The principle of free speech requires that we do not use police force to forbid the Communists the expression of their ideas -- which means that we do not pass laws forbidding them to speak. But the principle of free speech does not require that we furnish the Communists with the means to preach their ideas, and does not imply that we owe them jobs and support to advocate our own destruction at our own expense.
But she's clearly speaking out of both sides of her mouth when she follows that up with:
[L]et us put an end to their use of our pictures, our studios and our money for the purpose of preaching our expropriation, enslavement and destruction.
As the like-minded have argued, Rand was under no loyalty contract to friends when she agreed (along with many of her comrades in the Alliance) to testify as a friendly witness in 1947 before the House Committee on Un-American Activities (HUAC as it's incorrectly, but commonly abbreviated) in their investigation of the communist influence in Hollywood. Communists were her avowed enemies, in fact. But just what kind of pressure does a Senate hearing have if not that of a presumed threat of police force backing it up should one refuse to cooperate? If this were just a matter of her naïveté, she should've been disabused when the Hollywood Ten went to jail for taking their constitutionally "protected" fifth amendment right to not testify. However, it was a couple years after their convictions that she wrote the "Screen Guide." Now, it's undeniable that many Hollywood leftists have had a blinkered view of communism continuing right up to this day (just look at Sean Penn and Oliver Stone's views on Fidel Castro). According to Edward Dmytryk later in his life, he and others in the Ten actually took orders from the Party:
We worked for the Comintern, we were given directions by the Comintern, the Party was in the middle of all of it!
But the question for any civil libertarian (a small group, granted, even among libertarians) is whether anyone should have the right to promote such values in art, either in a subtle manner or in an explicitly ideological rant, along the lines of Rand's adaptation of her book The Fountainhead (starring Cooper and directed by King Vidor)? In defending the profit motive (her 5th commandment), Rand says:
An industrialist has to be interested in profit. In a free economy, he can make a profit only if he makes a good product which people are willing to buy.
There is nothing dishonorable about a pursuit of money in a free economy, because money can be earned only by productive effort.
So it would seem that the free market should decide whether communist ideas are worthy of selling Hollywood's product, not the government. That's the beauty of capitalism according to Michael Moore, he can criticize it all he wants, and as long as business men can turn a profit from his criticism, they'll continue to fund his films. So where's the problem with capitalist producers ("industrialists") using communist propaganda? It's perfectly moral in a world reduced to exchange value.
Rand claimed to not have a problem with communists making explicit propaganda, which for her would be nothing less than their openly claiming in long rants about how they're out to corrupt American individualism. Her problem was with subtlety (big surprise there, given her own thinking), or ideology (that wasn't her own, of course) included in films that weren't supposed to be political (i.e., that were supposed to be taken as status quo ideology). It was on this basis (because, let's face it, there were no avowedly communist films being made in mainstream Hollywood at the time) that she testified before HUAC, giving them an exegetic lesson on the communist subtext of Song of Russia (starring the anti-communist Alliance member Robert Taylor). See, despite all the folderol about how she prized American Individualism in the "Screen Guide," she really didn't trust individuals to make up their own minds about what films would receive either producers' funding or the moviegoers' attendance. Instead, she gave her support (by way of her testimony and manifesto) to the Law to help ensure that ideologically opposed creators (many of whom were certified moneymakers) would get excluded from the free marketplace of ideas. During the Blacklist, the Hollywood powers-that-be made an "economic choice" to no longer employ the communists of the overt or covert kind, regardless of their previous earning potential (albeit some writers continued to work under pseudonyms or as ghostwriters). Rand didn't have to threaten violence when the government was doing it for her.