The Francois Macerola report on Canadian content in film and TV opens the door to more foreign content in certified productions. The system would be based on a sliding scale approach that ties various forms of public-support benefits, including the content tax credit and direct participation by funding agencies such as the Canadian Television Fund and Telefilm Canada, to a production’s content level.

In a conference call, Macerola said the report’s recommendation to liberalize content rules reflects the increasingly difficult production financing market around the world.

‘We are establishing a correlation between the public benefits and the degree of [a production’s] content,’ he said.

The report proposes the three main project-specific tests (key creative points system, minimum production expenditure and minimum post-production expenditure) be entirely replaced by a new ‘Creative Expenditure Model,’ based on the overall creative and technical costs.

To qualify as Canadian content, a production would be required to meet minimum expenditure levels in each of four creative groups – authors, creative collaborators, performers and technicians.

The report says, ‘An option could be applied against any one element within a group, including one of the top three creative positions [writer, director and lead actor]. The option would allow the producer to net out the cost of that element when calculating the minimum expenditure requirements related to the group in which the option was exercised.’

Macerola says projects which exercise options in favor of foreign participation ‘will have to pay a price, and that price will be an increase in the amount of money [a producer] will be obliged to spend [within the four creative sub-clusters], and also a decrease in the tax-credit benefit.’

Macerola says because CTF and Telefilm are responsible for their own programs, ‘there may be a period of a year or two’ where one of the funding agencies decides not to accept any productions adopting even one option.

He says the proposed system ‘will be flexible.’

‘Producers will not be treated as children,’ he says, ‘but you’ll be able to make decisions and every single time you make a decision there will be a direct effect on the [accessible] amount of public money.’

The report also recommends the creation of a single arm’s-length organization (‘it could be a virtual one,’ says Macerola) responsible for certifying Canadian content, replacing the current multiplicity of definitions (sometimes cultural, sometimes industrial and sometimes collectively incoherent) in use at CAVCO and the CRTC, and by the CTF and Telefilm.

Only one option per group

‘A producer would be allowed to exercise only one option per group,’ says the report. ‘By requiring from the outset that the top three key creative positions (writer, director and lead performer) be held by Canadians and by including both the director and the screenwriter in the Authors group, we are assured that at least one of these two positions is held by a Canadian at all times.’

From the report’s perspective, film and TV productions with the fewest opting-out requirements, more Canadian content, would benefit the most. The scalable film and TV benefits would include financial support from the CTF and Canada Feature Film Fund, and indirect funding through the Canadian Film or Video Production Tax Credit Program.

Macerola says the implementation of a scaled content credit, with a base of 12.5%, with bonuses rising up to 17% and 22.5%, could be part of a solution to the current CTF crisis.

The report says productions which benefit from direct public funding (CFFF, CTF) should be restricted to only one opting-out option.

‘This would effectively correspond to the current minimum requirements that are common to both direct funding programs. The Canada Feature Film Fund, for example, requires that a film achieve at least eight out of ten key creative points. A film co-written by a Canadian and a non-Canadian may also be eligible for funding, subject to Telefilm Canada’s evaluation,’ says the report. ‘Further, the [CFFF] allows for flexibility in the assessment of the Canadian performer in a lead role in co-protagonist and ensemble situations as well as where the non-Canadian actor is integral to the project’s market potential.

‘Some may interpret the provision of one option in the direct funding tier as a reduction of the current minimum requirements, particularly as concerns the Canadian Television Fund, where all key creative positions must be held by Canadians,’ says the report. ‘The proposed model is not meant to preclude the role of the direct funding organizations in developing specific requirements in the pursuit of their particular mandates. Rather, it is intended to bring together the common Canadian content elements across the direct funding tier.’

The report also recommends that the certification of international treaty coproductions become the responsibility of a Canadian Content Commission; that Canada seek to secure preferential treatment and special association status with the most important multilateral initiatives, particularly with the European Union; that the distribution of Canadian feature films in Canada continue to be reserved for Canadian-owned and -controlled companies; and that Canadian Heritage find ways to facilitate creative and financial partnerships between aboriginal producers in Canada and aboriginal producers in other countries.

The Macerola report is the culmination of 10 months of cross-country consultations with 600 stakeholders.

The report is posted at:

-www.canadianheritage.gc.ca.