| SHANGHAI/LOS ANGELES
SHANGHAI/LOS ANGELES Plans for a long-discussed
Disneyland park in Shanghai could include a major media
agreement between Walt Disney Co (DIS.N) and the Shanghai
government that could give the company unrivaled access to the
market, documents obtained by Reuters show.
The joint venture agreement would give Disney a huge
advantage over U.S. media rivals by allowing it to bypass
foreign film import quotas and summer and holiday blackout
periods, as well as television censorship, both imposed by the
While its rivals vie for the 20 slots allotted by the
Chinese government each year to foreign films, Disney would be
tasked with creating movies, TV and web fare to promote its
brand, stories and characters to grow attendance at the Disney
and Shanghai government-owned park, the documents show.
Disney has engaged in on-again, off-again talks for more
than a decade with the Chinese government over plans to build a
large theme park and hotel complex in the southern outskirts of
Shanghai's Pudong district, where Fortune 500 companies like
General Motors Corp (GM.N) have regional headquarters.
Those talks were stalled by a Shanghai government scandal
in 2006 and Disney's need to focus on Hong Kong Disneyland,
which opened in 2005 to a string of operational problems and
The plan documents came from a presentation given by
Shanghai city government officials at a meeting in April with
local entrepreneurs and scholars who were then asked how to
improve the plan, a source familiar with the meeting said.
Two people familiar with the documents, who declined to be
identified due to the sensitive nature of the situation, said
that a legally binding final agreement would not be reached
until some time after the Beijing Olympics in August.
One source also said that current talks are focusing on
other issues, such as potential funding and profit sharing,
rather than the media and marketing proposal.
While the Chinese know Mickey Mouse and the Disney brand
through the limited number of movies and TV shows allowed into
the country each year and through Disney retail stores, they
are less familiar with the fairy tales and characters that
populate the parks, Disney officials have said.
The documents call for Disney to receive a large stake in a
joint venture that would manage the park. Under the joint
venture, Disney would handle marketing and promotions in
exchange for providing capital and technology.
The Shanghai government-led local consortium, including
some of the city's major developers, would provide land near
the Pudong International Airport in exchange for its share.
The joint venture would be controlled by the city
government, which would have the right to appoint the general
manager and other senior positions, according to the same
The agreement would give the joint venture the right to
publish and distribute a Disney-branded magazine, and to
produce animated films and television shows for local broadcast
and cable TV that showcase both the Disney brand and the new
park, the documents show.
The content of the magazine, movies and TV shows, and
breadth of distribution would have to be approved on a
case-by-case basis by the central government and relevant
ministries and regulators under Chinese rules, the documents
Disney also would get help from the joint venture in
opening the Chinese market to its films and other programming,
and in return would help distribute Chinese-made fare in the
United States and other countries, the documents show.
The agreement also calls for the joint venture to authorize
local manufacturers to produce Disney-branded toys in China and
sell them internationally.
'IMPOSSIBLE TO PREDICT'
The final talks for a Disneyland park in Shanghai could be
accelerated after the Olympics, as central government leaders
in Beijing prefer keeping the global focus on China's booming
economy and improving standard of living in major cities, one
of the sources said.
Disney has been in talks since 1994 over the Shanghai park
and was close to a deal about two years ago, when the project
was stalled by a corruption scandal that sidelined several top
Shanghai government officials involved in the negotiations, two
sources close to the deal said.
Disney's U.S. entertainment rivals, including NBC Universal
and Time Warner Inc's (TWX.N) Warner Bros, have held talks with
the Shanghai city government in the past decade but could not
iron out differences over concerns such as management control
and copyright protection. NBC Universal is 80 percent owned by
General Electric Co (GE.N) and 20 percent by Vivendi (VIV.PA).
Despite Chinese media reports that a deal is imminent,
Disney parks spokeswoman Leslie Goodman said there has been "no
agreement and no deal" to proceed with plans for a park.
Disney Chief Financial Officer Tom Staggs said in December
of 2006 that the Shanghai park was "something that I think we'd
like to see happen down the road" but that the "course ...
(and) speed of that conversation" had been "impossible to
Since then, the company has made no official statement
about the progress of talks except to shoot down talk of a
deal, emanating mainly from the Chinese press.
In March, Shanghai Mayor Han Zheng made a surprise
announcement that the city had applied to the National
Development and Reform Commission, China's top economic
planner, which directly reports to the cabinet, for approval to
build a Disney theme park in China's financial hub.
While Disney allows several years to build its
international theme parks, the company was planning to set up a
"special mini park" first at the World Expo in Shanghai in 2010
to promote a formal Disney theme park to tens of millions of
tourists expected to attend the event, according to one of the
(Reporting by Gina Keating and George Chen, editing by
Gerald E. McCormick)