Montreal: Telefilm Canada is negotiating with industry partners for management control of a new feature film fund. The talks are taking place as the board of the Canadian Television Fund prepares to release revamped guidelines for both program components sometime in December. Lurking behind both the film policy and revamped guideline issues is the unknown impact of this spring’s ctf oversubscription debacle.

Dropping the Licence Fee Program’s first-come, first-served approach has major implications for the federal funding agency, says Peter Katadotis, Telefilm’s acting executive director behind the announcement late last month that Francois Macerola will be taking a posting with the Quebec Liberal Party.

‘We want to ensure we’ll mesh our processes so there are no unfortunate surprises next year,’ says Katadotis.

lfp will use ‘objective criteria’ and a unified set of guidelines for both the Equity Investment Program and lfp, he says, adding: ‘It will be one set of ctf guidelines, with some elements common to both the eip and lfp programs.’

The agency is actively seeking management control of any new feature fund or mechanism with some form of industry advisory committee, and Katadotis says Telefilm is clearly opposed to a ctf-style governance for features.

A new feature fund would include both automatic and selective components.

‘Essentially, Telefilm and the advisory committee have agreed on everything except the governance of the fund,’ says Katadotis. ‘The industry says it will only accept a board that has real power.’

The whole issue is being actively negotiated with the high-profile advisory committee recommendations slated to go to Heritage Minister Sheila Copps sometime in mid-November.

As for implementation, Katadotis says, ‘The official messages we’re getting is `probably not before the spring.’ ‘

Macerola exits

Leaving the particulars of the new feature film fund and the existing uncertanties with the ctf behind him, Macerola resigned his post Friday, Oct. 23 and was introduced as a candidate for the Quebec Liberal Party in the upcoming provincial elections, expected for Nov. 30.

Macerola is one of several new candidates recruited for the party by Coscient Group chairman Charles Sirois. His resignation comes three and a half years into a five-year mandate, which began in March ’95.

With the agency’s top job held by a Montrealer for the past decade, a well-placed executive with Telefilm says in all likelihood the new executive director will be recruited from among industry ranks in Toronto.

Wayne Clarkson is currently topping the names running through the industry rumor mill. Other candidates on Copps’ current short list are thought to be Richard Stursberg, ctf executive director, and Sandra Macdonald, chair of the National Film Board. And because the nomination is political, Katadotis is not thought to be in the running.

A decision on Macerola’s replacement is expected to happen only after Bill C-44 completes its legislative cycle, which some sources say could take as long as three or four months. The legislation stipulates nominations such as the head of the cbc, Telefilm and the nfb will henceforth be made ‘at the pleasure of the cabinet,’ effectively creating an open-term mandate for Telefilm’s new boss. The bill is currently in reading in the Senate.

One factor which might influence the nomination is the need for a fluently bilingual executive director, a principle the industry in Quebec is expected to defend. Both Stursberg and Macdonald are bilingual.

Macerola will be a candidate in the suburban Vimont-Laval riding, and not as reported in Chambly, against Parti Quebecois Culture Minister Louise Beaudoin. His predecessor, Pierre DesRoches, currently a member of the board of Toronto-based Alliance Atlantis Communications, held the job from 1988 to mid-1994.

Financial highlights

Telefilm is releasing its 1997/98 annual report Nov. 4.

In operational terms, the agency invested $163.4 million in ’97/98, including $141 million in production and development ($111.6 million from eip and $15.9 from the Feature Film Fund). The net investment was $136.9 million.

The difference was made up in revenues or ‘recoveries,’ including $17.8 million in production and development revenues ($10.7 from broadcast and $4.4 from features), $6.9 million in distribution and marketing for total operational returns of $26.4 million. The total net operation cost in ’97/98 was $150.3 million, up $14 million from ’97.

Danny Chalifour, Telefilm director, finance and administration, says the ‘recovery of portions of our investment don’t necessarily mean anybody, including Telefilm, made a profit.’

Chalifour says the nearly $4.9 million in revenues from feature films is a ‘lifetime’ total representing returns for all features funded by the agency. ‘They [the revenues] were all collected last year but some of those returns could be tied to a project we funded 12 years ago.’

Annual report highlights include $33.9 million invested in 68 French-language tv productions with total budgets of $136.8 million, as well as $1.5 million in 61 screenwriting projects. French-language investment made up 37% of all eip production and development spending.

On the English side, $57.8 million was invested in 91 tv productions and $2 million in 90 screenwriting projects, making up 62.2% of all eip investment in the period. The agency invested another $1 million in 11 aboriginal production and development projects.

In total eip investments, Telefilm injected $96.3 million into 321 projects with total budgets of $367.2 million.

Overall, the agency invested $128.6 million in 506 new production and development projects – 333 in tv, 150 in feature film and 23 in multimedia.

Chalifour says the agency continues to slowly reduce its average investment in productions. In tv, the agency’s average share of project investment was 26.3% in ’97/98, down from 28.1% in the previous year. He says the trend will continue because it helps spread more money over a greater number of high-content productions.

Oversub impact

Chalifour says the bailout measures for the fiscal ’98 oversubscription, from $20 million up to an estimated $30 million, will impact starting in April ’99 and the following year. In strict eip terms, the impact is less, in the order of $4 million. There’s some hope the eip overcommitment charge may be applied over two years.

eip investments in renewed drama series represented about 45% to 50% of all broadcast investment last year.

‘It may be different this fiscal [’98/99] because of the early problems in the year and because lfp had to significantly overcommit,’ says Chalifour. ‘We won’t really feel that crunch until next year, but really there are many more series out there than the system can to some degree sustain.’

It means come next spring, with lfp short $20 million, or perhaps as much as $30 million, a number of series won’t be renewed.

‘There’s a lot of speculation but there could be more difficulties for producers next year than this because there would be much less money available,’ says Chalifour.

Telefilm expects its budget to hold steady for ’99/2000. The government appropriation is expected to hold at $78 million, just more than half the high-tide mark of $145.6 million in fiscal ’90.

On the plus side, Telefilm has received new funding through various contributions including the Heritage contribution to ctf-eip, $57 million, a separate Heritage contribution for film schools, and this year, a $5.8-million injection (for five years) for multimedia production.

Revenues are down

Telefilm’s budget was $210.5 million in ’97/98. The current budget for ’98/99 on a cash basis is $197.8 million.

‘The reduction relates firstly to our appropriation, which continues to go down by roughly $3 million, and our expected revenues, because we’re working on a projected basis, will be going down by roughly $10 million,’ says Chalifour.

Revenues were close to $35 million in fiscal ’97, $36.4 million in ’96. This year’s projection is $27 million.

‘The main reason for that significant difference [in revenues] is basically the impact of the reduction in the value of our portfolio,’ explains Chalifour. ‘Five years ago Telefilm would have invested much more money in productions and would have recouped a relatively stable percentage, but if our portfolio of annual investments goes down by $30 million then we are looking at maybe 10% or 15% less times that $20 million or $30 million.

While the Commercial Production Fund had a rate of return of close to 80%, Chalifour says because of the reduction in the appropriation the Commercial Fund has effectively been sacrificed. ‘In this fiscal [’98/99] basically we have nothing. We don’t have a Commercial Fund anymore.’

Katadotis says no major policy change in broadcast recoupment is anticipated. He says it’s ‘premature’ to project what foreign revenues producers might report to Telefilm in ’99. ‘But we are looking at it with considerable interest this year.’

Although Telefilm had $210 million to spend in ’97/98, it only spent $184 million.

Chalifour says this is not a retained practice by the agency but rather a result ‘of trying to cope with the implementation of the ctcpf where we are signing contracts with the producers but the producers are not necessarily still able to meet all the deadlines in terms of delivery.’

The point being, the obligations – in the order of $26 million – are being paid out this year, he says.

Regional triggers

Other issues on the table include the possibility of help for small and medium-sized producers in the form of recommendations in a new report by Ontario analyst Ian McCullum.

Katadotis says the agency is also looking at the possibility of participating in a mixed, public-private financing mechanism.

‘I don’t think we would want to duplicate in Quebec what sodec [Sodec-Financiere] is doing. But financing would be directed to small and medium companies.’

On regional investments, Katadotis says the level of spending is tied to ‘the way the broadcasters trigger. If they all trigger in one province then I can’t invest in all the other ones.

‘What we have to be sure of is that our funding respects industrial cycles,’ he says. ‘We know in television drama, broadcasters want most of the stuff to be in production in summer with decisions made in the spring. The question is `Should we be holding some back for other genres that are not tied to that kind of a schedule?’ We’re looking at that.’