Montreal: Total Canadian coproduction budgets – sparked by a major jump in the number of projects with the u.k. – grew to $872.2 million in 2000, a 45% increase over the $600.4 million recorded in 1999.

Canadian producers and their u.k. partners combined on 43 coproductions in calendar 2000, including one tri-parite project, representing combined budgets of $407.8 million. The Canadian share of financing is 59%. Growth in coproductions with the u.k. is certainly the biggest change on the coproduction scene, compared to ’99 when Canada and the u.k. combined on 22 projects worth less than $112 million, says Johanne St-Arnauld, Telefilm Canada director, international relations.

Spending on Canada/u.k. coproduction is considerably less balanced than the financing side – with 57% of budgets, or $232.9 million, spent in Canada and only 33%, or $134.4 million, spent in the u.k.

St-Arnauld says Canadians are open to majority u.k. projects but because of the production tax credit advantages and favorable cost factors, almost all of the 2000 u.k. feature coproductions are majority Canadian.

While the u.k. financing mechanism, like the sale and leaseback transaction, requires British content, St-Arnauld says there’s no obligation to shoot in Europe.

As of Dec. 19, Telefilm’s international relations office had issued advance certification rulings for 111 feature film and tv coproductions. St-Arnauld says 186 applications were filed last year, compared to 124 in ’99.

Leading partners

Telefilm issued advance rulings for 42 Canada/France coproductions worth $310.8 million in 2000, up from 35 projects with budgets of $230.2 million in ’99. By contrast with the u.k., virtually all the feature films coproduced with France last year were majority French.

Canada’s other leading coproduction partners from 2000 are: Germany, four projects with combined budgets of $43 million; Australia, two projects worth $40.6 million; China, seven projects and budgets of $38.4 million; Ireland, three projects worth $28.4 million; and Italy, which showed a marked increase, four projects representing combined budgets of $22.6 million, up from two projects worth $3.5 million in ’99.

Of the $872.2 million total in 2000, there were 75 tv projects worth $572 million, or 64%, while 36 feature projects had combined budgets of just over $300 million.

Telefilm has circulated a draft revision of its coproduction policies and requirements. The changes are mainly related to technical ‘paper work’ with one exception – a proposal to allow one additional performer from a non-producing country in what is essentially a cameo or limited role.

‘Everybody is in favor of that,’ says Park Ex Pictures producer Kevin Tierney, producer on the $10 million Canada/u.k. coproduction Varian’s War starring William Hurt. ‘Every single person you talk to in this business says, ‘Every picture is star-driven.’ So if you say we can’t use stars from outside of a treaty country, then we’re not functioning on the international level.

‘When you watch a great story like (the ’43 Hollywood classic) Casablanca, is it about Americans or about Germans? No, it’s a story about romance in war. Just because there wasn’t a Canadian (role) in Varian’s War it didn’t strike me as a reason not to do it.’

Jump in U.K. coprods

Muse Entertainment Enterprises executive producer Michael Prupas says the big jump in official coproduction with the u.k. is mainly due to the advent of sale-leaseback transactions.

(Companies like Grosvenor Park and MFB Leasing have emerged as specialists in servicing producers using the sale-leaseback financing option.)

Prupas says the new opportunities in u.k. coproduction financing – with the hope that financing from the renewed lottery-franchises and the Film Council production funds will play a greater role in the future – are in part cancelled or balanced out by the demise of insurance-financed deals.

Tierney says there’s a limited amount of strongly identifiable Canadian programming that the system can sustain.

‘The sale-leaseback is a big advantage in coproduction,’ says Tierney. ‘It seems to be hovering around 10% of the budget. Its obviously an advantage for the British side much like our tax credit here, but can the two bureaucracies find a way for those two programs to harmonize?

‘The problem is that the u.k. is significantly more expensive than Canada,’ Tierney continues, adding that direct production costs, other than talent, are roughly double what they are in Canada. ‘The obvious advantage is talent – because there are names that resonate in the u.s.’

Tierney says there are essentially two kinds of coproductions with the u.k. First, there are the more commercially viable productions, destined for the American and world markets, such as Showtime and Hallmark Entertainment, in the case of Varian’s War. And, secondly, national or bi-national production ‘with some kind of cultural relevance to either Canada or the u.k.’

He says ‘cultural’ coproductions are problematic, or difficult to agree on. ‘While Canada is busy trying to be uber-Canadian, the British are only interested in themselves. And that’s a hard way to make a living.’

Concerns with Germany

As for Germany, with only four coproduction projects in 2000, St-Arnauld says there is some concern the new private funds could prohibit sharing of the copyright, a requirement in coproduction.

Prupas also raises a red flag on the future of coproduction with Germany.

He says the stock market for media and entertainment companies in Germany (Frankfurt) basically crashed at the end of 2000.

‘The equity deals are now in some serious trouble because of the collapse of em.tv.’

Muse is coproducing the $20 million live-action family series The Neverending Story with The Movie Factory Gmbh of Germany. The production has been ‘grandfathered’ under old taxation rules. However, regulations governing tax-driven production financing programs available in Germany were revised twice in 2000, most recently in November, and dramatically reduce the amount of obtainable money by reducing the amount investors can write off, adds Prupas.

‘There are also major cultural differences that one has to overcome,’ he says. ‘You have to find products which can work in both markets, which isn’t easy.’

The Neverending Story is a German-copyrighted property, and while Hagar the Horrible (in co-development with Kirch Group) is not a German property, Hagar himself is at least a German character.

‘We’re trying in the case of Hagar to base a large part of our financing on pre-sales in Germany and other European territories,’ Prupas says.

As for broadcast licences in Germany, Prupas cites strong operations such as rtl, Kirch, ProSieben and Tele-Munchen. Hagar is a case in point, and Prupas says Kirch will seek returns from dollar sales to broadcasters, as opposed to tax or investment-driven deals.

France continues to be Canada’s leading coproduction partner over the long term, with much of the action keyed on animation and one-hour action series. There is a consensus the outlook for coproduction with France is stable.

Prupas says coproduction is an essential framework for Canadian producers seeking ways to finance content shows.

‘With the television system in the United States, talking about tv series or tv movies, specifically series, it becomes very difficult for a Canadian company to participate in that (network) business because production companies are all required to put up deficits of substantial amounts of dollars. And we can’t afford it.’

Documentary coproduction increased to 26 projects in 2000, up from 17 in ’99. Drama is the fastest growing program category – 50 projects with budgets of $557.2 million, up from 36 projects and budgets of $322.3 in ’99 – while animation declined somewhat in 2000 – 28 projects with budgets of $214.7 million down from 34 projects worth $233.3 million in ’99. *

www.telefilm.gc.ca