How film's independent producers are winning hearts, minds and seats from the Hollywood moguls

First the Oscar nominations suggested it and then this week's announcement of the front runners for Bafta awards, the British equivalent, confirmed it - the Hollywood giants are fighting a losing battle against the small independent film companies.

Inquests have already started as the film moguls try to work out why their blockbusters are not attracting critical acclaim.

The 13 Bafta nominations for The English Patient, starring Ralph Fiennes and Kristin Scott Thomas and coming on top of 12 Oscar nominations, sent shivers through Beverly Hills

The success of the film adaptation of the Booker Prize winner, with a largely British cast, the British director Anthony Minghella and money from the independent American company Miramax, looks to be part of a revival of stylistically old-fashioned films - long, thoughtful, intelligent character dramas.

Shine and Secrets and Lies are other Oscar and Bafta nominated films, again from independent stables, which are causing soul-searching in the US.

The New York Times claimed there was "a question that cuts to the heart of the creative quagmire that appears to grip Hollywood: how could the studios have released 163 movies last year and have only one, Jerry Maguire, turn out to be a serious contender for the Oscars?" The English Patient in particular has left Hollywood with egg on its face. Twentieth Century Fox tried to get Minghella to fire the film's two stars just three weeks before shooting was due to commence. They were "not hot enough" he was told by the Fox executives who wanted to replace Kristin Scott Thomas with Demi Moore. When Minghella refused, Fox withdrew its $20m funding, and Minghella and the producer Saul Zaentz wooed Miramax.

This year's critical success of the often British-led films has irked Hollywood so much that the big studios are quick to point out the myth of the independents. The well-known ones have in fact been taken over by the Hollywood studios.

William Mechanic, chairman of Fox Filmed Entertainment, said: "I resent this business of looking down on studios. I resent this attitude that that studio executives are boorish ... It's chic of Miramax to say they're independent when they're owned by Disney."

David Parfitt, the British producer of successes such as The Madness of King George, says that the situation is now so confused that the word independent has little meaning. "I think studios are being stunningly clever and simply investing money through a different route," he said yesterday.

But it is clear that there is increasingly a schism between the adventure blockbuster produced by Hollywood and the British-style drama produced by an "independent" subsidiary.

Though the big studios still produce some serious dramas - Fox films last year included The Crucible and Romeo and Juliet - most of the Hollywood giants recognise that action and hi-tech blockbusters are favoured by the overseas market and are easier to merchandise at stores or exploit in theme parks. The more serious fare is riskier and has a much lower return.

Robert A Daly, co-chairman of Warner Brothers, said that stars and directors would refuse to take the same salary cuts from a big studio that they accept on an independent film.

"People say `Warner Brothers does it. They can afford to spend a lot of money.' But if you're working for an independent, you're doing it at a different pace and scale, with no big salaries, no big trailers, no big anything." Ironically, the character drama that Warner did back, Surviving Picasso with Anthony Hopkins, did badly at the box-office.

n Of the 108 British films made in the first 10 months of 1996, half would not be distributed in cinemas because of foreign domination of the industry, Lord Freyberg warned, speaking in the Lords last night.

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Miramax The English Patient Buena Vista

Fine Line Shine Time Warner

Gramercy Fargo Polygram

Searchlight The Brothers McMullen Fox