Law Surprises Distributors, Movie Studios : Brazil Bans Foreign Ownership of Film Firms

Brazil’s new government, in a gesture inspired by cultural nationalism, has put into effect a law that bans foreign ownership of companies that produce, distribute or exhibit motion pictures in this country, which is a large market for foreign films.

The law, published in the official gazette last Friday, came as a surprise to both foreign distributors and the national film industry. American studios, represented here by Harry Stone, Latin American representative of the Motion Picture Assn. of America, withheld comment until association attorneys have had a chance to study the implications of the law.

Brazilian movie industry figures were divided in their reaction. Some local distributors said the law will reduce the power of foreign distributors, such as United International Pictures, representing Paramount, MGM, Walt Disney, Universal and United Artists, which also owns dozens of movie houses.

But Hector Babenco, a film maker who is known in the United States for “Pixote,” called the new law stupid because it would close foreign films out of Brazil, discouraging co-production.

Babenco has just completed “The Kiss of the Spider Woman,” which has two U.S. stars, William Hurt and Raul Julia.

The law was promulgated by Vice President Jose Sarney, who has been acting president in the absence of President-elect Tancredo Neves, who was prevented from taking office March 15 by illness. It was sponsored last year by the vice president’s son, federal deputy Jose Sarney Filho, and was approved by Congress but not signed by former President Joao Baptista Figueiredo.

Sarney Filho, in an interview published by Jornal do Brasil, a Rio daily, said the purpose of his law is to force foreign distributors and theater owners to “sell out to Brazilian owners.”

This forced takeover of distribution facilities would give domestic dominance to a sector now dominated by big foreign distributors, linked to studios in the United States, France and Italy.

The law puts all cinema enterprises on the same footing as newspapers, radio stations and television systems that must be 100% Brazilian-owned, under laws passed in 1967. At the time, this forced Time Inc. to give up part ownership of a television system that has since grown under its Brazilian owner, Roberto Marinho, into the biggest television system in Latin America.

“The reason invoked for this drastic restriction on the participation of foreign capital, even in a minority role, was the preservation of national culture,” said Jornal do Brasil in an editorial.

But the restrictions that have already been placed on foreign films here, including requirements that copies of films be made in Brazilian laboratories, that films be dubbed in Portuguese and that more than half of theater time be reserved for domestic films, already provides the national film industry with ample protection, the editorial added.

Despite the protection, Brazil’s national film industry is in a serious economic crisis. The number of theaters has been halved since 1979 and is now down to 1,500. Attendance has dropped from 275 million paid admissions in 1975 to 106 million in 1983.

The sharp drop in attendance is attributed to the rise of television--there are now 19 million sets in Brazil--and more recently the spread of videocassette recorders on which wealthier Brazilians watch movies at home rather than in often run-down movie houses.

Despite some successful films, such as “Dona Flor and Her Two Husbands,” “Bye-Bye Brasil” and others less known abroad, film producers here stay in business only through financing by Embra-film, the state company.

But Embrafilm depends on a tax on foreign film profits here for most of its income.

Anibal Massiani Filho, a producer, said the new law will undermine local production if it eliminates the tax income that provides Embrafilm with 60% of the resources with which it finances local films.

There were 106 U.S.-produced films exhibited in Brazil last year. The estimated attendance for foreign films last year was 55 million--more than half the total.