Cdn. production slowdown intensifies

Vancouver: Touchy subject matter and general business fears are behind the loss of about $30-million worth of Canadian service production work in the new era of terrorist warfare.

At least two of the shelved productions budgeted for Canadian locations in the past two months dealt with airline disasters. Fall from the Sky, a $5-million MOW from CBS, was scheduled to begin shooting in Winnipeg Oct. 2. The second, unnamed disaster MOW was being developed for Vancouver.

In Toronto, Fox’s MOW about assassinated U.S. president John F. Kennedy, which was set to shoot through Roadhouse Productions, was spiked, while two other U.S. TV movies and one miniseries were also postponed for either economic reasons or due to potential content issues. In Montreal, Muse Entertainment lost a one-hour episode for a big-budget Law & Order miniseries about a bioterrorism attack in New York.

But while the terrorist attacks on the U.S. have intensified matters considerably, a series of factors already had Canadian producers bracing for a slowdown toward the end of the year.

With the exception of the feature The Incredible Mrs. Ritchie, it appears that travel anxieties have not been a factor in production cancellations.

Actor Gena Rowlands, who skipped attending last month’s Vancouver International Film Festival because of travel concerns, was supposed to play the lead in Mrs. Ritchie, produced by Vancouver’s Prophecy Entertainment. Production has been pushed from this month until late February to allow the actors to be with their families for U.S. Thanksgiving and Christmas, says Prophecy spokesperson Loveena Chera. The production company cannot guarantee Rowlands will still be available for production in February.

More common is the perception that Canada is a safe haven from terrorism.

Since Sept. 11, for instance, Vancouver-based entertainment lawyer Brad Danks has negotiated 20 star contracts and travel to Vancouver has not been an issue with agents. ‘I’ve heard you can’t get bonds for India, the Middle East, parts of Eastern Europe,’ he says, ‘but Vancouver is close and comfortable.’

Proving his point, the negative pickup feature Ecks and Severs, starring Lucy Liu and Antonio Banderas, is setting up production offices in Vancouver after being moved from Bangkok.

‘We’re in a period of great patriotism and fervor in the U.S.,’ says Mark DesRochers of the BC Film Commission about the mood in Hollywood post-Sept. 11. ‘But it’s not just keep business in America, but keep business in North America.’

More complicated than 9/11

It’s overly simplistic, though, to blame the events of Sept. 11 for what is currently a volatile service production sector across the country. Overall, production volumes are down, but there are many other factors complicating business.

Of graver concern than the threat of terrorism, say insiders, are the declining U.S. economy and the rush to resume production after the SAG contract-induced lull this summer – seemingly opposing forces that are creating a push-and-pull effect on volumes.

‘Right now, the feature film industry is on fire,’ says Pete Mitchell, GM of Vancouver Film Studios. ‘MOWs are dead and series are on track.’

Television production is slow globally as networks grapple with sharp declines in ad revenues and, in some cases, shut down long-form television divisions. Broadcasters are also accommodating increased war coverage, the Winter Olympics in February, and the glut of programming produced prior to July 1, when American actors could have begun walking the picket.

Feature film producers, on the other hand, seem keen to get back to work after summer hiatus.

‘[We're predicting] a smashing winter,’ says Mel Hoppenheim, president and owner of Mel’s Cite du Cinema studio complex in Montreal. ‘We are getting a lot of calls. If everything goes through we could have three, four or five pictures in Montreal.’

Among them are the $60-million Confessions of a Dangerous Mind, George Clooney’s directing debut for Miramax Films, and Beyond Borders, a Mandalay Pictures feature starring Angelina Jolie.

In Vancouver, Tim Allen’s Santa Claus II is taking up 250,000 square feet of stage space. Castle Rock/Warner Bros. has Dreamcatcher, Paramount has The Core and MGM has A Guy Thing.

The Bridge Studios is booked until the spring and Vancouver Film Studios has waiting lists for stages still under construction.

In Toronto, preparations are underway to begin production on the Disney/Spyglass Entertainment feature The Farm, starring Al Pacino, and Miramax’s Chicago, starring Catherine Zeta-Jones, Renee Zellweger and Richard Gere. Additionally, DreamWorks’ action feature The Tuxedo, starring Jackie Chan and Jennifer Love-Hewitt, has been shooting in and around Toronto since September.

‘We’ll see less in the way of exploitative, effects-driven violence in favor of more comedies, more family-style and more epic-historical stuff, most of which should cost less,’ predicts Adam Ostry, CEO of the Ontario Media Development Corporation. ‘You are going to see more low-end episodic television to feed the digital channels and the explosion of specialty channels and low-cost MOWs. This means that while the number of projects may increase in any given jurisdiction, the overall budgets will decrease. That also has to be taken into account.’

Pilot season questionable

Other factors complicating the service sector are the dwindling value of the loonie, and the twilight of the Canadian tax shelter system, both of which should impact the Canadian scene right around pilot season.

On Nov. 6, the Canadian dollar was worth US$0.628, a new low that makes production in Canada even more enticing. However, the loss of the Canadian tax shelter system will push business away.

‘The closing of the [tax shelter] loophole…will have a definite negative impact on the amount of activity,’ says Ostry. ‘That activity is extremely important in terms of jobs and extremely important in terms of the amount of U.S. production dollars spent in the country.’

Vancouver entertainment lawyer Arthur Evrensel of Heenan Blaikie says he would normally be working now on contracts for shows going ahead in January, February and March, but with uncertainty around the tax shelters, business is down as producers budget other locations such as Australia and Britain.

In Montreal, meanwhile, Michael Prupas, president of Muse Entertainment Enterprises, says, ‘There is a greater reluctance on the part of the networks to order anything right now. There’s a good chance the environment will turn around and people will want to do more production next year. The financial alternatives are becoming narrower. That the Canadian dollar is as low as it is is going to help us a little bit.

‘The special-effects industry in this country seems to be thriving and more people are coming up to do special effects here. And I think we are going to be faced with a new reality in terms of costs of production. It’s clearly going to be a different environment. The fat is long gone in this industry for a while. We are going to have to be very lean and mean,’ says Prupras.

And no one is ignoring the Blame Canada initiative in the U.S. production community and its potential effect on volumes.

‘I would suspect that the rhetorical arguments that are traditionally used in certain quarters in the film industry in L.A. regarding runaway production have taken on added impetus and added importance in light of Sept. 11,’ says Ostry.

‘Nobody is obliged to come here,’ says Hoppenheim. ‘What the Americans have done is that they have upgraded our already excellent technicians and helped us create a durable and ongoing industry. The Americans will come here as long as it’s advantageous to them.’

‘The most critical issue is the free flow of business across the border,’ says Mitchell. ‘The film and television industry in Vancouver has a critical connection between YVR and LAX. So far, it’s not a problem.’

What is the good news?

For Canadian producers looking for opportunity amid the mess, they might look to the international markets. Because of fears of the travel chill in the wake of Sept. 11, big trade fairs such as MIPCOM are seeing fewer Americans.

‘I really don’t want to sound like I’m taking advantage of the travails of the Americans – but the fact is that with fewer Americans participating in these trade fairs, the Canadians are getting more attention from international buyers,’ says Ostry.

Also, the drop-off in U.S. production activity in Canada, he explains, ‘frees up studio space and crew availability, which will have downward pressure on input prices,’ such as real wage rates and rental costs – benefits to small- and medium-sized production companies.