For the past 10 years Playback has asked Canadian film and television companies what they spent on independent production in the previous calendar year.

Responses from 110 prodcos to the 10th annual survey reveal that total independent production expenditures for 1997 reached almost $1.5 billion. Development budgets tallied $24.9 million and service production cashed in at $88.2 million.

TV drama accounted for more than half – $770,8 million, of 1997’s total production expenditure. Canadian companies spent $168.3 million on kids tv, $127.4 million on animated programs, $54.7 million on documentaries, and invested $31.4 million in information/magazine televison. Feature film production budgets totalled $297.2 million.

In the case of coproductions or coventures, producers were asked to include only their portions of the budget during the 1997 calendar year. Playback estimated production volumes for companies which chose not to respond to the survey.

A complete financial breakdown is charted on page 33.

For a list of Canadian companies, their projects, and key executives turn to page 31.

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Feature filmmaking in Canada has come under microscopic scrutiny of late, with Telefilm Canada’s Houle Report and Heritage Minister Sheila Copps’ film policy review both detailing the minutia of dismal financing, distribution and exhibition opportunities facing the industry.

Despite these obstacles, responses to Playback’s annual survey of Canadian production companies show feature filmmaking is showing a healthy annual increase. Film production rang in at $297.2 million in 1997, a 33% jump from the previous year’s $224 million which was up 31% from 1995’s $171-million total.

The 1997 feature breakdown shows a 25% rise in dramatic films to $273.2 million from $218.8 million in 1996. Docs tallied $9.9 million in budgets, almost an eightfold increase over the previous year’s $1.2 million.

Animated films more than tripled to $14.1 million from a mere $4 million in 1996.

Individual companies are also spending more cash on feature filmmaking, according to Playback’s findings.

In 1996, the top spender on features was Montreal-based Kingsborough Greenlight Pictures with a budget total of $30 million. This year, Toronto’s Lions Gate Films takes first place with $47 million in production budgets (as Cinepix Film Properties, the company reported $25.8 million in feature production in ’96), followed by Montreal’s Filmline International, which more than doubled its ’96 feature expenditure of $20.9 million to $43.8 million. Kingsborough Greenlight moved to third place in 1997, with a slight production increase to $34 million.

More companies

The number of companies entering the feature game increased in 1997. Of the 110 respondents to Playback’s 1997 survey, 34 companies produced features. In 1996, 25 of the 93 responding companies reported feature film production.

But the state of feature filmmaking varies regionally.

According to Ontario Film Development Corporation stats, indigenous features produced in the province dropped 30% in dollar value to $38 million on 20 films from $54.6 million on 21 films in 1996.

Quebec, on the other hand, saw French-language features bolstered by an increase in the Quebec tax credit rate.

Feature production outside Ontario and Quebec is making inroads. In ’96/97, Telefilm Canada assisted four projects from Western Canada compared to one film the previous fiscal, and two features from the Atlantic provinces, up from one the year earlier. BC Film serviced five local features in 1997, up from three in ’96, and Film NB recorded two features, whereas the previous year only docs were produced.

Filmline producer and president Nicolas Clermont attributes his company’s doubled slate to the September ’96 buyout by Behaviour Communications, which not only has a distribution arm but, as a public company, provides access to capital. As well, Filmline is working more with banks than in the past, particularly through gap financing.

The company has also increased its foreign presales and European partners. In fact, stats from Telefilm’s Feature Film Fund show coproductions accounted for nine of the 24 projects supported in ’96/97 as compared to six copros among the 22 films the previous fiscal. France and the u.k. were the main partners over the past year.

‘The key is quality,’ says Rhombus Media producer Niv Fichman. ‘If you get scripts and production values at international standards, Canadians can finance their films on the world market.’

Canada could provide less than 20% of the $13-million budget for The Red Violin, so Fichman went to the marketplace. In fact, he says, Channel 4 put more money into The Red Violin than any non-British show in its history, and this licence combined with an advance from Newline International, Cineplex Odeon for Canada, and an Italian coproducer pieced the budget together.

‘The film is absolutely Canadian,’ he says. ‘Creative control was with a Canadian writer, director and production staff. It is a homegrown product with high enough quality to get international financing. Once you get outside the borders of Canada, it is a very different set of criteria. We found the money because people believed the film would make money.’

Funding agencies still have an important role to play, particularly for first-time feature directors, and add an extra incentive to bring foreign producers on board. ‘It is great to come to the table with foreign partners and say, `I can bring 20% of the financing from Canada,” explains Fichman. ‘It buys independence.’

However, the Houle Report points out that the financing of culturally relevant, high-Cancon features is far too dependent on government subsidies when compared to similar tv programs.

Roughly 70% of the Canadian production costs of English-language tv programs can be found at the financing stage via the marketplace (domestic and foreign broadcast rights, distribution advances, private investment), whereas only 40% of the financing for a feature that Telefilm would typically support could come from market revenues or private investment.

The Houle Report indicates industry consensus is that film budgets are shrinking to the detriment of their marketability.

Average production budgets of English-language films financed by Telefilm decreased 8% between 1988/89 ($2.6 million) and 1995/96 ($2.4 million). French-language films dropped 10% from $3.1 million to $2.8 million in the comparable period.

However, Telefilm’s ’96/97 annual report notes that the average budget of English-language features rose to $3 million in ’97/98.

There is a direct correlation between budget and overseas box office revenue, according to the Houle Report. Of 74 Canadian films supported by Quebec public funding which played in theaters in France over the past decade, the 15 that attracted audiences of 500,000 and over had an average budget of $7 million. The 24 films with audiences of 100,000 to 500,000 had an average budget of $5 million. And the 18 films which drew audiences of 100,000 or less were budgeted in the $3.5 million range.

A study commissioned by Telefilm shows that between 1993 and 1996, the 13 Canadian films with box office receipts in excess of $750,000 in Canada had an average unit budget of $12 million. French-language films with budgets in the $3 million to $5 million range and English-language films produced for more than $5 million had the highest box office receipts.

Filmline has been hiking up its film budgets to make the products more commercially viable. Whereas last year Clermont made films for less than $12 million, budgets for his current slate of features range between $15 million and $35 million.

‘The films that suffer the most today are the low to middle range budgets,’ he says. ‘Frankly, I don’t think you can do a film under $12 million. Bigger budget means access to bigger stars; bigger stars means access to more markets and more value in foreign and domestic territories, and more chance of a theatrical deal in the u.s. It is a chain reaction.’

But Telescene exec vp and coo Paul Painter is targeting the low-budget film as the best bet.

‘Unfortunately you have to go high ball or low ball to make money in the marketplace,’ says Painter. ‘With low-budget films there is the chance to break out with a little gem. But if you get into the $5-million and $10-million range, you have to have presales and be covered almost 100%, otherwise you are too exposed and could end up with a dog.’

The 1% solution

Painter says that rather than focusing on budgets, Telefilm should concentrate its distribution activity on getting films shown for free or at a subsidized cost in theaters across Canada as an incentive to increase audiences for homegrown fare. The Houle Report estimates that outside Quebec, Canadian films have a mere 1% market share.

With theatrical release a risky bet, Catalyst Entertainment is concentrating on a strong pay, video and tv life for its slate of features. Market demand for pay movies is strong, says ceo Charles Falzon.

Telefilm stats back this up. English-language pay-tv participation in Telefilm-funded film projects in ’96/97 grew to $1.9 million from $350,000 in ’95/96. Other broadcasters participated for a total of $155,000 on English-track features and $50,000 for French-language pictures.

Keeping budgets in the $5-million range, Falzon says the company, which holds international distribution rights on the films, can see recoupment without a major theatrical deal.

Catalyst’s role as a distribution entity first is an asset in the film biz, says Falzon, a strategy echoed by the Houle Report, which notes the low level of consolidation achieved by medium-sized prodcos specializing in high-Cancon feature films, many of which are neither vertically (production/distribution) nor horizontally integrated (theater/tv/technical services).

The report suggests that developing the Canadian feature industry rests on integrating distribution arms in medium-sized production companies that produce high-Cancon films. These companies could work regionally and nationally alongside the large Canadian distribution/production companies which distribute high volume through output deals with the u.s. mini-majors.

Despite the odds, with a feature film policy debate in play and the ctcpf continuing its strong support of feature filmmaking, the future of the medium looks promising.

Telefilm supported 81 new feature projects at the development stage in ’96/97, up from 75 a year earlier, and regions outside Toronto and Montreal are increasingly taking a bigger share. b.c. accounts for 23 Telefilm-supported development projects, Montreal 18, Toronto 26, the Prairies and Atlantic Canada six each, and two from cities outside Montreal in Quebec.

While feature film production at Alliance remained stable, with $25 million spent on six films in ’97 and $24 million on seven projects the previous year, Ian McDougall, senior vp of production, anticipates the volume will grow over the next year.

David Cronenberg’s $31-million eXistenZ is currently in production; Alliance’s LeMonde Entertainment division plans to increase its output from six to 10 titles; and recently acquired Citadel Entertainment has 10 to 12 movies slated to go.

And Cinenova’s David Lint is developing three imax films in his company’s successful niche of ‘factual entertainment,’ saying that the worldwide market for theatrical films combining documentary style and reenactments is growing.