Foreign Fare Has Hollywood Reviewing Strategy Abroad

No, “The Cyclone” is not a sequel to “Twister.” Nor is it yet another expensive American disaster picture in a long line to come.

It’s actor-director Leonardo Pieraccioni’s farce about a troupe of flamenco dancers who raise hell in a small Tuscan village.

It has also been the No. 1 box-office draw in Italy for the last two months, making it more popular than such Hollywood movies as “Ransom,” “Evita” and “The First Wives Club.”

In Germany, the film commanding the most audience attention these days is “Rossini, or the Murderous Question of Who Is Sleeping With Whom.”

France’s “Didier,” a family movie about a dog transforming into a man, out-grossed “Space Jam” last weekend, and the weekend before it beat out “Ransom” by more than $1 million to lead that country’s box office.

And, in Spain, although “Space Jam” and two other American movies--”One Fine Day” and “The First Wives Club”--topped the weekend, three local titles figured in the top 10.

All of this is not to suggest that foreign audiences will stop flocking to see the best of what Hollywood has to offer. American movies have long dominated the world marketplace and there’s no reason to believe they won’t continue to do so for years to come, particularly given the rapid expansion of theater building and the proliferation of broadcast-delivery systems around the globe.

But there has been a notable upsurge of locally produced indigenous product in various foreign territories. A recent story in the trade paper Variety noted, “The old saw about American domination of the global cinema is taking a hammering as a raft of indigenous films wows audiences in France, Germany Italy and Spain.”

Some in Hollywood say it’s just a blip. But major studio executives are taking it seriously and in some cases rethinking their companies’ long-term business strategies in the worldwide marketplace.

It’s hard to imagine that local product will ever surpass major American movies overseas, but there may be good reason for Hollywood not only to recognize the growing market share of indigenous product, but to further integrate itself in local businesses by co-financing foreign production ventures.

In a recent speech delivered at a UCLA entertainment symposium, Sony Pictures co-President Jeff Sagansky contended that the industry’s “Hollywood-centric” view of the world has to change before it can truly consider itself a globalized industry.

“There is a growing international business territory by territory, so to compete and fully participate in the upside of these growing markets, it would appear you’d have to get involved in local production,” Sagansky said in an interview this week.

Jeff Berg, chairman of powerful Hollywood talent agency International Creative Management, agrees: “I would look at cinema as a world business. There has to be reciprocal trade, an understanding of these local markets, as well as an unburdening of product.”

Berg suggests that it helps American entertainment companies politically to say, “We’re here to help build your business as well as to sell you movies.” For years, ICM has been deeply involved in the foreign arena by brokering co-financing deals for American movies, U.S. distribution deals for foreign movies and representing local talent.

“You don’t become globalized by simply laying off rights in a territory,” says Berg, referring to the common practice of selling foreign movie rights to local overseas distributors. “It’s a business of long-term relationships cultivated over years.”

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Hollywood’s major studios retain worldwide rights to their movies whenever possible because so much of the revenues are derived from the international marketplace. Foreign revenues from all media sources (theatrical, television, home video, etc.) account for about 42% of a film’s total revenue today, according to the Motion Picture Assn. of America. And foreign revenues account for half and sometimes more of theatrical alone. As theaters are built and new markets in Asia open up, those percentages are expected to grow in the next decade, says MPAA chief Jack Valenti.

In some cases, studios look to the foreign market to bail out an expensive movie that didn’t pan out domestically. Such was the case recently with Universal Pictures’ $85-million action movie “Daylight.” It grossed only $31 million at home but has sold more than $100 million worth of tickets overseas in countries where the film’s star, Sylvester Stallone, is still a huge draw.

Although the international marketplace is robust today and will be for the foreseeable future, some say Hollywood shouldn’t be arrogant enough to believe the boom will last forever.

“If China, Russia and India don’t come up to speed, and Europe stops building screens and Asia doesn’t build quick enough, the near danger is the costs of making and marketing our movies will grow faster than the international marketplace,” says Disney Studios Chairman Joe Roth.

Sagansky believes the market share for locally produced movies will continue to increase. In Germany last year, local production accounted for 17% of market share, nearly doubling from 9% in 1995.

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The shift in the television industry has been more dramatic. Sagansky points out that while American-made shows such as “Dynasty” and “Dallas” were No. 1 in prime time throughout Europe and Britain 10 years ago, that’s not the case today.

“If you look at prime-time broadcast schedules throughout Europe, American TV product is either totally missing or relegated to fringe periods. It has been replaced by very good and well-produced local shows, sitcoms, soaps, variety and dramatic fare,” he says.

Sagansky insists that with the exception of media mogul Rupert Murdoch, not only did the studios and networks “miss the boat in this European revolution on the broadcast side, but they missed the boat on the content side as well.”

He says that even though American product is finding its way into prime time in Central Europe, “in five years it won’t be the case because the local entertainment industry is going to figure out how to do their drama shows and sitcoms--there’s a really fast learning curve.”

The same could hold true someday for locally produced theatrical features.

“Ultimately, as the economics and local markets grow, you’ll have major motion pictures in non-English-language being produced,” says Frank Biondi Jr., chairman of Universal Studios. Today, locally produced movies cost only a fraction of what American movies do and are nowhere near their scope.

Biondi concurs that indigenous product “will get progressively more important,” just as it did both in the broadcast and record businesses. Much of the foreign revenues in the record business are generated from indigenous product, a significant change from a decade ago.

Biondi says that for the moment it’s more likely Universal will participate in local TV production before movie production because “the economics make more sense.”

American companies are already investing in foreign broadcast, satellite and cable ventures worldwide. They’re also involved in American TV co-productions with foreign partners both here and abroad. For years, studios such as Disney have acquired and released local foreign movies through their international distribution operations.

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But co-financing indigenous foreign-language movies and TV shows is relatively new ground for most.

Sony produces foreign TV shows in seven different countries--including China, Japan, Britain, Germany, Brazil and India--and in the next two years plans to “double that,” Sagansky says.

Theatrically, Sony has co-financed a handful of local films in Brazil and is examining several co-production opportunities in other countries.

Disney’s first co-production, a $5-million German film called “Knocking on Heaven’s Door,” opened wide in Germany on Thursday, and the studio is a one-third partner in two additional movies currently shooting in Argentina that will be released this spring.

Mark Zoradi, president of Disney’s Buena Vista International, says if “Knocking”--which stars one of Germany’s hottest young actors, Til Schweider--is as successful as Disney thinks it will be, studio head “Joe Roth is very open to doing the next one and the next one.”

“It’s important for us and helps us politically to be involved in local production,” Zoradi says. “It makes you more than an American company exporting American product. It helps the local industries, and I truly believe it will be profitable as well.”