Vancouver: Two years ago, British Columbia’s minister of competition, science and enterprise laid down a challenge: double B.C.’s production industry to $2 billion by 2004.

Even then, industry insiders, including the 70 delegates at the B.C. Film & Television Summit 2001 where Rick Thorpe tried to rally the troops, were squirming with discomfort. The domestic industry was already in steep decline and international markets were conspiring against growth of the service sector.

Now, in 2004, instead of a robust film economy, Vancouver’s long-term fortunes as a self-sustaining independent production center are in question, especially now with the loss of key players in recent months. B.C.’s volumes have dipped below the magic $1-billion threshold, with the $2-billion target merely laughable. With few exceptions, there is little help forthcoming from the homegrown domestic industry, which in four years has faded in output and control.

A year ago, for instance, Peace Arch Entertainment, a major domestic production engine in the 1990s, ‘acquired’ Toronto-based GFT Entertainment in a stock-swap deal, which resulted in the gradual shift of operating control, except for a small fact-based production division, to Toronto. Former Vancouver-based Peace Arch CEO Juliet Jones, who remains on the board of directors, relinquished operating control to new Toronto-based CEO Gary Howsam and COO Mara Di Pasquale.

In September, majority ownership of Mainframe Entertainment, a mainstay of the local industry and an animation innovator, was sold to New Jersey-based DPS Global Animation Studio Network, a division of telecommunications company IDT Media, for $14 million.

‘There is real and serious cause for concern about the future of the independent production sector in B.C.,’ says Rob Egan, president and CEO of British Columbia Film. ‘There is no single reason you can point to, but there are a number of companies that showed promise that are no longer in the landscape.’

After a flurry of activity in the late 1990s prompted by CTV’s launch of BC-CTV (then called VTV), a concerted investment by CBC in West Coast production and the debut of provincial production tax credits, domestic activity grew to an all-time high of $419 million in 2000. However, the scales soon tipped downward.

Following a protracted negotiation, WIC Western International Communications was sold to CanWest, leaving the West Coast without a major broadcaster. Because WIC was a modest investor in independent production, Vancouver lost a pillar of its broadcast sector.

Meanwhile, after launching in 1997 with much fanfare as the West Coast’s missing production link, Vancouver distributor Red Sky Entertainment was absorbed by Vancouver-based International Keystone Entertainment in late 2000 – a move that did little more than buy Red Sky’s inventory. Red Sky had boasted experienced, transplanted Toronto distribution executives such as Tony Cianciotta and gained funding from the Working Opportunity Fund and Royal Bank Capital Partners, funders then committed to growing the local industry, but failed to realize the promise of putting B.C. films on the screen.

Today the founding Red Sky principals are back in Ontario and WOF and the Royal Bank are investing in other industries.

Forefront Entertainment, a West Coast production company run by Helena Cynamon, Mickey Rogers and Teri Woods-McArter, had gained momentum by producing successful youth programming including Madison and Magician’s House, but collapsed in 2001 when the international markets got sketchy.

By early 2002, funder B.C. Film opted out of television funding after having its allotment from government slashed by $1 million. Domestic production has since declined 61% to $163 million from its high in 2000. This year, B.C. Film, with its operating budget of just $2.28 million, will have to abandon feature film funding unless the provincial government extends the B.C. Feature Film Fund, which invested $4 million in 18 B.C. features in its three-year existence.

Also in 2002, Sextant Entertainment Group failed three years after launching as an ambitious, diversified, vertically integrated, studio-style organization of Vancouver’s production heavyweights including Chris Brough, founder of Mainframe Entertainment, and Tom Rowe, cofounder of Pacific Motion Pictures. A lack of funding closed the doors.

Vancouver-based venture capitalist Frank Giustra bankrolled the launch of Lions Gate Entertainment in the summer of 1997 and grew big fast – for instance, acquiring distributor Cinepix Film Properties and what is now Lions Gate Studios in Vancouver in 1998 and Trimark Holdings in 2000. Despite the company’s continued claim to be a Vancouver-based company, Giustra gave operating control to Jon Feltheimer, a Hollywood veteran, and the team in the Marina Del Rey, CA office after 2000 and left Lions Gate last year. The Artisan acquisition in late 2003, for instance, was orchestrated out of Los Angeles.

‘There is no real money in Vancouver,’ says Shawn Williamson, a partner in Brightlight Pictures and chair of the Indigenous Film Committee at the Motion Picture Production Industry Association of B.C. ‘It’s difficult to become a player without cash. This is a cyclical industry and we’ve had a couple of years of downturn, and that’s not changing in the short term. It’s still brutal and challenging out there. The lack of success stories makes it difficult to raise money.’

By clinging to the status quo, the B.C. industry appears not to have the momentum or internal strength to stand up against external market forces, at least in the current structure of under-capitalized, hand-to-mouth production companies. Volumes here are still completely at the mercy of visiting productions and the largesse of the taxpayer.

‘We can’t rely on the Canadian system, which can be a great way to make a movie, but is a difficult business model,’ says Williamson, pointing to a need for greater business savvy in this market that could generate a return on investment.

Egan stresses that it’s important to keep a long-term perspective about the production depression on the West Coast and the exodus of key players in recent years. ‘This decline is not unique to B.C.,’ he says. ‘It’s found in other provinces and reflects the overall difficult time in international business. And we have a number of B.C. companies that are weathering the storm.’

A lot of expectation is heaped on the shoulders of the new guard, like Brightlight, Studio B Productions, Force Four Productions, Screen Siren Pictures, Omni Film Productions, Bardel Entertainment and Paperny Films.

Domestic production in 2002, Egan adds, was still four times greater than the output by the domestic industry of the mid-1990s. Meanwhile, B.C. Film and the B.C. Film Commission both survived the provincial Liberal Government’s Core Review that cut costs throughout government.

‘Perhaps we have to be cautious about expecting too much, too soon,’ says Egan. ‘The film and television industry in B.C. and, particularly the domestic sector, is a relatively young industry. Like other sectors of the economy, it may experience growing pains, marked by periods of rapid growth and then followed by a period of retrenchment. Year-over-year growth may be an unrealistic expectation.

‘The serious problems the domestic sector is facing are at the forefront of our deliberations and activity at B.C. Film,’ says Egan. ‘We are consumed by this challenge and are reviewing our programs with an eye on the future and a commitment to make a difference with the available funds we have at our disposal.’