Europe Targets Overseas Distributor : Film: Commissioner opposes extending United International Pictures’ antitrust waiver.

In a world of multibillion-dollar communications ventures, some realized and some not, nothing sounds more quaint than the business of physically delivering movies to the screen.

But foreign film distribution has become a hot-button issue in the new media world, as the same European executives grappling with plans for the information superhighway look for ways to stem the flow of Hollywood movies to their shores.

The first victory for audio visual representatives of the European Union (formerly known as the European Community) came last year, when they won a fight to exclude entertainment from the far-reaching General Agreement on Tariffs and Trade. Now comes word that the group has set its sites on a specific American company: United International Pictures.

UIP distributes movies overseas for Universal Pictures, Paramount Pictures and MGM/UA. The London-based joint venture, formed to save money on overhead, has existed in various configurations for more than 20 years. But its future has been thrown into jeopardy lately by Joao de Deus Pinheiro, the European commissioner in charge of audiovisual issues.

Pinheiro, who’s scheduled to address the American Film Market convention in Santa Monica on Tuesday, said this week that he opposes extending an antitrust waiver that was granted to UIP in 1989 and expired in July. One reason: Pinheiro charges that UIP has strong-armed European exhibitors into taking unpopular films in return for hits such as “Jurassic Park.”

Any action against UIP would please European filmmakers. But for Hollywood, which receives about 50% of its box office revenue from overseas, such a move is regarded as a real threat. Universal Pictures Chairman Tom Pollock says the studios will go to the mat to protect UIP, but concedes that it could be tough.

“They’ve just won a battle in GATT,” Pollock said of the Europeans. “Obviously, it’s not enough. That’s one of the things we were worried about. If we couldn’t get protected, things would get punitive.”

Some see UIP as an easy mark for the Europeans, since it’s the only distribution company that represents the combined interests of three Hollywood studios. But it’s also noteworthy that two of the studios aren’t even American-owned. Universal is a unit of Japan’s Matsushita Electric Industrial Co., and MGM/UA is controlled by the French bank Credit Lyonnais.

UIP also says, with a surprising degree of candor, that it hasn’t even done that well recently--with MGM/UA and Paramount putting out comparatively few movies and Universal putting out few with European appeal except for “Jurassic Park.” UIP controls roughly 18% of the European theatrical market, which in turn is 72%-controlled by Hollywood movies. Ironically, some feel that the company has already outlived its usefulness.

“There’s been a lot of talk about breaking it up,” said one source. “One argument for that, as far as the studios are concerned, is that they don’t really control the destiny of their product. They’re basically turning it over to a third party.”

As a UIP alternative, Universal, Paramount and MGM could start their own distribution companies or contract with outsiders. Each studio spends $20 million a year on UIP--roughly half the cost of running individual operations.

MGM and Paramount privately indicated that they will stand behind UIP. Pollock said the company still fulfills its mission. He said the Europeans are misguided if they think that breaking it up would reduce Hollywood’s influence.

“UIP doesn’t introduce any movies into (the) European marketplace that wouldn’t be introduced anyway,” he said. “It simply allows for overhead to be shared among the three partners. If it was broken up, all of Universal’s pictures would be distributed by Universal, and so on.”

Brian Reilly, UIP’s senior vice president and general counsel, says the company formally filed for a waiver extension in June, one month before the deadline. The Europeans have not responded. Reilly said he was “astonished” by Pinheiro’s comments but noted that the EU competitiveness committee, not Pinheiro’s audiovisual group, will ultimately decide the matter.

“The climate since June has been one in which the whole audiovisual sector became highly emotional and highly politicized,” Reilly said. “But we feel that we have a good case.”

Pinheiro was unavailable Thursday. Francisco da Silva, a member of his cabinet, acknowledged that the competitiveness committee will make the formal recommendation on UIP. But he added that Pinheiro intends to remain a powerful advocate for revoking its waiver. If that occurs, UIP’s backers would have several months to reorganize their operations.

“Pinheiro is against this exemption--I’m putting it very plainly and clearly,” Da Silva said. “He basically has stated his political line. We feel it distorts and disrupts the market.”

Some still see hope for UIP, especially if it throws the European entertainment community some business by acquiring rights to films or co-financing productions. “They have to at least appear politically sensitive,” said one source.

Da Silva says it’s premature to predict the outcome, but says the Europeans’ resolve to protect and expand their own film industry shouldn’t be underestimated.

“We’re not against American movies,” Da Silva said. “But we do not want the market to be controlled by American movies. We also want a place of our own.”