Universal to Make Films With European Pay-TV Firm : Entertainment: Canal Plus will get an equity stake in the new co-productions.

In the latest step in the globalization of Hollywood, Universal Pictures and Studio Canal Plus, the production unit of Europe’s largest pay-television service, have agreed to co-produce films for worldwide distribution.

Canal Plus, with more than 3 million pay-TV subscribers in France as well as joint venture TV services in Germany, Spain and Belgium, has been a regular buyer of film rights from Universal and other Hollywood studios since it was founded in 1984. But the latest deal will give the French company an equity stake in the co-productions.

“They’ve always been a customer of ours, but what they’re doing here is going into production,” said Universal studio chief Tom Pollock. “There is a process by which we submit projects to each other, and we’re partners who share in both the risk and the upside.”

Over the long run, the alliance might also provide Universal a partner to ease the way in operating in a post-1992 unified Europe, which may place significant quotas or trade barriers on U.S. entertainment products. Universal is a unit of MCA Inc., which in turn is owned by Matsushita Electric Industrial Co. of Japan.

“We believe it’s strategically important to be in business with Canal Plus,” Pollock said. “They are a major player now, and they will be an even more major player in the future.”

In the co-production deal, each side is free to choose which projects to participate in, and Canal Plus will co-finance only part of Universal’s full slate of releases. Universal will retain theatrical distribution rights in the United States and Canada, and its UIP joint venture with Paramount Communications and MGM-Pathe will distribute overseas except in France, where Canal Plus will hold theatrical rights.

The first film to be co-produced in the deal, “A Bronx Tale,” will be the directorial debut of Academy Award-winning actor Robert De Niro.

To feed the nearly insatiable programming appetite of its pay-TV operations, Canal Plus has spent heavily in Hollywood to assure itself a steady supply of new films. As one Wall Street analyst put it, Canal Plus is “a machine that eats movies and throws off cash flow.”

Among its international alliances, the fast-growing company has formed a co-production deal with Carolco Pictures, taking a 5% equity stake in the U.S. independent, and has entered a partnership with producer Arnon Milchan’s Regency Enterprises and Warner Bros.

In another international media development, United Cinemas, a joint venture of MCA and Paramount, said Friday that it has agreed in principle with the newly elected mayor of Moscow to study the feasibility of building and operating six modern multi-screen theater complexes in the Soviet capital. The theaters, with between eight and 18 screens each, would be wholly owned by United Cinemas and managed initially by foreign staff. Soviet citizens would be trained to take over management as soon as possible.