DIRECTOR VS. STUDIO CHIEF : THE BATTLE TO RELEASE ‘BRAZIL’ : Terry Gilliam’s film could serve as a textbook model for examining the conflict of art and commerce in Hollywood.

“Brazil” is for sale. The movie, not the country.

Sidney Sheinberg, president of MCA Inc., the parent company of Universal Pictures, says the studio will take a loss on its $9-million investment in Terry Gilliam’s futuristic black comedy, even though he and other Universal executives believe that the film has Academy Award potential.

Responding for the first time to Gilliam’s public campaign to get his version of “Brazil” released in the United States, Sheinberg said he has told Gilliam and producer Arnon Milchan many times that if they want to get their version released, he’d sell it at a discounted price.

“ ‘If this movie is so wonderful in its present form, get somebody else to buy it,’ ” Sheinberg quoted himself as telling the film makers. “ ‘We’ll take a loss on it.’ ”

During a two-hour interview in his Universal City office, Sheinberg said that while he thinks the movie “has brilliance in many portions of it,” he assesses the commercial potential of Gilliam’s cut at “something close to zero” and questioned whether any other studio would want to buy it.

Sheinberg said he has already approached the heads of two other studios about a potential sale. One of them laughed, he said. The other said he was interested only if Universal gave up the rights for nothing and agreed to cover the costs of prints and advertising.

Sheinberg wouldn’t say how much less than $9 million he would take for “Brazil,” but at one point in the interview he said that when he read Gilliam’s ad in the Oct. 2 issue of Daily Variety--”Dear Sid Sheinberg: When are you going to release my film, ‘Brazil?’ “--he wanted to respond with an ad of his own:

“For sale. Half price. A film by Terry Gilliam.”

“Brazil” producer Milchan, reached in Paris, said that if Sheinberg is willing to settle for half price--$4.5 million--he’s got a deal.

“I will agree right now to pay him $4.5 million to get it back,” Milchan said.

Meanwhile, Sheinberg said Universal is completing editing on its own version of “Brazil,” intending to test both cuts with research audiences before deciding which to release.

Gilliam, who had final cut approval in his contracts with both Milchan and Universal, lost that privilege when he delivered a film 17 minutes over the contractual limit of 2 hours and 5 minutes. Twentieth Century Fox, which put up $6 million of the film’s $15-million budget, released the long version in Europe several months ago, although it had the same 2-hour-and-5-minute limit written into its agreement.

“Brazil” could serve as a textbook model for examining the conflict of art and commerce in Hollywood: a serious director trying to protect a serious movie from a serious studio head trying to protect serious money.

In a way, it’s the flip side to “Heaven’s Gate.”

“Brazil” is a movie that was made on budget, on schedule and according to its approved shooting script. Many of those who’ve seen the film--including top marketing and production executives at Universal--believe that while it has major marketing drawbacks, it is one of the year’s best pictures.

“I think Terry Gilliam is a genius, and the movie is brilliantly made,” said Marvin Antonowsky, president of Universal’s marketing division, “but a lot of brilliantly made pictures don’t do business. It’s a very highbrow picture.”

The questions now, nine months after Gilliam delivered his first cut to Universal, are whether the film will even be released this year, and if so, by whom, and whose version?

Gilliam, whose “Time Bandits” overcame the inaccessible label to gross $42 million for Embassy Pictures, has turned “Brazil” into a cause celebre, publicly accusing Sheinberg of bullying the film makers out of their editing rights so Universal can turn the film into something more accessible and upbeat for American audiences.

“Sid has said all along that he wants a happy ending,” Gilliam said. “I’ve said all along that the ending is not negotiable.”

“I don’t want a happy ending; I want a satisfying ending,” Sheinberg said. “ ‘Romeo and Juliet’ didn’t have a happy ending, but it had a satisfying ending.”

“Brazil” (the title is taken from the film’s theme song) is an Orwellian nightmare/fantasy about a numb mid-level bureaucrat (Jonathan Pryce) who stirs to life and has to be restrained by the system. There is a scene in the film where the protagonist is tied to a chair and tortured by his oppressors. In interviews, Gilliam has cast himself as the man in the chair and Sheinberg as his tormentor.

“I don’t know why in God’s name we fall into a category akin to Hitler or Genghis Khan for insisting that we get the picture in the length we contracted for,” Sheinberg said, adding that Gilliam’s public attack against the studio is more an act of terrorism than heroism.

Few people close to the Gilliam/Sheinberg war zone believe that length is the real issue. Sheinberg himself said, “As a matter of contract, length was the only issue that we had any right to insist on.”

Sheinberg said Gilliam could have saved himself all this anguish. Had he complied with the length requirement, Universal would have had no choice but to release that version.

Gilliam said he would have complied with the time limit if it had ever been made clear to him that he would end up losing his right to a final cut in the United States.

“Sid sat in a room full of witnesses and said, ‘I have never cut a director’s film and I never will,’ ” Gilliam said. “I took him at his word.”

Sheinberg said he doesn’t recall making that comment, but said it’s probably true that he did. What’s different now, he said, is that in 20 years, he had never met a director who flatly refused to work with the studio to make a film more accessible to its audience.

“Mr. Gilliam’s version may be the best version of this movie,” Sheinberg said, “but don’t you at least have the duty to try? Do you just deliver it and say, ‘Screw you,’ and that’s it?”

Ironically, length was not mentioned in the basic distribution agreement, according to Milchan.

“They (the studio) called us after we were already editing and said, ‘We forgot to put a time limit in the contract. Do us a favor and put one in; we won’t use it against you.’ We could have said no and given them a four-hour movie and they would have had to release it. But we didn’t think we had that kind of a relationship.”

Sheinberg said there are problems with “Brazil” besides length, and cited the results of audience research screenings to support him. He said viewers found the film boring and confusing, adding that 52% responded negatively.

He also refuted Gilliam’s claims that the film received mostly good reviews abroad and is doing good business. According to Sheinberg, who recited passages from several negative reviews, the critics have been about evenly split on “Brazil,” and financially, “it has been a failure everywhere but France.”

(A spokesman for Fox International, citing orders from Fox management not to cooperate with the American press on “Brazil,” would not provide foreign box-office figures. But another source who monitors overseas film business said “Brazil” has “performed well but not spectacularly.”)

Sheinberg would not accept the international cut, and before he would release the studio’s final payment of $4.5 million to Milchan, he negotiated contract changes. The amendment gave Gilliam a second cut, seven minutes longer than the original 2 hours and 5 minutes, but if Universal didn’t like that one, it would be able to do any further editing it wanted.

Gilliam called that Feb. 6 amendment letter “a $4.5-million gun held to our heads.”

Sheinberg said that if there was a gun held to anybody’s head, it was to his. He said that the studio was given a choice by Milchan and Gilliam of either accepting the long version or being forced to distribute a “legal”-length version edited by the completion guarantor (the company insuring the film’s completion) that might be “botched in the process.”

Gilliam said that the most frustrating thing about all this is that Sheinberg is the only person at the studio who doesn’t want to release his version. Sheinberg said he knows of no one at the studio who thinks “Brazil” is commercially viable.

The two also have opposite recollections of how the film played at the original studio screening.

Gilliam said that (Universal president) Frank Price came up to him afterward and said the film “has to be handled as the best picture of the year” and that Sheinberg raised the ante to “best picture of the decade.”

Sheinberg said he found the long version “relatively speaking, interminable,” and remembered Price’s attitude as being “why bother with this thing at all?”

MCA Chairman Lew Wasserman was more to the point, according to Sheinberg.

“His response was . . . ‘I think this picture is unreleasable,’ ” Sheinberg said.

Sheinberg, who normally is not involved in dealings with film makers, said he stepped in on “Brazil” because he was at the studio when the deal was made (by former Universal President Robert Rehme), and Price was not.

Price, who Gilliam and Milchan say has been supportive of the film all along, declined to be interviewed for this story.

Communications between Sheinberg and Gilliam broke off in July. Gilliam recalled “going berserk” when Sheinberg, after rejecting his second cut, asked him to work with the studio to come up with “a more accessible” movie. Sheinberg said that in that conversation, Gilliam “threatened a war” if the studio didn’t release his final cut.

“He (Gilliam) has placed himself and us in a no-win situation,” Sheinberg said.

The principles are clear. Gilliam says he made the movie everyone agreed he was to make and now Sheinberg wants a different movie. Sheinberg says he wants the same movie “made accessible.”

Sheinberg said during the interview that he didn’t know how many movies Gilliam had made before (two) or whether any had been commercially successful but that the director certainly doesn’t have the stature to be making such demands.

“If Steven Spielberg brought me a movie four hours long and said, ‘It has to go out this way,’ I guarantee you that’s the way it would go out,” Sheinberg said. “But Terry Gilliam is not Steven Spielberg.”

Sheinberg’s decision to respond to Gilliam’s charges seems as much a matter of pride as a desire to set the record straight.

“What hurts me at a deep level is I think I have given too much of myself to the idea of good working relationships with directors . . . . I would be shocked if you would find that there are directors who really consider me a villain.”

Gilliam said he doesn’t consider Sheinberg a villain, just a man who makes contracts and wishes he made movies.

“Sid truly doesn’t understand why I don’t want to change the movie to something that he thinks would be more commercial,” Gilliam said. “He says, ‘Who in his right mind would not want a bigger audience?’ That’s how he’s paid to think. But it doesn’t have anything to do with film making.”

Is Gilliam pushing at the wrong time? At least one person in the midst of the feud thinks the studio is too committed to “Out of Africa” to worry about “Brazil” right now. Universal has nearly $30 million invested in Sydney Pollack’s film and that one--with Robert Redford and Meryl Streep--has accessibility and commercial viability written all over it.

“Out of Africa” is Universal’s big Christmas movie and also its big hope for Academy Awards. A simultaneous Oscar campaign for “Brazil,” a film that even with awards doesn’t figure to be a big moneymaker, might be more trouble than it’s worth.

But Sheinberg has been consistent with “Brazil,” insisting since January that regardless of its critical and award prospects, it needs work if the studio is to get its money back.

Even if Sheinberg decided now that Gilliam’s version is as good as it can get, he may find himself pinned too tightly against the wall to release it. As he said, “Mr. Gilliam has raised another issue, whether a director can threaten a studio and coerce it into doing his will. He can’t.”

Don’t count on a last-minute reconciliation.

Although Sheinberg said he would welcome Gilliam’s cooperation in the current editing process, he doesn’t want the director to compromise his beliefs. (“Then he wouldn’t even be a good Terry Gilliam,” Sheinberg said.)

As for Gilliam: “I will talk to Sid, I will get in a Jacuzzi and drink wine with Sid. I will do anything to get this film released, except get in the editing room with him.”