COMPANY TOWN : EU Film, TV Leaders Meet to Try to Save the Industry : Trade: They gather to discuss restructuring the beleaguered business in the face of Hollywood’s encroachment.

In a mood of apprehension and uncertainty, 300 leading figures from Western Europe’s entertainment industry convened here Thursday to confront a problem that won’t go away: Hollywood.

They came to the three-day European Audio Visual Conference to search for ways to revive and reshape the region’s beleaguered film and television business, after being battered for years by the growing strength of their American counterparts.

Delegates are expected to work from a series of proposals from EU Cultural Affairs Commissioner Joao de Deus Pinheiro for restructuring the industry. They will also discuss possible changes in a controversial 5-year-old EU directive governing television programming content in the region. Although the issue is not new, a sense of urgency has gripped Europeans that unless they invoke changes now, the entire industry could be doomed.

In Hollywood, which derives roughly half its overall box office revenue from foreign markets, executives are battling to maintain their foothold. Representatives from the Motion Picture Assn. of America and the American Film Marketing Assn. have argued against protectionism in a series of meetings with their European counterparts.

But the combination of the recent world trade agreement, which has severely weakened protections everywhere, and the implications of new technologies and a “global information society” have convinced many Europeans that they must go on the offensive or give up.

A recent report on the status of the industry commissioned by the EU, known as the Think Tank Report, sketches out the decline.

In cryptic fashion it notes:

* In 10 years, European films have lost 50% of the theater movie market.

* In 15 years, European films have largely become money losers.

* American films are the only ones that play well throughout Europe.

* The explosion of video has intensified American domination.

* The liberalization of television in Europe has increased the dependence of the stations on American productions.

A separate report issued by EU Executive Commission President Jacques Delors in December notes that American movies are mainly responsible for Western Europe’s brisk 6% annual growth rate in the audiovisual sector, with revenue from U.S. films rising from $330 million in 1984 to $3.6 billion in 1992.

“Our fundamental political option is either to . . . create efficient industries that match our ambitions or to give up and take the economic and cultural consequences that lack of action would entail,” said Pinheiro, who is the host of the conference. “ . . . Implementation of a European policy for the program industry is therefore most urgent. We must act now.”

Last fall’s bruising General Agreement on Tariffs and Trade talks and stubborn economic troubles in Europe have also brought an important new dimension to the meetings--the voice of a pragmatic constituency that has come to view Europe’s film industry not solely as a cultural treasure, but also as a commercial industry that needs to be made more competitive.

This view first came to light in March, when another senior EU cultural affairs official, Colette Flesch, told a group of film industry officials that “Americans have taught us that motion pictures are an industry and exports are crucial . . . .”

In this respect, there appeared to be a broadening awareness that in order to survive, European directors and producers need to become more responsive to market demands and needs and that Europe’s film industry can no longer afford to subsidize productions that never reach an audience.

“We have to make more mainstream pictures,” said Andres Vicente Gomez, president of Spain’s Ibero Americana Film Produccion.

At the same time, however, Gomez and others gave no impression they want to cut either the $500 million in subsidies doled out annually to European filmmakers or to phase out a controversial quota system that requires that at least half of television transmission time in EU countries be devoted to European works.

Indeed, the EU’s discussion document for the industry’s future calls for a series of subsidies and other supports to assist a major restructuring, and the producers group Eurocinema recently proposed a five-year, $1.8-billion injection of government money to support the industry.

The influential Think Tank Report also warns, “The quota would be wasted entirely if it simply allowed broadcasters to show American drama during prime time and to dump European material into the more marginal segments of the schedule.”

During the three-day conference, the industry leaders are also expected to review ways to improve Europe’s inefficient film distribution system and break down intra-European cultural barriers that keep films made in one member country from showing in another.