Michael Kuhn, president of PolyGram Filmed Entertainment, stirred the controversy over PolyGram’s efforts to establish a film distribution office in Canada when he addressed a packed house at the Toronto International Film Festival’s trade Symposium and slated the local attitudes as ‘monopolistic’ and ‘xenophobic.’

In an interview, Kuhn put another spin on the same concept: ‘The government argues that if it d’esn’t have this rule then all the local distributors will lose out because they can’t compete with us. The reason that’s important to the Canadian government is because these companies bring distribution profit to investments in Canadian production.

‘I’d buy that argument if I saw a healthy, thriving local industry and if the fundsŠwere being used for that purpose. But they aren’t, they’re being used to buy foreign films.’

The attack has induced a formal response. In a demonstration of solidarity, a coalition of cultural organizations was spontaneously struck with the co-operation of the cftpa, the apftq (the Quebec producers association), the Directors Guild of Canada, the Writers Guild of Canada and the Canadian Conference of the Arts.

Their letter argues the current policy not only serves the interests of Canadian distributors but also those of ‘the national associations which represent Canadian film producers, writers, directors and performers.’

Dan Johnson, president of cafde, says, ‘Where (Kuhn) sought to divide and conquer the industry, the assault had the opposite effect.’

The Dutch conglomerate has had an application for a theatrical distribution start-up in Canada on the desk of Investment Canada for over a year. Investing one in every five dollars of revenue for the next five years in Canadian production is one of PolyGram’s promises.

Where pundits said at the time the application was filed that it was a fait accompli now there is some question as to whether PolyGram stands a chance of getting in.

A policy to protect Canada’s indigenous distribution industry from internationally controlled entities was introduced in 1988, after most of the Hollywood biggies ­ from Buena Vista to Warner Bros. ­ had set up shop north of the border with few restrictions. The deal is that any foreign company that wants to establish a new film distribution business in Canada is restricted to distributing its own films ­ defined by an investment of 50% or more in the production or the acquisition of world rights.

Kuhn agrees protectionist policies serve a valuable purpose. ‘There are certain movies that are not commercial but are important moviesŠsuch as the films of Derek Jarman. That’s the place of protectionism and also where (the issues are) language-related. The areas where protectionist measures are appropriate are national cultures and especially non-English-speaking cultures.’

If a Canadian filmmaker with a non-commercial project is looking for backing, is PolyGram’s door open?

‘No. That’s the business of culture, like the ballet. We’re in the business of Hollywood,’ says Kuhn. ‘What we’re trying to do is to put doors in those countries ­ such as Canada ­ where you can get someone to say ‘yes’ whether it’s a $2 million movie or a $70 million movie. Then I think you retain the talent in that country.’

Johnson argues: ‘Emerging filmmakers in Canada have a choice and the only reason they have a chance to become the next Egoyan, or Cronenberg, or ultimately, Jewison, is we have a system that nurtures them where they don’t have to get the approval of an international studio. It d’esn’t matter whether that studio is Fox or PolyGram.’

Both sides of the debate agree on one point: protectionist policies are being broken down by technological advances.

Kuhn posits that the only way to control the future is to control content and one of the two key areas of content is Hollywood-budget movies (the other is sports.)

‘How do you get yourself into movies? You have to raise a huge amount of money and then you have to have a worldwide marketing and distribution operation. We’re that. We’re happy to do joint ventures with Malofilm and Alliance or anyone, but instead of them coming forth to say ‘What can we do together?’ we are treated to this nanny state.’

Kuhn maintains that Canadian producers not affiliated with distribution activities ‘are all very, very supportive and most of them have written letters of support.’

Johnson claims producers are being ‘blackmailed by PolyGram to either join or be blacklisted’ if the application is approved ­ a statement he says he is ‘very comfortable with.’

Not since the heavily criticized federal decision in 1993 that allowed Viacom to take ownership of Paramount’s Canadian operations has the debate of protectionist film policies reared its head with such force.

When asked to comment on how the once-unwelcome Viacom Canada has performed in Canada, Johnson says: ‘When Viacom wanted to get approval from Investment Canada, they positioned themselves as good corporate citizens. They hired a few Canadians and spent some money in areas like the Canadian Film Centre as a matter of good corporate citizenship.’

The key difference, he adds, that makes any comparison between Viacom and PolyGram a matter of mixing apples and oranges is that Viacom played within the confines of the rules. ‘Viacom worked within Investment Canada policy and that is a model which others can utilize: seek to comply with the policy on a constructive basis.’

According to recent reports in the press, Industry Minister John Manley and Heritage Minister Sheila Copps have been tussling over the issue by correspondence. Copps maintains the policy is necessary to protect the Canadian distribution companies and Manley is leaning toward granting PolyGram the exception it seeks.

D’es the decision rest in Manley’s power? Officially, the word will come from Investment Canada and not from Heritage, but as Johnson points out, Copps has an advantage with her position as deputy minister. ‘Manley is an extremely powerful minister, but it should be remembered Copps is not only deputy, but an enormously effective politician.’

cafde sought a meeting with Manley mid-September and was immediately turned down because ‘the minister is too busy to meet with us,’ says Johnson. ‘In the meantime, obviously, PolyGram has had fabulous access to Manley.’

Kuhn says he expects a decision within the next two, three or six months.