In the summer of 2001, in the midst of completing their first feature, the Steve DiMarco-helmed Hurt, Charlotte Bernard Entertainment partners Joel Awerbuck and Bob Banack took it upon themselves to shoot a campaign of spec spots for Rogers Communications and agency MacLaren McCann.

While it might seem an odd move to shift gears so early in the life of a fledgling prodco trying to build momentum in the feature film business, it was, in fact, part of the company’s growth strategy right from the start.

The partners, coming from backgrounds as varied as documentary production and investment banking, did a lot of research before jumping into the game. After looking at a few domestic and U.S.-based companies, they decided to diversify their company’s revenue sources early in the planning stages.

As it turned out, the spots, directed by Michael Downing, were picked up for air by Rogers, and almost simultaneously with the completion of Hurt, Charlotte Bernard had its first payday as a commercial producer. Building on that initial success, the partners, following several months of research, launched Spank Films last May.

Awerbuck, a former partner at documentary maker Paradox Productions, says it made sense as a new business to set up a diversified production model up front, considering their focus on feature projects. Because of the hurry-up-and-wait nature of the feature film business, it is important to have the cash infusion that the commercial sector provides, which will naturally pay the bills and contribute to the financing of their movies.

Another question mark was the timing of the move to spot production, considering what might best be described as an unstable commercial market. But that doesn’t faze the folks at Spank, either, say the partners.

‘The best time to do anything is when everyone else is saying ‘Don’t do it,” says Banack, a former analyst and trader at Goldman Sachs. ‘That’s when there is opportunity and that’s when there is value, too, in terms of the overhead cost and having access to more important and valued people at agencies and other production companies. There’s more value in coming in now.’

Of course, in this respect, Spank is not alone. It is, in fact, the unstable commercial production market that has opened the door for many Canadian prodcos to expand their businesses.

Indeed, as production companies try to navigate an unpredictable market, diversification has become a hallmark of the commercial production business. While a year ago, the number of companies spinning out new divisions could be counted on the fingers of one hand, today virtually every commercial producer has rolled out or is planning to roll out new production ventures, from feature film to corporate video to so-called ‘branded content’ programming.

New breed of producer

But while most established prodcos such as Radke Films and The Players Film Company in Toronto have evolved into the model as a means of keeping their businesses growing despite an advertising downturn, a new breed of commercial producers is incorporating diversification models into their start-up strategies.

Buck Productions, headed by owner/director Sean Buckley, has been using such a model since its launch in 1995. However, the diversification of Buck happened more organically. Buck launched in Toronto doing corporate and music videos, but gradually added commercials, documentaries and features to its portfolio. Buckley says he diversified his business early on because he was eager to find work, but says it has paid off in the longer term.

‘Sometimes I think people believe that a company can only do one thing well, but I disagree,’ says Buckley. ‘We do a number of things very well and our commercial directors’ minds don’t shut off after 30 seconds.’

Buckley admits, however, that in the early going it was difficult at times to land commercial gigs because of the diverse nature of the work going on at his shop.

‘I’d go in and present to agencies the many things we do, but they were a little bit more used to looking at just commercials,’ he says Buckley. ‘There were, however, some people who really enjoyed moments or moods in a documentary or music video and saw them fitting into a commercial. They were willing to take a risk and the risk paid off and that’s what fuels our commercial division.’

Executive producers Claire Cashman, J.J. Lyons, Jane Charles Shaw and head of sales Cheryl Munroe launched Park City Film Company in Toronto in June and have already shot more than 20 days on various commercial projects, but according to Cashman, the team has an eye on long format as well. She says they hope to officially launch a long-form division in the next one to three years.

‘There is not enough work for all of us to survive just on local [spot] production,’ says Cashman. ‘A lot of local production is still being farmed out to U.S. companies so we have to keep up with the times. I’m not sure how lucrative the commercial industry will be in the next 10 years. It seems to be changing so dramatically. We want to make sure we have other forms of income, but we also just want to keep it interesting for ourselves.’

Radke Films, a successful staple of the commercial industry for many years, is also implementing a feature film and special projects division, headed by producer Chris Nanos.

‘I think Radke wanted to grow in the face of the down period in the business,’ says Nanos. ‘[The Radke executives] had interest in growing the company and I think a natural area of growth for them was to go into long-form features. It gets them introduced to talent that isn’t necessarily available in the industry right now.’

He says the new division may provide opportunity for the Radke directors to move into other types of filmmaking, which the folks at Buck, Park City and Spank/Charlotte Bernard have also taken into consideration for their rosters. However, the two projects being developed by Radke’s new division (The Fuck Up, a novel by Arthur Nersesian optioned by Radke, and Everything’s Gone Green, a screenplay by Douglas Coupland) will be using talents outside the current roster.

All of these companies have lofty visions of the future, but the begging question is will it work? Ask Phil Mellows. As president of Players’ group of companies, Mellows has been leading the charge to diversification.

He says anything is possible as long as you have the right people involved.

In the last few years, Players has diversified its commercial house to the point where it has become a production community unto itself, with its own interactive/design component in PlayMedia, post facility in Relish, boutique spot shop in Pure Film, and successful feature film division in 49th Parallel. In the midst of it all, Players, as a sole entity, continues to thrive, according to Mellows.

‘In forming these companies, Players has been the backbone, but we’re at a point with 49th Parallel where it’s doing extremely well,’ he says. ‘What we are trying to do is build a vertical that will hopefully allow [all of the divisions to] benefit from each other. It’s all been about the people, being able to connect the dots and making the vertical work so everybody is making everybody else look better.’

Diversification working

With 49th Parallel partners Steve Hoban and Noah Segal, Mellows has a number of feature projects well underway, including Ginger Snaps 2 and Vincenzo Natali’s Nothing. The diversification model is working for Players, and other commercial producers are confident it will work for them as well, but they all seem to agree it is important to diversify only within the given company’s means and fields of expertise.

‘There is also the other side with too much diversification and you don’t do well at anything,’ says Awerbuck. ‘That happens when you do too many things. There is something to be said for focus.’

Buckley agrees, saying a company should diversify if it can keep the quality of the work excellent across the board.

‘If they can maintain that level of quality through the diversification, I would say do it,’ he says. ‘If it is only going to diminish the quality of the work across all of your divisions, then it will probably cut your throat.’

All agree, however, that diversification and finding alternate revenue streams will be an important aspect of the business for years to come as the face of the commercial sector changes.

‘The fate of commercial companies is more in the hands of how the multinational corporations and the advertising agencies decide to go forward in their marketing strategies,’ says Mellows. ‘We all have to be looking at different ways of branding. The person who has their blinders on is going to try to do as many days as they can as a commercial production company, and not looking outside of that is being shortsighted.’

-www.playfilm.com

-www.radkefilms.com

-www.charlottebernard.com

-www.buckproductions.com