In addition to proclaiming a permanent downturn in domestic and international demand for drama, Alliance Atlantis Communications’ December decision to get out of production sent a bold message to the industry that producing in Canada under the current system is no longer viable from a business standpoint, a sentiment with which at least some independent producers are forced to agree.

AAC may be the biggest company to abandon production in Canada, but it is not the only one. With production costs rising and available funds already stretched beyond their limit, independent producers are fighting to make their budgets, let alone a profit.

‘Big companies are getting out of production because they can’t afford it, you can only produce for so long losing money,’ says Kevin DeWalt, CEO of Regina-based Minds Eye Entertainment. ‘The amount of overhead you need to do the paperwork alone in our system doesn’t justify the spend.’

After emerging from credit protection in January, reducing production volumes was essential to the viability of Minds Eye, which will now focus its efforts primarily on the company’s distribution business. DeWalt says he can’t see a future in production.

‘If the public and the government want Canadian content on the airwaves, there has to be a better understanding within the government and the organizations that finance the system of the importance of having successful, financially viable companies producing,’ he says.

Wendy Hill-Tout, executive producer and founder of Calgary-based Voice Pictures, agrees, saying that her company will no longer pursue projects that depend on financing from the Canadian system. Two years ago, all of Voice’s projects were Canadian-financed, this year she says there might be one.

‘We’re not doing any more Canadian production until the system is fixed. Production costs are actually higher than the amount of money you can get in Canada to do an MOW and we’re not prepared on a business level to work like that any longer,’ says Hill-Tout, who has produced MOWs such as Windermere and The Investigation for CTV. ‘The costs of producing have gone up over the last six years, but the amount of money coming into production has gone down.’

Hill-Tout says Voice will pursue primarily feature films going forward and will focus on developing international financing sources and increasing business relationships in the U.S. She is currently producing a series of MOWs based on the long-running TV show Little House on the Prairie with Touchstone Pictures.

‘There’s a real crisis in Canadian broadcasting far beyond the reach of whether the LFP has more money or not. I think the system needs a major overhaul, not just tinkering,’ says Hill-Tout. ‘I think we need a private system that works hand in hand with government in Canada, similar to the leaseback system in the U.K.’

Laszlo Barna, president and CEO of Toronto’s Barna-Alper Productions and chair of the CTFPA, says he understands producers’ frustration all too well. It is an issue that was addressed at Prime Time in Ottawa 2004.

‘People who actually answer to shareholders like those at Alliance Atlantis framed what we have been saying for a while, which is that production is not a business that can thrive and grow unless some changes are made,’ he says.

For Barna, AAC’s departure marks the final retreat of big business from domestic production, with the onus shifting to independent prodcos, which, facing 20% to 30% licence fees and often working work with only 80% of the budgets needed, are forced to sell off underlying copyright to finance the show.

‘There are no more big companies in business here,’ says Barna. ‘The remaining production community is extremely vulnerable and unless that’s addressed in the next year or two, we will have a really serious problem.’

With the onus for indigenous production falling increasingly to the independent production community, DeWalt and Barna agree that funding organizations and government must shift the focus towards encouraging the growth of successful, financially stable production companies, rather than financing individual productions.

For example, Barna explains, ‘tax-credit money was originally intended to build companies, not finance productions.’ He says producers are over-administered, need less regulation and should be cut some slack in terms of fees, overhead and recouping investment.

Initiatives such as the recently restructured CTF guidelines may help independent producers by streamlining unnecessarily expensive administrative processes, but they reward broadcasters for licensing shows that attract audiences, while failing to make producing more viable for producers. This is something Barna hopes the CTF will address in the near future.

‘The system has been very busy trying to find incentives for the broadcasting community and has not acknowledged the need to do likewise for the producing community,’ explains Barna. ‘If the producers of mega projects like Trudeau, Shattered City or Human Cargo come out of one of those projects just as broke as when they went in, there are some very tough choices to face.’

David MacLeod, partner at Halifax-based Big Motion Pictures, executive produced the critically acclaimed Trudeau miniseries, which reportedly brought in two million viewers. He says the show’s popularity did not translate in any way into a financial benefit for BMP.

According to MacLeod, the only rewards producers can hope to gain from producing shows that do well with audiences are additional commissions from broadcasters.

‘In this country, just working again is the reward you get for doing popular work, and frankly you can’t really have bigger ambitions without getting out of this country, which isn’t on my agenda.’

According to MacLeod, MOWs stand to be the hardest hit by the current environment because their production budgets depend on distribution advances from the international market, which have all but disappeared in the last year. Although MacLeod is hopeful that BMP will be able to go forward with MOW projects, he says their fate is uncertain to say the least.

‘If I can’t get a distributor, this will be the first time ever that it will be me pulling these projects off the table, even if I do get broadcast licences, because they’re just not possible to finance in today’s climate,’ he says. ‘For years we’ve put in half of our fees and overhead back as investment, so the profit margins were already tiny.’