Rupert Murdoch Remarks at The 14th Shanghai International Film Festival

Shanghai – June 12, 2011 – Thank you. I would like to thank the Shanghai International Film Festival for inviting me to be here today.

Honorable Minister Cai, ladies and gentlemen, I am delighted to be with you to help open this year’s festival. Over the years, you have made Shanghai one of the world’s premier film platforms. Leading industry figures from around the world come here to screen some of the most creative films from the Chinese market. They come to engage in spirited discussions about the complex issues surrounding international cinematic relations. Most of all, they come for the chance to meet with you. The simple truth is: there is no more exciting market in the world than this one.

Today the Chinese people have transformed one of the world’s oldest cultures into one of the world’s leading economies. Hundreds of millions of people have been lifted out of poverty and are now entering the middle class. They have quickly become discerning consumers eager to be entertained and informed. Their increasing buying power has made China the fastest growing movie market in the world: Since 2005 – when the total box office was just $150 million – box-office grosses have grown nearly 40 percent every year. In 2010, China’s box office grew 65 percent to $1.5 billion. It’s extraordinary.

Chinese entrepreneurs are responding to this incredible demand by rapidly expanding the movie-going infrastructure, investing heavily in new theaters. China now has 6,200 movie screens. Every day another three screens are added. There is nothing like it anywhere else in the world. Within five years, China will have 20,000 screens. Here’s another point: Unlike the United States, most of the new screens here are digital and 3-D capable.

That made China one of the few places in the world where the audience could appreciate the effects of a film such as “Avatar.” It also helps explain why 3-D”Avatar” grossed more than $200 million here – second only to the US box office totals.

So, it’s easy to see why the filmmaking world is clamoring at China’s doorstep. At News Corporation, we are thrilled by the potential. In addition to “Avatar,” we are bringing American films such as “The Chronicles of Narnia” and “Rio” to the Chinese market. At the same time, we are equally committed to producing local fare in partnership with Chinese production companies. For example, we are now working with talented Chinese partners such as Hua-Yi Brothers and others to co-produce and release local films such as “Hot Summer Days” and its upcoming sequel “Love in Space.” With our global distribution capabilities, we can release these films in various markets simultaneously. In fact, we are now doing this with the Chinese film that’s being screened here tonight, “Snow Flower & the Secret Fan.” Fox Searchlight will be releasing the film in North America this July.

So, we are very energized by the investments in both capital and innovation that Chinese companies and entrepreneurs are making to expand the theatrical infrastructure. However, we believe the promise of this investment is not being fully realized because market access remains restricted. It is restricted both by the limitations on the importation of foreign films as well as the restrictions on investment in marketing and distribution entities. This presents significant challenges for U.S. studios like ours. More important, it creates incentives for people to steal what they do not have access to. In the long run, that will only limit the opportunity for China to grow its booming market.

As China’s theatrical infrastructure continues to grow, it’s critical to fill the pipeline with more local films, as well as more films imported from other countries. It’s equally important to have strong and enforceable intellectual property rights to protect the artists who create these works. The Chinese filmmakers whose works are finding popularity around the world will tell you just how important this is. Moreover, the true value of film investment is realized from the continuing revenue stream of films that endure over long periods of time. It encourages further investment, promotes creativity and ensures the ongoing vitality of the film industry.

Indeed, today, watching a film in a theater is just one of many ways that this new generation is consuming movies. Every month, we are seeing the introduction of increasingly sophisticated mobile phones. Some of them can even download a movie and project it onto a wall at home. In China, there are more smart phones than there are people in the United States. Here at SIFF, I have noticed that this year you are hosting your first ever mobile phone film competition. I’m told you have received more than 10,000 entries – many of them shot on the iPhone4. As these digital devices continue to proliferate, there will be even more ways for people to enjoy movies whenever they want, wherever they want. Look at the tablet movement. A year ago, it barely existed. But two years from now, there will be more than 50 million tablets in the hands of people around the world.

You here are the people who bring those inventions to life. For without compelling creative content… without our movies and television shows…. without engaging and powerful programming… these electronic devices are merely expensive playthings.

My point today is this: The explosion of digital means that the work of all the brilliant filmmakers gathered here has never been more valuable. There is a whole generation of people in every corner of the world hungry for your creativity — and thanks to technology, today you have the ability to reach each and every one of them. I believe that an open market in films and ideas is the key to spurring even more creativity. Only a thriving market willing to invest in your creativity and eager for global competition will thrive in the coming years.

I began visiting China regularly more than 30 years ago. In the years since, my admiration for the character of the people of this country has steadily deepened. Everywhere in China I go, I meet someone starting up a new enterprise, seeking a higher degree, or building a better life for his or her family. Their optimism is infectious. And it comes from a whole new generation of Chinese — highly educated, incredibly creative, and with global aspirations. These people are the future. And I’m here today because I cannot wait to see what they do with it.

Thank you for inviting me today.