Canada’s publicly traded production companies have raised more than $150 million in equity financing in the past three years.

As the industry leaders looked to expand production and diversify revenue sources during the period they moved into new sectors. Atlantis Communications and Alliance Communications staked out major claims in specialty broadcasting, with Nelvana and Cinar Films poised to follow suit.

And as in the u.s., important acquisitions were part of the picture. Coscient Group certainly changed its profile by acquiring Productions sda and Allegro Films, while Malofilm Communications used new financial resources to acquire Desclez Productions, an international children’s program producer, and Megatoon Studio, a multimedia creative producer. Nelvana’s investment in 3D animation studio Windlight captured the interest of the investment community. Paragon Entertainment’s strategic alliance with Ottawa-based animation house Lacewood Productions is also seen as positive.

Maturity takes hold

If ’95 was the year of high living for most of the public producers, a certain level of maturity has taken hold in ’96.

Canada’s publicly traded production companies do not share identical profiles, and although the urge to compare is overwhelming, clearly each company has its own history and unique challenges.

As for the general lay of the land, Simon Lussier, a Montreal-based analyst with Sprott Securities, says Canada’s publicly traded production companies are still growing. The production sector is not particularly dependent on the state of the general economy, he says, and the international market is only starting.

‘Canada is in an excellent position as the world’s number-two exporter of audiovisual programs,’ says Lussier.

Lussier says there’s almost unlimited export potential when one considers ‘m.a.s.h. is (the) second (highest-rated show) in the Czech Republic and Charlie’s Angels is number one in Vietnam.’

Other major assets include the $300 million, five-year Cable Production Fund and the Telefilm Canada-administered Broadcast Fund, and of course, Canada’s international network of coproduction treaties.

Rapid growth

Roger Dent, a Toronto-based analyst with CIBC Wood Gundy Securities, says the federal refundable production tax-credit program ‘is good news for the industry, but the problem is the delays(it means) an increase in interim financing requirements and the need for more presales.’

‘On the whole (the publicly traded production companies) all have solid management teams,’ says Dent.

And, despite reductions and uncertainty in public funding levels, ‘the production sector is still a rapid-growth business,’ says Dent. ‘All the companies are large enough so that they can survive in the international arena.’

Over time, he says, the industry will see more mergers and alliances.

In a recent lengthy report, Wood Gundy stated, ‘We see the situation as being similar to a game of musical chairs. All the Canadian players are comfortable as long as the music (i