Hollywood Left Out of Picture in Costly Blow

After hours of unsuccessful negotiations at the U.S. trade office overlooking a park in Geneva, Hollywood’s GATT team got the bad news early Tuesday--President Clinton was going ahead on the far-reaching trade agreement without them.

The message from U.S. Trade Representative Mickey Kantor was a stunning blow to the entertainment industry, which is expected to lose billions of dollars in foreign revenue as a result of being excluded from the broad-based General Agreement on Tariffs and Trade.

Foreign money has become a vital source of revenue for Hollywood, often equaling or exceeding American box office receipts on blockbusters such as “Jurassic Park” and “Aladdin.” The television and music industries also derive growing revenue from overseas.

While some losses may be recouped through expanded global alliances and markets opened by new technology, exhausted negotiators said they see no hope for reviving quota and subsidy discussions.

The loss was an especially big blow for Jack Valenti, the president of the Motion Picture Assn. of America, who for seven years has spoken out loudly on the significance of GATT. The former protege of Lyndon B. Johnson was Hollywood’s senior representative at the bargaining table--nervously monitoring developments and hanging around a hotel coffee shop in a Touchstone Pictures sweat suit.

At a press conference Tuesday, Valenti alleged a “deliberate strategy” by Europe’s negotiators to “put on the table at 3 a.m. an (offer) so riven with potholes that no rational, sane person could ever consider it. That tells you they wanted to kick the decision off the table.”

In Hollywood, the reaction ranged from outrage to confusion. Some executives privately groused that Kantor had sold them out. A smaller number said they felt betrayed by Clinton, who has courted entertainment executives and recently made a major fund-raising swing through Hollywood. There was even talk of challenging the agreement before Congress, although calmer minds seemed resigned to accepting defeat.

MCA President Sidney J. Sheinberg, who was closely involved in the talks, said he believes the Clinton Administration did everything possible. “The President probably killed himself to achieve the best result he could, and he was stymied,” Sheinberg said Tuesday. “When you’re the President you have to make tough choices.”

Executives involved in the talks say they were ultimately undone by the intransigence of the French, who refused to budge on the issue of quotas and subsidies. Throughout the GATT process, French officials have held that protection of their fragile entertainment industry is a key cultural issue.

The final negotiations were held during a marathon session in the eighth-floor conference room of the trade office, a drab place with security measures so tight that the entertainment contingent was barred from carrying in their prized cellular phones.

On hand for the Americans were Valenti, Fox Inc.’s George Vradenburg, MCA’s Bob Hadl and Recording Industry Assn. of America Chairman Jay Berman. Representing talent guilds were Brian Walton, Glenn J. Gumpel and lawyer Jay Roth. Kantor popped in and out of the room with updates on the overall trade discussions.

When Monday’s talks began at 9 a.m. Geneva time, the industry was confident of reaching an accord. By midafternoon, the English and German negotiators had even signed off on a compromise quota and subsidy plan. But at midnight those hopes gave way to despair as EC negotiator Leon Brittan announced that he could not bring the French aboard.

Hollywood negotiators say their hopes for a compromise slowly crumbled throughout the long night as the French hardened their stand in opposition to the British and Germans.

Brittan presented a non-negotiable proposal that largely reflected the hard-line French position. “It was less attractive than the previous proposal he had on the table,” Vradenburg said from Geneva. “It become fairly evident then that the U.S. and the EC were not going to be able to conclude a reasonable agreement.”

Soon afterward, Kantor relayed the news from Washington that Clinton was proceeding on GATT without them. “Kantor came back and said, ‘We have to go ahead,’ ” Vradenburg said. “The EC was adamant and stubborn. There was nothing the industry could do.”

According to one source, Clinton asked Kantor to relay the news first to MCA Chairman and Hollywood patriarch Lew R. Wasserman. The Hollywood negotiators, exhausted from days without sleep, then called their bosses back home, including most of the major studio chiefs.

Meanwhile, a startled industry awakened to the news in the United States. “People are disgusted, they’re angry, they’re upset,” one executive said. “They feel they were screwed.”

On Tuesday, one of many theories within Hollywood was that the Administration was outmaneuvered by European negotiators, whose game plan was to steer talks so that entertainment was the last major issue on the table, knowing it would be hard for Clinton to scrap the entire deal to appease Hollywood.

“They wanted to have this issue as the outstanding one at the end of the day, knowing they had no intent of budging. We were negotiating with ourselves,” said the recording industry’s Berman.

Ultimately, negotiators warned that the Southern California economy could be damaged by the decision if trade restrictions force producers to move some production activity overseas.

“The number of people in Hollywood who are moguls is nil. They are not threatened by this. The top stars are not threatened by this. Who is threatened by this is the middle-class working people in this industry,” said Walton of the Writers Guild of America, West.

Vradenburg said that restrictions could also become more rigid and protectionist under GATT unless technological advances render them obsolete.

“It seems ironic that Europeans can be trusted to choose their political leaders but not trusted to choose their television programs,” he said.

Times staff writer James Gerstenzang in Geneva contributed to this report.