Polygram Takes Over Interscope : Entertainment: The British record giant buys 51% of the successful Hollywood film production company.

London-based Polygram on Monday significantly raised its profile in Hollywood by paying $35 million for a controlling interest in Interscope Communications, the production company behind such hits as “The Hand that Rocks the Cradle” and “Three Men and a Baby.”

Interscope will produce about 30 films over the next five years under the terms of the deal. The company’s top executives, Chairman Ted Field and President Robert Cort, will remain on board and continue to make creative decisions. Production and marketing budgets will be drawn from a $200-million film fund established by Polygram.

Michael Kuhn, president of Polygram Filmed Entertainment, said the company considered several production firms before acquiring the 51% stake in Interscope. The strategic deal is part of a long-range plan to form an international film distribution company at Polygram.

“The (worldwide) demand for Hollywood movies is ever increasing,” Kuhn said. “And the supply is ever diminishing. In a normal market economy, the suppliers should become very rich.”

After a long run by the Japanese, European firms such as Polygram have funded the latest wave of foreign investment in Hollywood. French TV giant Canal Plus is a major partner in financially troubled Carolco Pictures, which recently produced “Universal Soldier,” and in New Regency Productions, which produces movies for Warner Bros. An Italian company, Penta Pictures, has a distribution deal with another major studio, 20th Century Fox.

Polygram, which is majority owned by Philips Electronics, already owns three small production companies in the United States--Propaganda, A&M; and Working Title. The Interscope investment, which will be paid for out of existing cash flow and available funds, ends a two-year search for a partner with a strong track record at the box office. It also figures into the company’s plans for gradually cobbling together a substantial film operation.

Interscope is known for producing high-concept, commercially oriented films with relatively low budgets, meaning in the $15-million to $25-million range. It has produced more than 25 movies in eight years with worldwide revenue surpassing $1 billion.

Field predicted that Interscope will grow into a much stronger company under the Polygram deal. “This allows us to build a presence as a production and distribution company,” he said. “We are totally committed to building this company.”

Interscope distributes most of its films through Walt Disney Studios. It has three pictures remaining on a co-production financing deal with Nomura, Babcock & Brown, which is 80% Japanese owned. The final film under that deal is expected to be completed in mid-1993.

Field said Disney will get first crack at a domestic distribution deal with the newly constituted Interscope. Polygram will handle the international distribution of the films and will add domestic distribution when its operation is in place, under terms of the deal.

Polygram’s main business is music. Its major recording acts include U2, Bryan Adams, Vanessa Williams and Def Leppard. It also controls about 50% of the world’s classical music sales. Polygram had net income last year of $261 million on sales of $3.7 billion.