Fears for the future of the Canadian production industry, reduced economic growth, the post 9/11 climate and international trade issues, particularly with the U.S., were the most obvious themes at this year’s Prime Time in Ottawa, the annual CFTPA conference held Feb. 6-8.

With roughly 550 attendees, a large portion of whom had association acronyms next to their names, there was standing room only at the conference’s three most pivotal sessions: the State of the Canadian Industry Report, in which Pat Ferns, president and CEO of the Banff Television Foundation, and National Film Board chairman Jacques Bensimon presented the findings of the CFTPA’s Profile 2002; the Pundits Panel entitled Future Shocks: What Lies Ahead for the Canadian Production Industry; and the Jack Valenti Luncheon, at which the president and CEO of the Motion Picture Association of America spoke passionately and poetically of the synergies between Canada and the U.S., while in the same breath denounced governments that ‘put up barricades to exile or restrict TV programs and films which may compete with local creativity.’

Ignoring the fact that Canada’s production community was fostered by a protected broadcasting system, as later pointed out by Astral Media president and CEO Ian Greenberg, Valenti went on to say, ‘I passionately believe that tariffs, duties, quotas and other artificial trade barriers which interfere with marketplace competition are wrong. They disfigure good trade policy. They cause fiscal mischief to no one’s gain.’

He also focused on the growing need to export. ‘In America, only two films in 10 retrieve their investment through domestic theatrical exhibition. To survive, each film must try to find its place on TV, cable, satellite, home video and most of all, internationally.’

And while he said he supports the right of producers to film in whatever locale they choose, as well as the right of sovereign nations to offer incentives to producers, he is part of the lobby to persuade U.S. Congress to pass legislation that will entice more producers to film in the U.S. ‘But I am also standing alongside a good many of my colleagues in Hollywood to oppose attempts by others in Hollywood to impose countervailing duties on Canada,’ he said.

Despite his eloquent attack on cultural protectionism that has paved the way for the careers of much of the audience in the room, his address was met with roaring applause and a standing ovation.

Pundits Panel

The feature panel of the conference, moderated by Peter Kent, brought together industry leaders from a multitude of sectors to debate on how to position the industry in this difficult economic and political climate.

The most salient speaker on the panel was Michael Donovan, cofounder of Halifax’s Salter Street Films, who claimed that if he was starting out in production today he’d move to Hollywood. Despite boos and hisses from the room, the film and TV executive, whose company was swallowed by Alliance Atlantis last year, went on to say that consolidation works against the Canadian industry.

‘Withering fortitude in this country, economic and technological changes coupled with more mealy-minded thinking is resulting in a trend to where there’s 2% [of Canadian films on screens in Canada] and 10% [of Canadians are watching domestic] television. That’s the best it’s ever going to be.’

And how do you weigh on the public agenda when you’re taking up 2% of screen time? asked David Zussman, president of the Public Policy Forum.

With little in the way of an answer, some of the panelists agreed that public policy is not the solution to the Canadian production dilemma.

‘It’s not simply about money or more regulation, it’s about getting stuff out there that people want to watch,’ said public affairs consultant Michael Robinson.

But the problem is twofold: to make compelling product, producers need money, and to access the money, they need compelling product.

‘No foreign investor needs to own Cancon – it’s not big enough – they’ll be more enthusiastic about it when it becomes compelling,’ said John McVay, chief executive of PACT, the U.K.’s trade association for feature film, television, animation and new media producers.

‘We’re disenchanted by Canadian production in these tough times just like any business that doesn’t provide an immediate return on investment,’ said Canadian media analyst Scott Cuthbertson. ‘It’s not a terribly robust time for the markets.’

So, with little hope for more money, no long-term funding guarantees from the CTF, the lowest rank on the public policy agenda, and a fragmented TV market that has reduced the value of licence fees exponentially, Donovan may have been right when he said, ‘It’s only downhill from here.’

Profile 2002

This past fiscal year – April 1, 2000 to March 21, 2001 – saw a 9% increase in total film and television production in Canada to $5 billion, a slightly lower rate of growth compared to the average annual growth rate of 13% over the last five years.

And while the sixth annual Profile is still encouraging, it is not an accurate representation of the current state of affairs since it does not account for post 9/11, which has put the Canadian broadcasting and, subsequently, the production industry in peril. And because it doesn’t cover the entire calendar year, the result of the stockpiling that happened in the first six months of 2001, as a result of strike fears, was not factored in.

According to the report compiled by PricewaterhouseCoopers in association with the CFTPA, Canadian certified production rose to $2 billion; total foreign revenues collected by Canadian producers rose to $2.2 billion, with foreign location shooting up to $1.8 billion; non-certified productions exceeded $300 million; and broadcaster in-house production rang in at $887 million.

The production industry employed 134,400 Canadians in 2000/01, with 5,700 direct jobs and 82,700 indirect jobs.

In Atlantic Canada, the volume of production reached $176 million in 2000/01, a 3% increase over last year, but significantly lower than the 25% average annual growth rate for the last five years.

Total production volume in Quebec increased by 4% to $1.35 billion as a result of significant growth in foreign location shooting, which offset a decline in CAVCO productions. The average annual growth rate in Quebec for the past five years is 13%.

The volume of production in the Prairie provinces declined by 10% to $286 million, primarily because of a 50% drop in foreign location production in Alberta.

While B.C. experienced a 10% growth in 2000/01 to nearly $1.2 billion, the province’s average annual growth in production volumes over the past five years is close to 20%.

Finally, the report indicates that production volume in Ontario grew by 16% to nearly $2 billion, an increase in the average growth rate for the past five years, which is the lowest among the Canadian regions at about 9%.

OMDC numbers clash

But while Profile 2002 saw increased growth for Ontario in fiscal 2001, the Ontario Media Development Corporation report, which accounts for calendar 2001 – Jan. 1, 2001 to Dec. 31, 2001 – and excludes broadcaster in-house production and commercial production, recorded diminished growth for the province.

‘In 2001 there’s been a 10% decrease in terms of our own stories,’ says OMDC CEO Adam Ostry.

And while foreign production grew by 3.3%, bringing $561 million to the provincial economy, Ontario witnessed an overall 2.9% decrease in film and television production in 2001, bringing the total value of production in the province down to $981.6 million.

Production activity, according to the OMDC report, was accelerated in the first six months of the year because of threatened SAG and WGA strikes, followed by a drop in activity during the second half of 2001 because of the stockpiling in the first six months and the catastrophic events of 9/11.

Domestic production accounted for 43% of industry activity in the province while foreign production accounted for the remaining 57%.

And while production budgets for foreign shoots have increased, the per project budget average for domestic productions has declined by 16%.

‘This speaks to our cultural policy. If our stories are told cheaply, nobody wants to watch them,’ says Ostry. ‘There’s a crying need for the CTF to be renewed, permanently. There’s no development or equity money in this province. Our general tax-credit regime cannot be the sole tool. We need to ensure we have unfettered access to international markets…the feds have to sit down with the banks and look at the corporate tax act – what renders us uncompetitive.’

The question, why is it a given that only Canadians can tell Canadian stories, as posed by Erica Redler, Canadian Association of Broadcasters general counsel, senior VP, policy and legal affairs, at the session entitled Trading Culture at What Price? is one Ostry says should be put forth in an orderly public debate.

Other conference highlights

* In a breakout session entitled The Great Wall of Canada: Can the red tap be cut? Robert Soucy, director of CAVCO, committed to speeding up the process of retrieving tax credits, from what in the post-Cinar world has become a grueling eight-month process to an eight-week process.

* The CFTPA and the CBC are on the verge of ratifying a terms of trade agreement for productions involving independent English-language TV producers and the CBC, including Newsworld. The agreement was proposed at the 1999 Banff Television Festival.

CTV deputy chair Trina McQueen confirmed that once the CFTPA is finished with the CBC, CTV would be willing to negotiate an agreement with the producers as well.

* A group of banks and film financing providers have joined together to identify and address ways to improve how lenders work with the Canadian production industry.

The Production Lenders Committee will develop strategies to better deal with government bureaucracy and broadcasters, with a plan to explore the possibility of reducing the negotiation time in financial transactions.

Representatives from CIBC, HSBC Bank Canada, the National Bank of Canada and RBC Royal Bank founded the PLC, a subgroup of the CFTPA’s tax and finance committee.

-www.cftpa.ca