PolyGram Will Spend More on Films

Flouting a retreat that takes in much of Hollywood, PolyGram--the British record company whose artists include Bon Jovi and Bryan Adams--said Tuesday that it would significantly expand its filmmaking activities, earmarking $200 million for film projects during the next three years.

“When things go bad, it’s the right time to go in,” said Alain Levy, chief executive of PolyGram. “From a strategic point of view . . . whether Hollywood is doing good or bad, we’ve been moving toward this for five years.”

PolyGram, which is 80% owned by the Dutch communications giant Philips NV, already owns 49% each of Propaganda Films and Working Title Films, two highly regarded independent producers. Levy said PolyGram would eventually boost its stake in those companies to 100%.

Along with its own in-house A&M; Films unit and its Netherlands-based distribution arm, Manifesto, PolyGram has helped finance 17 films since 1986.

They include David Lynch’s critically acclaimed 1990 film “Wild at Heart” and the Oscar-winning “My Beautiful Launderette,” which were produced by Propaganda and Working Titles Films respectively.

Propaganda was also one of the producers of the cult TV series “Twin Peaks.”

Levy said PolyGram would finance up to four films per year with budgets of $15 million to $25 million and four smaller films annually with budgets of $7 million to $10 million. Additional financing beyond the $200 million to which the firm is committed could be raised from sales to home video or third-party arrangements, he added.

“They are not overextending themselves with overhead or taking on high-risk pictures,” noted Hal Vogel, an entertainment industry analyst with Merril Lynch in New York. “This is a very cautious approach.”

Whether it will be cautious enough, however, remains to be seen.

Hollywood is littered with independent film companies that have gone bankrupt in recent years because they either misjudged the market for their product or backed too many high-risk films that bombed at the box office.

Levy said PolyGram is talking with Hollywood studios about distributing some of its bigger-budget pictures but would probably distribute lower-budget films itself. He confirmed a report that PolyGram had discussed acquiring financially strapped Nelson Entertainment’s distribution agreement with Columbia Pictures.

PolyGram’s film office will be headed by Michael Kuhn, senior vice president of media, who will relocate from London with his two-person staff.

Although principally known as a record company--84% of its revenue comes from recorded music--PolyGram in recent years has been expanding its interests in film and video. Last month it bought a 30% stake in Really Useful Holdings, the entertainment firm founded by theatrical producer Andrew Lloyd Webber.