1995 has put into perspective the different strategies that Canada’s newly publicly traded entertainment companies have adopted to compete on the national and international level.

After raising over $150 million in 1993 and 1994, our industry leaders sought to expand production volume and diversify their revenue sources through vertical integration in areas such as broadcasting and post-production.

In Canada, we have also come to realize just how capital-intensive our businesses are, whether in production, distribution or broadcasting, and how, as one grows, the stakes get higher.

Some have discovered how unforgiving the stock market is and how better understood the entertainment industry is south of the border. Most of us also realized long ago that Canada is a very small market, and that our success depends on the vast and growing potential abroad.

After lots of hype about video-on-demand, interactive television and other newfangled technologies, wannabe telecommunications/entertainment companies came back down to earth this year.

Traditional media have never been stronger as audiences continue to generate record numbers at the box office and in home video.

While the proliferation of new channels and methods of viewing filmed entertainment is fueling higher demand for content, the fragmentation of the marketplace is resulting in lower prices being paid per unit of content by broadcasters. Thus, our industry is being forced to be more and more creative and innovative in order to obtain financing and maximize revenues from as many sources as possible such as home video, cd-rom and merchandising.

1995 has witnessed major events which threaten to change dramatically not only the film distribution business but the whole industry as well.

Cutbacks at Telefilm Canada, the cbc, the Ontario Film Investment Program and the Ontario Film Development Corporation, which challenge both their mission and even their existence, added to the distribution market opening up to foreign multinationals, broadcasters lobbying not only for the tax credit but Telefilm funds, American satellites having access to the Canadian market, a relaxation of the law protecting broadcasters’ rights, the mounting and aggressive inflexibility on the part of American distributors leaving the cupboard bare for Canadian distributors, and, lastly, the Internet’s underestimated popularity as users enjoy ‘surfing the Net,’ have collectively contributed to this pivotal year.

Most notable, however, is the gap developing between our industry and the federal and provincial governments. It is disconcerting that as the cultural industries have just matured, while still fragile, the governments are devoting less and less energy and resources to culture, and consequently, to the cultural industries.

Our system of television quotas has fueled our industry’s energetic pace of growth. We have suddenly become the second largest exporter of tv productions, trailing only the Americans.

Surprisingly, Canadians are still active in the film industry despite the fact the Americans barely recognize Canada as a nation.

The abuses to the old Capital Cost Allowance system that have tormented the government for years will be eliminated when the replacement mechanism, the refundable investment tax credit, comes in. The new mechanism will have measures to prevent Canadian taxpayer money from subsidizing service work.

Anticipated cuts to the cbc, Telefilm and the National Film Board will measure how seriously the federal government takes the principle of ‘partnership’ between public-sector agencies and the private sector.

A wise government will recognize that it is better to put its resources into agencies that in turn support private-sector companies than those that use them primarily to pay for civil service jobs.

Private companies represent a greater return than public-sector employers on public money in terms of program creation, job creation and tax revenue. Telefilm money is added to privately assembled capital to produce and promote Canadian cultural products. Telefilm works in partnership with the private sector, and creates much more than public sector employment.

It is no secret that the u.s. government continues to attack Canadian policies that seek to ensure the preservation of the Canadian broadcasting system. Such attacks on Canada’s cultural industries will provide a challenging test of the government’s commitment to stand up for Canadian culture in broadcasting.

The crtc will also decide which direct-to-home satellite carriers and pay-per-view programmers it will license, and the conditions under which they will be allowed to operate in Canada.

The challenge for the commission will be to ensure that the Canadian broadcasting system survives, and is actually enhanced by the authorized use of foreign satellites.

The Canadian Association of Film Distributors and Exporters has made its views known at every stage in the dth process. At the crtc hearing, we spoke about the need to fight for the continued existence of the Canadian broadcasting system, to ensure that the integrity of the Canadian market is preserved, and that Canadian feature films are financed through the ‘tithes’ on the new carriage and programming licensees.

There has been a wave of foreign startups and takeovers of foreign-owned distribution businesses in Canada.

Almost exactly one year ago, the federal Cabinet approved the Viacom takeover of Paramount under an Investment Canada policy that the Mulroney government brought back in 1988. We now await the results of the applications filed by Turner and Polygram, both of which will be decided under this old policy.

The Canadian industry has been making heroic efforts to get the government to take the policy problem seriously, but rumor has it powerful bureaucrats at Industry Canada are opposed to any changes in this Mulroney-era policy.

The problem is obvious: Canadian distribution companies will be hurt by foreign-owned companies that start up and take business from them. Weakened Canadian distributors are able to do less for the Canadian industry. If we want a strong feature film industry, we need to have a strong distribution industry.

The Referendum result has succeeded in getting the attention of the federal government. It has been suggested that Quebec voters have articulated what many people in this country believe: the federal government has not made a credible case that Canada will stand up for Canadian cultural interests.

Is it not one of the grievances of the people of Quebec that they need a country that is willing to stand up for the survival of their culture? A defense of Canada’s cultural industries, cultural products, culture and identity by the federal government would be more than appropriate and a timely argument for the continued existence of Canada.

The North American rights problem continues for independent (i