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Canada crimps Polygram’s plans

TORONTO — The Canadian government has denied Polygram Filmed Entertainment an exemption from rules that restrict its distribution activities in Canada, but the company is setting up shop here anyway.

Industry Canada approved Polygram’s application to establish an integrated film and television production and distribution subsidiary in the country, but the company will have to abide by a 1987 policy limiting it to distributing films it owns or for which it has worldwide rights.

Polygram fought a yearlong battle, which turned nasty at times, to circumvent the policy, but finally decided to live with the existing regulations.

“We had no choice,” said Darryl Iwai, president of Polygram Filmed Entertainment Canada. “At the end of the day, we had to look at it and take stock of how committed we are to the Canadian industry.”

Polygram’s Canadian unit has promised to reinvest C$20 million ($14.6 million) or 20% (whichever is less) of future Canadian revenue in Canada’s film and entertainment industry over five years.

This fall, the Canadian distrib arm will launch the pic “Bean,” starring Rowan Atkinson and Canadian actress Sandra Oh, produced by Polygram’s Working Title Films.

Polygram had petitioned for an exemption from the Investment Canada Act, arguing that it needs a level playing field to compete with Hollywood studios, which were grandfathered under the previous, more liberal regulatory regime.

“The essence of their argument,” said Dan Johnson, president of the Canadian Film Distributors and Exporters Assn., “is that the studios can treat Canada like the 51st state, so we should be able to as well.”

The studios control about 83% of Canada’s film distrib biz, and Alliance Communications Corp. is said to have 10%, leaving little for the rest of the pack to pick over.

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