SEC investigating movie studios' dealings with China

Reuters is reporting that regulators have begun a probe of American movie studios and their dealings with Chinese officials. The Security and Exchange Commission has sent letters to at least five companies, including 20th Century Fox, Disney and DreamWorks Animation requesting information about "potential[ly] inappropriate payments" made to members of the Chinese government. The market in the pseudo-Communist nation is seen as one with huge potential for US-made films, but the state-owned China Film Group has placed strict limits on foreign cinema. However, in February, the group agreed to loosen restrictions and exempt up to 14 IMAX or 3D films a year (along with their 2D counterparts) from the 20 movie cap on international media. Around the same time, DreamWorks announced it would be building a production studio in Shanghai with participation from several large Chinese media companies. Even Disney struck a deal that will see the next Iron Man title co-produced by China's DMG Entertainment. The sudden shift in tone must have raised some eyebrows with watchdogs, and the SEC has responded by hitting up the studios for info over the last few months. Obviously, we'll be keeping an eye on this to see how it develops.