The past year has brought many new developments in the investment and finance areas of film and television. Fluctuations in the public finance sector were offset by gains in the private sector.

The drain on public funds was most notable in the television industry with last year’s oversubscription of the Canadian Televi-sion Fund leaving many producers short of funds for their productions. The great demand on the ctf was the result of increased production and the additional programming demands of specialty channels.

New specialty channels launched in the last 12 months included the Aboriginal Peoples Television Network, Report on Business Television, CablePulse 24, and Canadian Learning Television. New French-language specialties licensed encompassed such diverse genres as z, specializing in science and technology; Historia, a history channel showcasing documentary and entertainment history programming; Canal Evasion, a specialty channel for travel and adventure buffs; and Series +, which broadcasts alternative drama and films.

In the u.s., news of mergers between monolithic media giants sparked a round of speculation as to whether Canadian companies would follow suit. Speculators did not have to wait long as the recent takeover bid of ctv by bce was announced.

The year saw Montreal media company Radiomutuel purchased by Astral Communications, which included Astral’s acquisition of French-language specialty channels Canal Vie, z, and MusiquePlus and MusiMax, which are jointly owned by Astral and CHUM Ltd.

ctv purchased NetStar Communications, (subject to crtc approval) giving it control of tsn and Discovery Channel.

It was a busy year for CanWest Global, which purchased assets of WIC Western International Communications in a triumvirate deal that, when approved, will see Shaw Communications, Corus Entertainment and CanWest Global divvy up wic holdings. The deal will make CanWest Global Canada’s third national television network.

On the public financing front, changes have been made to the Canadian Television Fund and Telefilm Canada that will see more dollars channeled towards small to medium-sized production companies and projects that are predominantly Canadian. Telefilm is also raising the bar for those searching for funds by requesting projected audience ratings and rate of recoupment for projects seeking funds.

In another move, Telefilm instituted guidelines that deny publicly traded production companies access to Telefilm’s development and production revenue-sharing programs.

The changes to the ctf and Telefilm not only affect private companies but also touch upon the cbc, which no longer has a guaranteed envelope at the ctf, which may impact cbc’s future programming decisions.

In the private funding sector, Rogers Communications recently added a new fund to its existing grants program. The Rogers Cable Network Fund will award approximately $4 million a year in equity financing to Canadian independent producers who have projects licensed to Canadian cable and specialty channels. English-language projects in the categories of performing arts, variety, drama, children’s, documentaries, educational and instructional are eligible to apply.

Provincial initiatives

Provincially, the funding environment was positive, with several new initiatives being instituted.

In British Columbia, there was fear that B.C. Film’s budget may be drastically curtailed, but the major change occurred to the Market Incentive Program, a granting program that was shelved in favor of the new Production Financing Program. The new program gives producers recoupable advances or equity investments in lieu of the previous granting program.

In Alberta, the new $15-million Alberta Film Development Program will help boost Alberta-based producers and local production. In Regina, Minds Eye Pictures launched a low-budget film venture that enables the company to shoot eight movies in Saskatoon. Dubbed the ‘Saskatoon Initiative,’ with emphasis on thrillers, the project’s focus is to help build crews in the Saskatoon area by providing training and support. The project is an ingenious pairing of support from the Saskatoon Economic Development Authority and provincial training initiatives. Other cities interested in building up film and television production would be wise to take note of the project.

The province with the most new funding initiatives announced was Quebec, thereby maintaining its support of a thriving production community. sodec and nine Quebec companies joined together to launch the $45.5-million fidec. fidec invests in film and television projects by Quebec producers in the form of gap financing, rights acquisition and production financing.

In other Quebec news, Telefilm’s Quebec office created a feature film allocation for independent projects with budgets of $1 million or less.

Quebec was also the province achieving notoriety with investigations into allegations over improper use of Canadian credits for creative personnel. A report by sodec, on the management of public funding in Quebec made recommendations for improvement to the provincial culture minister.

The Atlantic provinces also picked up speed in the past year with the announcement from Telefilm’s Atlantic office of the creation of the Emerging Filmmaker’s Program for filmmakers in New Brunswick, Newfoundland, Labrador, Nova Scotia and Prince Edward Island. The fund is to support new projects by up-and-coming directors.

Also on the East Coast came the introduction of the Newfoundland and Labrador tax credit. Based on a healthy 40% tax credit rebate for producers, it has now become the highest tax credit incentive currently offered in Canada. p.e.i. is set to offer a tax credit incentive later this year.

The film world had hopeful news early in the year with the recommendation of a new $150-million fund for the creation of Canadian films. The elation was short-lived, with Heritage Minister Sheila Copps backing away from the idea.

While the government has not stepped in to help the beleaguered film community, the private sector has. The Cogeco Program Development Fund added $200,000 to support feature films in addition to its current funding for dramatic television series and mows. Broadcasters also stepped up to bat, with both the cbc and Radio-Canada pledging more money for Canadian feature films in the form of licence fees.

Investor funds, TADs

Investor funds opened a door in film financing over the year. Investors such as pension funds and insurance companies invest in a production or distribution company, which then provides advances to producers for Canadian fieatures.

Montreal distributor Blackwatch Entertainment went this route by announcing a new production film financing pool with funds coming from a Canadian pension fund. Blackwatch will invest in its own projects plus third-party projects with budgets of $3 million or less.

The advantage of using investor funds is that the producer has longer to exploit the film before paying the investment back, as opposed to bank financing which has to be repaid more quickly.

This type of financing can also be used for television and is being accessed by Lions Gate Entertainment of Vancouver for its new fund that focuses on reality-based television in the form of commercially minded documentary programming. Lions Gate Television International can deficit finance its own productions as well as programs from independent producers that contain a strong commercial slant.

Another new avenue of funding comes in the form of Trade Acceptance Drafts. tads – a tool of commerce recently adapted to the film industry by Toronto-based Actrade Capital Canada – function in a manner similar to the discounting on post-dated cheques, meaning the filmmaker gets immediate payment in return for a percentage fee to the financiers.

Further good news on the film front was the announcement of new Canadian movie theatres being built by Canadian and American interests. Alliance Atlantis, in a joint venture with Famous Players, joined together to begin creating a circuit of art-house theatres across Canada. The theatres will play some of aac’s own product as well as films from other distributors.

Another national theatre chain was announced by Galaxy Entertainment, which plans to open 20 theatres in small and medium-sized communities throughout the country over the next three years.

Not to be outdone is the Kansas City-based AMC Theatres movie chain, which also plans to build new theatres in Canada and will run commercial films mixed with independent films. The hope is that with new theatres will come increased exhibition space for independent distributors and therefore more room for Canadian films.

The new millennium will surely bring further changes to the finance and investment realm. With more production companies going private with rights offerings or the procurement of large credit facilities from banks, the way is being paved for less reliance on public funds. The industry is starting to achieve its own balance with public funds being directed to small and medium-sized companies.

Felice Gorica is an independent producer and author of Canadian Television Financing: The Buck Starts Here.