Montreal: A new study on u.s. ‘runaway’ production jointly commissioned by the Directors Guild of America and Screen Actors Guild points an accusing finger at the Canadian government, which it says has adopted a pattern of ‘comprehensive and aggressive’ policies aimed at luring u.s. film and tv shoots north of the 49th.

The report says feature films and tv product shot abroad cost the u.s. economy us$10.3 billion in 1998 based on an industry multiplier formula, which includes direct production spending, lost wages, various tax revenues and other spending. The report says the offshore production translated into the loss of 23,500 full-time ‘below-the-line’ jobs.

In less inflated terms, the report says cumulative production budgets for 285 runaway projects in 1998 was actually $2.8 billion. Canadian sources estimate service production in this country is currently in the $1.5 billion a year range.

Prepared by the Monitor Co., the dga/sag report says the incidence of runaway u.s. film and tv production has doubled since 1990 when 100 out of 716 u.s. film and tv projects were shot abroad. Last year, 285 of 1,075 u.s. productions were filmed offshore, with 81%, or ‘the vast majority in Canada.’ Other runaways headed for the u.k., Australia, Ireland, New Zealand, and more recently, South Africa.

Released June 28, the report says close to 27% of all u.s. theatrical and made-for-tv movies were shot abroad in 1998.

New action plan

The Monitor report was presented to the dga’s national board in late June and will be the basis of a new action plan, according to Jack Shea, the dga’s president.

But while the dga and sag and its partners in the growing u.s. production coalition point to Canada as the main offender, the Monitor report fails to make any mention of a 20% to 25% decline in studio production term deals for features in 1999, or the accelerating movement of traditional production dollars towards new media, digital technology and special visual effects.

‘It is impossible to look at this study and say that this issue does not pose a grave threat to the future of film and television production in the United States,’ says Shea. ‘And it is important to remember that the people who are being hurt by this are the people who depend on steady work to feed their families and repay their loans and send their kids to college. In our internal discussions, we’ve heard from many of our assistant director – and unit production manager – members who cannot find work because so many productions are going to Canada, where the government mandates that their jobs be filled by Canadian citizens.’

Valenti’s perspective

Not everyone is buying into the u.s. guilds’ assessment of the situation.

Based solely on population, Arthur Evrensel a partner in Heenan Blaikie, Vancouver, says with about $1.8 billion in u.s. production in Canada annually, Canada’s share of the production pie is ‘less than half of what we actually buy.’

Evrensel says the term ‘runaway’ production is a misnomer. He says a more appropriate word would be ‘impossible’ production, as in impossible to produce Stateside. The situation won’t fundamentally change, he says, unless u.s. union rates, iatse for one, are reduced 35% to 40%, the Canadian dollar starts to trend toward parity with the u.s. dollar, and residual and buyout structures for performers in sag are modified.

Pete Mitchell, director of the British Columbia Film Commission, earlier told Playback Canada has less than 5% of the annual u.s. film and tv production total, but makes up 10% of the North American buying audience. (And the u.s. has never been accused of dumping its shows on the cheap in Canada.)

Predictably, u.s. film and tv producers are not part of the protest.

A recent ap report out of Los Angeles quoted Motion Picture Association of America president Jack Valenti as saying the u.s. is, in fact, not losing its film industry. We’ve always produced abroad,’ said the powerful veteran studio lobbyist.

Valenti was also quoted as saying Canada provides u.s. filmmakers with approximately us$70 million in annual tax and labor-related incentives. He said the real attraction remains the competitive exchange rate.

Report highlights

Other highlights in the dga/sag report include:

* 45% of u.s.-developed movies for television in 1998 were economic runaways (139 out of 308), with 90% going to Canada.

* Although u.s. domestic feature film production grew 8.2% annually from 1990 to 1998, u.s. features produced in Canada grew 17.4% annually during the same time period. Similarly, u.s. domestic television program production grew 2.6% annually from 1990 to 1998, but u.s. television production in Canada has grown 18.2 % annually.

The joint dga/sag news release says, ‘The Canadian government has engaged in a comprehensive and aggressive, long-term strategic campaign to attract u.s. producers. This program includes government incentives and tax rebates, which, coupled with lower production costs, have made it economically attractive for producers to film in Canada. This successful Canadian approach could become a model internationally.’

Two weeks ago the sag board approved a resolution on runaway production, committing the guild to develop an industry coalition which includes the Film & Television Action Committee, Film u.s., the U.S. Conference of Mayors, the National Governors Association and Congressional leaders.

The coalition intends to ‘pursue a range of legislative and administrative initiatives at the local, state and federal levels, with a focus on competitive solutions to the crisis of u.s. runaway production,’ the resolution says.

In a related matter, a clampdown on film financing by the Australian Taxation Office is reported to have had a devastating impact on this year’s production fundraising.

One of the casualties of the clampdown has been the government’s recently authorized Film Licensed Investment Cos. plan, a bid to attract more private investment. Estimates place the actual funds raised at about 15% of the anticipated amount.

On June 18, the Australian government issued a warning it will disallow deductions claimed by more than 7,000 investors, worth an estimated us$530 million.