"Beauty and the Beast" is heading to China. YOU On Demand, a major distributor of pay-per-view content in China, said Thursday it has signed an agreement with Disney Media Distribution to distribute films in the country.

Many Disney films would be available through its pay-per-view and subscription video services offered through an arrangement with the state-run CCTV's Channel 6.

China has strictly limited the number and types of foreign films imported, but the market is heating up. Last week, during a state visit to the U.S. by Chinese Vice President Xi Jinping, the two countries reached an agreement to open the Chinese market wider to American films.

Also last week, DreamWorks Animation SKG Inc. announced plans to set up a $330 million joint venture in Shanghai to make Chinese animated and live action films.

Disney, which is building a theme park in Shanghai, has begun ramping up its business in China. It has licensed to the Chinese online video company Tudou Holdings Ltd. the right to show films and shows such as "Cars 2," `'Revenge," and "Castle" to online customers on demand for a fee.

Still, limits remain. YOU says the films its mainland Chinese viewers can watch will be those that are "officially approved."

YOU is headed by Shane McMahon, former executive vice president at World Wrestling Entertainment Inc. and the son of WWE Chairman and CEO Vince McMahon. The company's headquarters are in Beijing and its main base of operations is in eastern China's Shandong province.

It also has an licensing agreement with Warner Bros. Home Entertainment Group.

Although China is the world's largest cable TV market, its state-dominated media industry can be a daunting environment, given constant but unpredictable moves by the authorities to assert greater control over content, especially for movies and television.

In the third-quarter of last year, YOU reported a net profit of $544,000, compared with a loss of $9,546,000 in a year earlier. The company says it expects its performance to improve with the recent introduction of its pay-per-view and subscription video services.

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YOU on Demand: http://www.yod.com