemic, there is still growth in the market, driven partly by bundling of services,” senior analyst Toby Holleran said in a statement. “Cord-cutters in a number of developed territories like Canada — whose pay-TV market continues to mirror its North American neighbor — are being replaced by newer TV customers in emerging markets, leaving the market as a whole stable.”

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Holleran contends there is some sub growth left in developed nations such as France and Spain, which he said are bucking the trend of “stagnation” in Western territories.

Federal Judge Blocks Trump’s TikTok Ban in the U.S.

With President Trump’s Aug. 6 executive order banning social media video app TikTok in the United States set to go into effect Sept. 27, a federal court judge in Washington D.C. has reportedly approved a preliminary injunction blocking the order.

Chinese-based TikTok owner ByteDance Sept. 23 filed for an expedited preliminary injunction against Trump’s executive order, calling it politically motivated and lacking in merit. The Trump Administration, which is involved in ongoing trade and ethnic Muslim disputes with China, argued the TikTok app posed a threat to national security. TikTok reportedly has more than 100 million U.S. users on a monthly basis.

U.S. District Court Judge Carl Nichols, who was appointed to the bench by Trump in 2019, reportedly felt TikTok had not been given the proper time to defend itself in court.

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“This was a largely unilateral decision with very little opportunity for plaintiffs to be heard,” said the judge as reported by the Washington Post.

Trump had initially given his public approval (in a North Carolina campaign rally) for a proposed TikTok asset sale to Oracle and Walmart. But when it was revealed that Oracle and Walmart would collectively own just 20% of new entity TikTok Global, with China controlling 80%, Trump changed his mind.

This is the second legal setback for Trump, who saw a second executive order banning China’s WeChat app overruled by a San Francisco federal magistrate, which cited First Amendment issues in ruling against the president.

GOP Senators Question Netflix’s Planned Chinese-Based Sci-Fi Series

A group of Republican senators has sent a letter to Netflix co-CEO Ted Sarandos questioning why the SVOD behemoth plans to adapt Chinese sci-fi trilogy “A Three-Body Problem” by author Cixin Liu into an original series. “Game of Thrones” creators David Benioff and D.B. Weiss have been tasked with creating the series for Netflix about humanity’s first contact with an alien civilization.

Liu is also author of the short story upon which Chinese sci-fi theatrical hit The Wandering Earth is based. The movie, which has topped Mulan in theatrical revenue, has generated more than $690 million at the Chinese box office. Netflix acquired SVOD rights to the movie for North America, Australia, New Zealand and South Korea.

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Senators Marsha Blackburn (R-TN), Kevin Cramer (R-ND), Martha McSally (R-AZ), Rick Scott (R-FL) and Thom Tillis (R-NC) contend Liu is sympathetic to Chinese government’s forced re-education of ethic Uyghur Muslims in the Xinjiang region.

The Uyghur Muslims have become political pawns for the Trump Administration and its allies in Congress seeking leverage in the government’s ongoing trade disputes between Beijing and Washington, D.C.

Earlier this month, Sen. Josh Hawley (R-MO) took to social media, accusing Disney of “whitewashing genocide” by allegedly cooperating with Chinese police working at the Uyghur camps, including crediting them in the live-action Mulan movie credits. Disney CFO Christine McCarthy said it was common practice in Hollywood to acknowledge local governments for a movie filmed abroad.

In the Sept. 23 letter to Sarandos, the senators are seeking answers to the following questions:

  1. Does Netflix agree that the Chinese Communist Party’s interment of 1.8 to 3 million Uyghurs in internment or labor camps based on their ethnicity is unacceptable?
  2. LWere Netflix senior executives aware of the statements made by Mr. Cixin liu regarding the Chinese Communist Party’s genocidal acts prior to entering into an agreement to adapt his work? If so, please outline the reasoning that led Netflix to move forward with this project. If not, please describe Netflix’s standard process of due diligence and the gaps therein that led to this oversight.
  3. Does Netflix have a policy regarding entering into contracts with public-facing individuals who, either publicly or privately, promote principles inconsistent with Netflix’s company culture and principles? If so, please outline this policy. If not, please explain why not.
  4. In order to avoid any further glorification of the CCP’s actions against the Uyghurs, or validation of the Chinese regime and agencies responsible for such acts, what steps will Netflix take to cast a critical eye on this project – to include the company’s broader relationship with Mr. Liu?

 

A Netflix representative was not immediately available for comment.

TikTok Owner Seeks Injunction Stopping App Ban in the U.S.

ByteDance, the Chinese owner of social video platform TikTok, has filed for a preliminary injunction against the Trump Administration’s executive order banning U.S. access to the app, effective on Sept. 27. About 100 million Americans use TikTok on a monthly basis.

The request, filed Sept. 23 in the District Court for the District of Columbia, seeks to stop a DOJ mandate ordering Google and Apple to remove the TikTok app from their platforms on Sunday — in addition to ceasing to provide updates for current holders of the app.

ByteDance is currently in negotiations with Oracle and Walmart to sell 20% (for $20 billion) of a new corporate entity called TikTok Global. Trump last weekend publicly gave his approval of deal — until he found out the Chinese would still own 80% of the company. Oracle reportedly said the sale would preclude ByteDance from owning the TikTok app outright.

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Regardless, the Chinese government would have to approve of any deal, which seems increasingly unlikely following reports in the government-owned English newspaper China Times, which called the transaction “dirty and unfair,” and based on “bullying and corruption.”

The Trump Administration, which eyes TikTok as a threat to national security, continues to engage in a war of words with China over trade and technology.

ByteDance says the security fears are overblown and political in nature.

“There is simply no genuine emergency here that would justify the government’s precipitous actions,” read the filing. “And there is no plausible reason to insist the prohibitions be enforced immediately.”

Trump Wants Oracle/TikTok Deal, Which Now Includes Walmart, to Include $5 Billion for Educational Programs

President Trump has big plans for TikTok, the Chinese-owned social media app and video platform currently in sale talks with Oracle — and Walmart.

Speaking Sept. 19 at a rally in Fayetteville, N.C., Trump said the proposed executive order banning TikTok in the United States had been delayed a week so the reported $20 billion sale of TikTok in the U.S. by parent ByteDance to Oracle and Walmart could be finalized. The retail behemoth had previously been associated with a joint bid with Microsoft that had been rejected. TikTok has about 100 million users in the United States.

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Under the proposed deal reported by CNN Business, which needs to be approved by Chinese regulators, TikTok would relocate its headquarters to Texas, hiring 25,000 workers in the process. More importantly, TikTok would store user data on Oracle servers rather than on the current Chinese-based servers — which had prompted initial concerns by the Trump Administration over cyber and national security.

“I’ve given the deal my blessing,” Trump said. “If it gets done, that’s great. If they don’t that’s OK, too.”

It’s been reported that Trump is seeking $5 billion from the “TikTok Global” transaction to help fund an educational project the president claims “can educate people as to real history of our country — the real history, not the fake history.”

Both Oracle and Walmart — as publicly held companies — are not legally obligated to fund Trump’s educational project.

Trump is proposing the fund in response to the “1619 Project,” which was started by The New York Times in 2019 on the 400th anniversary of slavery in the United States. The project aims to put consequences of slavery and contributions of black Americans as its main theme but has been criticized by historians.

Trump previously tweeted that planned rollout of the “1619 Project” in public schools in California would not be supported by the federal government.

“Department of Education is looking at this,” Trump tweeted earlier this month. “If so, they will not be funded.”

TikTok Owner Picks Oracle as ‘Trusted Tech Partner,’ Rejects Microsoft/Walmart Bid

ByteDance, the Chinese owner of social media video app TikTok, has reportedly selected Oracle Corp. to acquire its U.S. operations as a “trusted tech partner.” The deal, which must be approved by U.S. and Chinese regulators, amounts to a high-priced partnership rather than outright asset sale, according to media reports.

Beijing-based ByteDance had previously rejected a joint offer by Microsoft and Walmart, Microsoft disclosed in a Sept. 13 blog post. The amount of the software and retail giants’ bid has not been disclosed. The offer by Oracle reportedly hovers around $20 billion.

“ByteDance let us know today they would not be selling TikTok’s U.S. operations to Microsoft,” the software giant wrote. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.”

TikTok has emerged into a social media phenomenon during the coronavirus pandemic generating upwards of 100 million users monthly watching both self-generated and third-party videos. It has also come into the crosshairs of the Trump Administration, which considers the app a national security threat, among other concerns. Trump has warned the government would ban the app in the U.S. by Sept. 15 unless it was sold to an American company.

Specifically, the National Security Agency and United States Cyber Command claim that Chinese control of TikTok’s computer code could influence distribution of propaganda and politically-motivated content to end-users.

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Microsoft said it would have made the required security, privacy and online safety adjustments to appease both federal and Chinese regulators. The Xbox manufacturer said it would have taken steps to prevent the spread of disinformation on the app — something it made clear to ByteDance.

“We look forward to seeing how the service evolves in these important areas,” Microsoft wrote.

Whether Oracle founder Larry Ellison’s personal relationship with Trump played a factor in the deal remains to be seen. Ellison has hosted a fundraiser for Trump, and Oracle CEO Safra Catz worked on Trump’s transition team in 2016.