In this report we take a look at the activities and game plans of Canada’s public production companies.

In this report:

Alliance p. 40

Atlantis p. 42

Cinar p. 39

Coscient p. 40

Devine p. 42

Greenlight p. 43

Keystone p. 43

Malofilm p. 37

Nelvana p. 38

Paragon p. 40

Cinar president Ron Weinberg says Cinar is aiming at 20% growth in ’96 or an eps of $0.70. There are no plans to cool down, he says.

Cinar announced ’95 results on Feb. 8 for the year ending Nov. 30. Net earnings increased 53% to $5.2 million while the eps rose to $0.59 from $0.48 last year.

Total revenues in fiscal ’95 increased 41% to $42.1 million while gross profits increased 45% to $10.5 million.

Fourth-quarter highlights include a noteworthy 103% increase in net earnings to over $2.1 million (an eps of $0.22), with revenues up 56% to $14.9 million.

Weinberg says Cinar’s top-line revenues are lower than many other publicly traded Canadian producers, and in some ways, he says, the company’s production strategy is less speculative, with slates largely renewed year to year.

‘They (the brokers) have always said our prices are going to be lower in the future than in the present and they have always been wrong,’ says Weinberg.

‘The network game is a tough game and we have been able to build our business with a more conservative, slower, low-profile strategy. It’s the race between the tortoise and the hare. We only care about the shows,’ he says.

‘Outside of Canada there is a longer vision of the value of a library, its potential uses, and the value of a company in a specific niche. It’s not just a question of ‘Here’s my earnings and the ratio is too high therefore I’m going to forecast flat growth for the stock price because it’s already too high.’ ‘

On the issue of public funds, Weinberg says the Quebec government is satisfied with the benefits generated by the refundable tax-credit program. There has been some talk of fine-tuning and a possible cap, or ceiling, per program.

‘As far as we are concerned, it’s a fabulous program that has allowed Cinar to increase permanent employees from less than 70 three years ago to 150 last year, not taking into account all the freelance production people.’

Cinar is traded on nasdaq and the Toronto and Montreal Stock Exchanges.

The company has about 10 million shares (at $20, $21) outstanding, of which $120 million is in the public float.

Cinar will also deal with more dilution this year, in the order of another 10%.

More than a few players in the business note that Cinar’s eps went up following last year’s major dilution. According to Weinberg, this is a result of the predictability of Cinar’s production and sales program.

Cinar is looking at a possible North American acquisition in ’96, in complementary sectors such as education and entertainment.

The company has a 10% stake in teletoon and an option to go to 20% pending a change in legislation on foreign broadcast ownership.

‘We fully intend to exercise the option pending the change in the restriction,’ says Weinberg.

Cinar set record production levels in 1995 with 143 episodes. The projection is even higher for ’96 – 175 half-hours.

The live-action share has increased each year for several years, and this year includes the puppet series Wimzie’s House, 70 half-hour episodes, and 13 half-hours of Space Cases, a sci-fi adventure series order for Nickelodeon. There is an additional pickup of 13 episodes, slated to start shooting in April.

Cinar also has a family feature film called Rinko on the books for ’96. The story of a Japanese family’s coming to North America, the film is being financed with wqed and has been presold to pbs and nhk, the public broadcaster in Japan.

The company is also developing a deal with Paramount Pictures to shoot a feature film based on the long-running tween series Are You Afraid of the Dark? Also in development, two one-hour drama series, Cirque du Soleil and Emily, the latter in association with Baton Broadcasting, Salter Street Films and WIC Western International Communications.

Also rolling out – more animation in the form of Richard Scarry, Arthur, and 20 new half-hours of The Little Lulu Show, for a total of 26.

At this point, the commitment on Lulu is based on the participation of European and Asian partners. Weinberg says talks are being held with broadcasters in both the u.s. and Canada.

In terms of Wimzie’s stateside prospects, Weinberg says Cinar has a deal with wqed, the Pittsburg pbs station, to arrange an outreach program and eventually a broadcast arrangement on pbs.

‘With Wimzie, we’re looking at the same kind of strategy as we have with Arthur (coproduced in association with wgbh), which provides outreach (development of all of the school and community complements, study guides and other primarily print materials) and access to pbs.’