Company Town : Trade Barriers? What Trade Barriers?

It was a little more than two years ago that Hollywood was battling Europe’s fears that if something wasn’t done fast to fortify strong trade barriers, American films and TV shows would obliterate local cultures as they dominated the world’s entertainment business.

It all seems especially ironic now in a year when the rest of the world’s culture is playing well here. Oscar-nominated best pictures include “The Postman (Il Postino)” about an Italian mailman; “Sense and Sensibility,” set in early 19th-century England; and Australia’s “Babe.” Added to that, the top-grossing films of the last three weeks have featured either a star or director from Hong Kong’s vibrant movie business, with Jackie Chan in “Rumble in the Bronx” and director John Woo’s “Broken Arrow.”

If this were France, those cultural intrusions might trigger calls to restrict the number of Merchant-Ivory films to two every five years.

Indeed, some factions in Europe are still pushing for stronger quotas. But even as they are doing so, it’s becoming clear that such barriers rarely work and are being made irrelevant by new technologies.

The Internet, satellite broadcasting and the building of wireless and cable systems all foreshadow a day when people will bypass protectionist barriers. An explosion of TV channels and movie screens in Europe has meant an expanding market for Hollywood, rather than a constricting one feared when Europe’s trade policy was Hollywood’s hot button.

Still, two weeks ago, the European Parliament voted for tighter quotas on foreign films and TV shows, saying the requirement of 51% European content on TV channels is “legally enforceable.” Previous wording said it should be enforced only “where practicable,” which was a loophole big enough to allow a territory to ignore the requirement.

That conflicts with the more moderate stance taken by the ministers of another body, the 15-nation European Union, which recommended that quotas end in 10 years, when they will probably be moot anyway.

“The time will come when they will be phased out,” Collette Flesch, director-general for information, communication, audiovisual and culture with the European Commission in Brussels, said during a visit to the American Film Market in Santa Monica.

The event, which starts today, attracts foreign buyers shopping for films.

Today’s view of quotas seems in stark contrast to the kind of fears whipped up in late 1993, when Hollywood felt double-crossed by trade negotiations that many felt opened the door to draconian measures that would seriously cut into the billions of dollars in revenue Hollywood gets from Europe.

During an interview, Flesch said quotas probably have had little, if any, economic impact. Europe’s trade deficit with the U.S. in entertainment is about $4.2 billion, she said, and American films command about 80% of the market.

“Quotas are something American filmmakers object to. It’s legitimate, and I understand it. On the other hand, it cannot be that much of a problem, otherwise why would the trade balance be what it is and why would the Americans have 80% of our market? Maybe the quotas are not that efficient,” she said.

One of the real issues, she notes, isn’t so much that American films dominate, it’s that movies in each European country don’t seem to do well in other European countries, in contrast with American films that seem to do well everywhere.

Flesch suggests that Europe might do well to address that by learning a lesson from Hollywood in the way it treats films as a business, becoming more innovative in financing and marketing as well as developing scripts for films with a broader appeal.

A good number of people in Hollywood have always felt the cultural argument was a smoke screen anyway, and that efforts to enact barriers were purely political moves to give the appearance that France’s film industry was being looked after.

“In France, there is wide popular support for quotas. So it’s very difficult for the French government to say: ‘It’s none of my business. I don’t care.’ They have to care, because it’s a hot political issue,” Flesch said.

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Brillstein/Grey for Sale?: Brillstein/Grey Communications, the boutique film and TV studio headed by Brad Grey, is considering selling half the company to MCA Inc. in a deal that would shore up its syndication arm while securing Brillstein’s film and TV distribution.

Sources said Thursday that under the deal, Grey would retain management control over the young company, whose TV shows include “The Jeff Foxworthy Show” and “Naked Truth” on ABC and “NewsRadio” on NBC. MCA, whose weak television department is being rebuilt by Gregory Meidel, is looking to distribute Brillstein/Grey programs for the first-run syndication market.

Still, one source said, the deal is more sweeping, involving a complete sale of the company for as much as $100 million. Under such a scenario, Grey would eventually segue out of Brillstein/Grey to take a high-level position at MCA.

The company, and a separate talent management firm not included in the deal, is controlled by Grey in partnership with Bernie Brillstein.

Although negotiations with MCA are in advanced stages, Walt Disney Co. has also expressed interest. Disney wants to keep Brillstein/Grey’s loyalties focused. What’s more, Grey is particularly close to new Disney President Michael Ovitz.

Times staff writer Sallie Hofmeister contributed to this report.