Canadian film and TV production and development spending was down nearly 7% in 2003 compared to 2002, in the latest phase of a three-year slide. While dramatic shifts in the domestic production industry have driven the overall decline, some prodcos are seeing new opportunities emerge.

Playback’s 16th Annual Report on Independent Production shows Canadian companies having spent $1.49 billion on production last year, down from $1.59 billion in 2002. Development spending was down to $26 million in 2003 from $34.6 million in 2002.

The numbers represent the cumulative amounts Canadian prodcos spent on indigenous production or international copros in calendar 2003, with service production tallied separately and broadcasters’ in-house production not counted. According to the CFTPA/APFTQ Profile 2004 study, the total volume of Canadian production, service and in-house included, was $4.93 billion for the 12 months ending March 31, 2003. Spending data for 176 prodcos was provided by the companies themselves through a Playback survey.

A primary factor in the overall decline has been the moves away from production by Alliance Atlantis (remaining atop the list) and CanWest Global, through its subsidiary Fireworks Entertainment (holding at number two).

AAC’s production and development spending in 2003 was $187.4 million, down 40% from $309.8 million in 2002. AAC for the most part threw in the towel on production at the end of last year, eliminating nearly half of its entertainment division and closing Halifax’s Salter Street Films, controversially citing ‘a permanent downturn’ in the worldwide demand for drama. However, AAC shows already underway, including The Eleventh Hour and This Hour Has 22 Minutes, continue, and of course, AAC produces the smash hit CSI franchise with CBS and Jerry Bruckheimer Films. But going forward, the company will focus more on its broadcast and distribution businesses.

The future of Fireworks, recently put up for sale by CanWest Global, is less certain. Sources at Fireworks confirm the prodco’s 2003 production spend at $110 million, down 16% from $130.4 million in 2002. CanWest used language similar to AAC’s in making the Fireworks sale announcement, referring to ‘weakness in demand for North American content in international markets.’ As with AAC, CanWest says it will continue to support Canadian production as a broadcast licenser.

Also, Corus Entertainment (moving from third to fourth) has cut back production at its Nelvana division, resulting in a $48.5 million drop, according to a Playback estimate. Developments at these giants have been met with mixed emotions.

‘It’s never good when any company shuts down elements,’ says Shawn Williamson, producer at Vancouver prodco Brightlight Pictures. ‘That’s not good for the investment community or the Canadian film industry at all. But it happens, and so for us it’s about opportunity now. Certain people said ‘The sky is falling and the industry is slowing down.’ We see that the sky is changing, but it’s how well you adapt to the new industry.’

The titans’ step back will lead to a more level playing field among prodcos and opportunities for others to grow. Foreign companies that previously would have partnered with these majors will now have to look at other Canadian coproducers.

Coproduction has helped Brightlight grow its 2003 spend to $28.9 million from $8.2 million the year before, propelling it from 39th to 11th spot on the list. Accounting for much of this rise was Brightlight’s involvement on the $20-million videogame adaptation Alone in the Dark, a copro with Germany’s Boll KG.

Williamson cautions that his numbers are not necessarily indicative of an industry upswing, but he does note the shift in Vancouver business from MOWs to features.

‘Vancouver had a large part of the TV movie market, but when the German market crashed, the number of movies that were being produced, primarily by American cable companies, decreased significantly,’ he says.

Drama might in fact be down, but it is not dead. While the $566 million spent on dramatic series in 2003 was down 9% from $620.9 million in 2002, the volumes for MOWs, pilots, minis and shorts were actually up 18%, to $179 million from $151.9 million. So if MOWs have rebounded somewhat – yet steer clear of the former TV movie hub of Vancouver – then they are heading in large part to the Prairies.

One beneficiary has been Calgary’s Nomadic Pictures, which reported production/development volumes of $16.5 million in 2003, up from $5.9 million in 2002, boosting the company to 27th from 53rd on the chart.

Last year, Nomadic partnered with L.A. producers Once Upon a Time Films on the MOWs The Legend of Butch & Sundance and Call Me: The Rise and Fall of Heidi Fleiss, and it has just begun rolling on the Michael Jackson biopic Family Values with L.A. copro partner Blueprint Entertainment.

Nomadic principal Chad Oakes credits the Alberta Foundation for the Arts with the province’s industry growth. In addition to Alberta’s strong tax incentives, AFA guidelines stipulate that when a foreign producer partners with a local company for a shoot in the province, the local company becomes a coproducer on the project.

‘Everyone down south – the networks and our coproduction partners – realize the value of the AFA fund and what the Alberta producer can bring to the table,’ says Oakes. ‘It’s a way to build an industry and a crew base unlike the bigger cities in Canada where they are allowed to do service production. This is actually building Canadian companies.’

Coproducing with the U.S. may be good business, but those that see Canadian film and TV as crucial outlets for ‘telling our stories’ might take issue with all the Americentric content. But after having been shut out of the EIP and LFP last year, Nomadic has given up on the Canadian Television Fund to pursue product with global commercial interest.

‘To survive, you need to make stories not just for Canadians, but for the world,’ Oakes says.

Of course, Quebec is the exception, as producers there have been very successful in making projects that tap into Quebeckers’ unique tastes and culture, on screens both big and small. For 2003, Zone3 again tops the list of Quebec prodcos, with a $50.4-million spend and the sixth spot on the chart overall. Its many diverse productions include the children’s live-action series Phenomia and lifestyle show Ma Maison RONA.

In English Canada, however, the challenge remains steep. Unless you are producing a magazine/lifestyle/reality show on the cheap, some believe you should either go big or go home.

‘People want bigger movies,’ says Robert Merilees of Vancouver’s Infinity Media Canada, which produced the $10.3-million feature The Snow Walker and a $150,000 making-of doc that places the prodco 40th on the list. ‘The market for the $2-million Canadian movie is gone.’

But to make a relatively big-budget project purely Canadian in theme is a financial gamble. In the case of The Snow Walker, despite strong reviews, nine Genie Award nominations, and a marketing campaign with which Merilees is totally satisfied, the Northwest Territories-set film did not find a large audience at home. It dropped from Playback’s Top 5 domestic films at the box office after taking in $113,452 in ticket sales.

‘The majority of the people who saw the movie liked it and saw that it could compete in the foreign market, which is where you have to succeed,’ Merilees says. ‘It may have fallen into that trap – ‘too Canadian for Canadians’.’ He adds that the film has sold in Germany, France and in several Asian markets.

Overall spending on feature films in 2003 virtually held steady at $293.4 million. In other genres, documentary spending was down 10% to $107.2 million from $119.3 million, perhaps explained by the rise in magazine/lifestyle/reality production, which recorded a whopping 64% growth, to $73.8 million from $45.1 million. Animation spending was down 12% to $170.9 million from $195.3 million, while comedy and variety production was up 5% to $47.9 million from $45.6 million.

One factor that should help numbers rebound in 2004 is the restoration of the federal contribution to the CTF, an essential trigger to the cash that gets many Canuck programs off the ground. Down to $87.5 million in 2003, the feds’ annual CTF commitment is back up to $100 million for 2004 and 2005. *