Company Town : British Visitors Pick Hollywood’s Brain : Film: Despite a flood of location work, U.K. industry is shrinking. Government seeks to turn things around.

In the country where Shakespeare flourishes, movies don’t.

Despite an overwhelming number of Oscar nominations last year for such critical successes as “In the Name of the Father” and “The Remains of the Day,” and a current flood of big-budget period films set in the United Kingdom, the British film industry is flagging at best.

As indigenous investment in its movies continues to decline, British film is shrinking in the shadow of Hollywood productions that are luring away its actors, directors and production crews and eating up the lion’s share of its growing theatrical market.

In a new effort by the British government to hunt down the Grail of a profitable film business, several members of Parliament paid a quiet visit to Los Angeles last month to pick Hollywood’s brain.

During the visit, which sharply contrasted with Prince Charles’ recent whirlwind tour of Los Angeles, the group held a tightly scheduled week of private meetings with many of the industry’s most influential players--including director Steven Spielberg, International Creative Management Chairman Jeff Berg, MCA Chairman Lew R. Wasserman, Motion Picture Assn. of America President Jack Valenti and digital wizard George Lucas in San Rafael. The agenda: to learn about everything from movie financing to production and distribution.

“The group was meeting people in the industry and trying to find the best way to revive the U.K. both as a producing country and a country of locations and facilities,” said Peter Rawley, head of the international department at ICM and a chief organizer of the visit, which was timed to coincide with the two-month UK/LA festival of British Arts that ends next Monday. Michael Fabricant, one of the seven visiting members of the British National Heritage Select Committee, whose other tasks include steering the future of the British Broadcasting Corp., said he considered the trip a success.

“It was a very, very good and worthwhile visit,” he said. “It gave us a huge insight into the working of cinema in Los Angeles.”

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The group will formally present its findings to the British government early next year. Ironically, the trip comes as Britain is enjoying a boom in location work with the filming of such big-budget movies as the independent production “Judge Dredd,” starring Sylvester Stallone; TriStar Pictures’ “Mary Reilly,” co-starring Julia Roberts and John Malkovich, and Columbia Pictures’ “First Knight,” starring Sean Connery.

Those films will help boost the total investment in British movies to a projected $656 million in 1994, more than an 80% increase over 1993, according to the London-based British Film Institute. But observers say the figure is merely a temporary surge due to current interest in period films.

Another drag on the industry is the fact that most of the financing for British films comes from U.S. or other foreign investors, which means the British economy sees very little return.

In 1993, U.S. or other non-British financing was either “significantly” or entirely behind 37 of the year’s 69 British films, representing 82% of the year’s $361.5 million in film production, according to figures from the British Film Institute to be released this week.

One such film was last summer’s blockbuster “Four Weddings and a Funeral,” which PolyGram says took in $225 million in international box office revenue. The film, hailed as a big British success, was actually financed by the German unit of Dutch-owned media giant PolyGram, so a significant percentage of the revenue went to Germany.

“Part of the problem is that people in the U.K. have never really taken the film industry too seriously,” Fabricant said. “I think a major part of our task is to create a financial environment wherein the financial industry in England realizes that filmmaking isn’t just glamour, it can be made into a major export earner.”

Such skepticism in the London financial market has meant that film success has been sporadic. The occasional box office hit hasn’t led to further investment, causing critics to scoff at the idea that an “industry” even exists in Britain.

“Steven Spielberg said to us, you’ve got all this talent. . . . You’d have a marvelous industry if you had an industry,” Fabricant said.

The aim, Fabricant said, is to “get away from the idea of producing a series of one-offs. We have to produce a portfolio of films just like a stockbroker produces a portfolio of shares.”

The building of a healthy indigenous industry is at least a few years off. But the parliamentary committee’s fact-finding trip has spurred some hope.

“I would expect to see some positive action by the (British) government within the next two years,” said ICM’s Rawley. “I think the visit shows a willingness by the government to look at the problem seriously.”