While the amount of cash spent on animation and kids’ programming skyrocketed, 1996 was a relatively static year for Canada’s independent production industry and the overall growth of production volume was modest.

Replies to Playback’s ninth annual production survey indicate that the official final cash tallies for 1996 will be in the neighborhood of 3% higher than in 1995. Responses from 93 participating prodcos, including the major public companies, claimed an expenditure of $983 million in 1996 on production and development, up only $32 million over $951 million in 1995 even though six more companies reported.

In a nutshell, about 25% less money was spent on tv drama and about 30% less on info shows. On the upside, over 40% more was spent on documentaries and 30% more on features.

When the cash is broken down by genre, the biggest story is an 88% jump in children’s and animation production. While the 1995 survey pegged children’s expenditures at over $134 million, the numbers for 1996 (including animation) topped $252 million.

The growth of the genre means that companies like Nelvana and Cinar Films, which ranked in the lower part of the top 10 list last year, have moved up to round out the top five. (See chart, page 28.)

While comprehensive 1996 tallies from the likes of Telefilm Canada and Ottawa-based Nordicity Group have not yet been completed, execs from Nordicity and the Royal Bank of Canada’s Robert Morrice are also expecting to see a slower rate of growth over previous years, with numbers somewhere between 5% and 10% higher than the $1.3 billion figure attributed to 1995 (a figure which included both indigenous and service production). Respondents to Playback’s survey showed a $108.4 million expenditure on service work in 1996, on top of the $983 million they spent on their own product.

In fact, reports from Canada’s largest production company actually show a decrease in production volume between 1995 and 1996, a consequence Alliance attributes to having significantly increased its development activities over the last two years. With the announcement of a $166-million tv slate in the first week of fiscal 1997 – an expenditure which already ellipses the whole of 1996 – the argument rings true.

‘We’ll definitely have very significant growth in 1997,’ says Alliance chair and chief exec Robert Lantos, ‘but 1996 versus 1995 was pretty flat.’

Flat, that is, unless you produce animation and kids’ programming. At a time when Cactus Animation is entering the fray to the tune of $12 million and Lacewood is posting expenditures of over $22 million, the traditional leaders admit that new companies are seeing their gains and are looking to cash in.

‘Certainly Nelvana has cut the path, and Cinar has followed very aggressively,’ says Nelvana chair Michael Hirsh. ‘Other companies are perceiving our success, and now they want to be in the business too.’

‘They all want a piece of this,’ says Cassandra Schafhausen, vp of animation and production development for Cinar. ‘It’s amazing the number of people who think they can plop into it. This is not an easy business. We’ve worked very hard on the niche we’ve carved out for ourselves.’

But with specialty windows of opportunity opening up in Canada via the animation specialty channel teletoon (a venture backed by Family Channel ytv, Cinar and Nelvana) and potentially via ytv-backed Treehouse, in addition to the traditionally animation-hungry markets overseas, the lure is there. The front-runners say the product is still profitable over a long period, and markets are outpacing any risk of saturation.

Andre Belanger, president of Coscient’s Cactus Animation, expects his company to produce increased animated product in 1997, with an eye to establishing a hefty library. ‘Animation has possibilities no other kind of production has. You produce it, and it’s on the market for a long time.’

Belanger predicts a 30% increase in production expenditure for animation in 1997.

The other area which showed significant growth in 1996 was feature production. Playback’s survey for 1995 indicated over $171 million was spent on features, while 1996 shows $224 million, an increase of 31%. These gains were posted despite significant cuts to Telefilm, the closing of the Alberta Motion Picture Development Corporation, and further shrinkage at the Ontario Film Development Corporation in 1996.

On the upside, 1996 ushered in the first full year of the federal tax credit and piggyback credits in a number of provinces. It also saw a buzz in the indie production community about the $200 million Canada Television and Cable Production Fund, along with licences for 23 new specialty services.

But new and up-and-coming feature producers, most of whom saw their companies grow in 1996, say that their work hinges less and less on government subsidies.

Daniel D’Or, one of the partners of Producers Network Associates, says government money – aside from the tax credit – has never, and probably will never, factor into his company’s production scheme.

‘Only 10% to 20% of our budgets come from inside the country, through distribution, presales, banking tax rebates, stuff like that. The rest comes from the foreign and u.s. distributors. We’re preselling for everything.’

The presell is also key for Stavros Stavrides, president of Toronto’s Arto-Pelli Motion Pictures. ‘Cutting subsidies has made us far more creative,’ says Stavrides. ‘The subsidies helped us to become producers, to acquire the skills, and now we’re applying them on the global scene to presell our movies.’

Financing through presales has also become the mantra at Alliance, where Lantos is hoping the company will begin producing at least one big-budget feature a year instead of one every year or two.

‘We’re cranking up our motion picture business because we’ve reached a point, in terms of our strengths and our track record internationally, where we have the ability to presell our movies, even movies with ambitious budgets. We can reach a level of financial comfort before we even begin production.’

Even with new federal money being mandated to spark ‘super Canadian’ production, it’s clear that such projects – where the story, the above and below line costs, the intended first window, and the financing are all Canadian – will increasingly be the exception.

‘It’s inevitable,’ says Telegenic Programs executive vp Michael Taylor. ‘The bottom line is that we generate as much as we can out of our country, and then we look to what we need in terms of foreign distribution to make the production whole.’

Looking ahead, many independent prodcos are expecting that info programming, down over 30% by Playback’s 1996 results, will be bolstered significantly in 1997 as the new specialties look to acquire.

‘We’re in a building stage. Saskfilm is getting stronger each year, and we’re hoping to do at least a third more production,’ says Clark Donnelly, executive producer at Regina’s Film Crew Productions, a company which already supplies Life Network.

Conventional wisdom says that 1997 will probably reflect a greater regional disparity. There’s already anecdotal evidence that productions are moving out of traditional production centers like Ontario and post-ampdc Alberta into areas like New Brunswick and Nova Scotia, to take advantage of incentives like highly flexible provincial tax credits.

Nova Scotian producers, particularly, are capitalizing on provincial goodwill towards the industry to initiate more indigenous product than ever before.

Halifax’s Salter Street Films posted a 35% growth in production over last year, and Topsail Entertainment – the drama division of Citadel Films – reported almost $2.8 million in production for last year with a feature and three series in development.

Editor’s note: Our total production number does not include a report from Montreal’s Transfilm Inc. as the company chose not to participate in the survey this year. Transfilm reported over $57.2 million worth of production in 1995. The only project Playback reported for the company in 1996 was the feature Milles Merveilles de l’Universe, which we reported to have a budget of $11 million. The feature was a coproduction with e.g.m. and two French companies – Compagnie des Images and Lumiere.