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The role of the federal government in the commercial feature film industry in Canada : an introduction Diebel, Dennis H. 1976

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THE ROLE OF THE FEDERAL GOVERNMENT IN THE COMMERCIAL FEATURE FILM INDUSTRY IN CANADA AN INTRODUCTION by DENNIS H. DIEBEL B.Comm., University of B r i t i s h Columbia, 1970 LL.B., University of B r i t i s h Columbia, 1975 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION We.accept this thesis as ^ conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA August, 1976 (o) Dennis H. Diebel In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t fr e e l y available, for reference and study. I further agree that permission for extensive copying of this thesis for scholarly.purposes may be granted by the Head of my Depart-ment or by his representatives. I t i s understood that copying or publication of t h i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of Commerce & Business Administration The University of B r i t i s h Columbia 2075 Wesbrook Place Vancouver, Canada V6T 1W5 Date ABSTRACT The feature f i l m industry i n Canada i s dominated by two large foreign owned theatre chains and eight foreign owned d i s t r i b u t i o n firms, who, by engaging i n a series of i n t e r r e l a t e d trade practices, have managed to gain e f f e c t i v e control of not only the marketing of feature length motion pictures i n Canada but t h e i r production as w e l l . In 1968, the federal government's stated purpose when establishing the Canadian Film Development Corporation was to foster and pro-mote a feature f i l m industry i n Canada. Since that time, the government has taken a d d i t i o n a l measures designed to influence the industry. This study attempts to measure the impact of these i n i t i a t i v e s on the f i l m industry i n Canada and concludes that they have had l i t t l e or no s i g n i f i c a n t e f f e c t . While feature films are f i n a l l y being produced i n t h i s country, few of them return a p r o f i t . Consequently, the private sector i s reluctant to invest i n the production of Canadian f i l m s . Indications are that tax incentives w i l l not improve th i s s i t u a t i o n since i t was concluded that the primary purpose for investing i n films i s not to reduce taxes but to return a p r o f i t , substantial tax savings notwithstanding. Co-production agreements with other nations a s s i s t Canadian producers i n financing t h e i r productions but i t i s s t i l l too early to draw conclusions about the f u l l p o t e n t i a l of the co-production agreements. Canada's competition laws have only recently been extended to services such as the f i l m industry, so again i t i s s t i l l too early to draw any conclusions. From past experience, however, the results do not appear encouraging. Voluntary quota agreements between the two large theatre c i r c u i t s and the Canadian Film Development Corporation have resulted i n Canadian films being shown throughout Canada but only i n an apparent attempt to avoid l e g i s l a t e d quotas and thus, early indications are that the l e t t e r and not the s p i r i t of the agreements i s being adhered to. Canada's foreign ownership l e g i s l a t i o n has had absolutely no a f f e c t on the extent to which the f i l m industry i n Canada i s foreign control l e d . In short, from a business point of view, and i t was concluded that the f i l m industry must be run as a business, the Canadian f i l m industry remains much the same as i t was before the government's involvement. The study, therefore, looked at the f i l m subsidies of a number of other countries and some of the Canadian f i l m p o l i c y proposals submitted to the Secretary of State's Department, i n an attempt to i s o l a t e incentives which would help develop a Canadian f i l m industry. I t was concluded that a f i l m levy l i k e that of the Eady Plan i n Great B r i t a i n , would not only h a l t the flow of substantial sums of Canadian source funds to foreign controlled corporations but i t would also make available to Canadian producers a source of funds i v which i s presently being supplied by the Canadian taxpayer through the Canadian Film Development Corporation. A levy, i t was concluded, would also encourage private sector invest-ment i n the production of Canadian motion pictures. Further i t was concluded that the supply of Canadian films at t h i s time does not warrant a l e g i s l a t e d quota and what Canadian films need instead i s better and proper promotion. It was also.concluded that the. federal government should be encouraged to negotiate and complete further co-production agreements since they increase the p o t e n t i a l sources of financing available to the Canadian producer as well as make available the advantages of whatever subsidies the co-producing nation has imposed, be they quotas, d i s t r i b u t i o n agreements or levy p a r t i c i p a t i o n . F i n a l l y i t was concluded that the federal government should take steps to a t t r a c t foreign productions to t h i s country because they not only provide additional sources of employment for those now working i n the Canadian f i l m industry and, at the same time, provide those new to the industry with a p r a c t i c a l means of learning t h e i r trade, but they also have the added advantage of i n j e c t i n g large amounts of c a p i t a l into the Canadian economy generally. V TABLE OF CONTENTS Page ABSTRACT i i TABLE OF CONTENTS V LIST OF TABLES i x ACKNOWLEDGEMENT X Chapter I. INTRODUCTION 1 LIMITATIONS '. 4 A. Sources of Data and Information 7 PRODUCTION, DISTRIBUTION AND EXHIBITION 8 THE AMERICAN FILM INDUSTRY: A SHORT HISTORY 9 THE WHITE REPORT 11 I I . THE STRUCTURE OF THE MOTION PICTURE INDUSTRY IN CANADA . 15 THE FEATURE FILM INDUSTRY IN CANADA: AN INTRODUCTION 15 THE CANADIAN FILM INDUSTRY VS. THE FILM INDUSTRY IN CANADA 16 A. Production 18 Independent Producers 19 B. D i s t r i b u t i o n ••• 23 C. Ex h i b i t i o n 26 Famous Players 28 v i Chapter Page Odeon Theatres (Canada) Limited .. . 29 The Smaller Independent Chains 29 The Independents 30 I I I . MARKET BEHAVIOUR IN THE MOTION PICTURE INDUSTRY IN CANADA 33 THE MARKETING OF MOTION PICTURES: AN INTRODUCTION . 34 A. The Product 34 B. The Demand for Motion Pictures 34 TRADE PRACTICES IN THE MARKETING OF FEATURE FILMS IN CANADA 36 A. Block Booking 36 B. Runs 39 C. Film Rentals 41 D. Booking Practices 44 SUMMARY OF STRUCTURE AND TRADE PRACTICES . 45 IV. THE FEDERAL GOVERNMENT AND THE FEATURE FILM INDUSTRY IN CANADA 50 POLICIES INFLUENCING PRODUCTION 51 A. The Canadian Film Development Corporation .. 51 The Feature Film Investment Program ... 53 The Low Budget Program 54 v B. The Canada Council 55 C. Deductions from Income Tax: Feature Film Investment 56 Feature Film Investment: The 100% Deduction 58 v i i C h a p t e r Page D. C o - p r o d u c t i o n A g r e e m e n t s 5 9 E. C a n a d i a n F i l m I n v e s t m e n t : Famous P l a y e r s a n d Odeon 60 COMPETITION POLICY 61 A. The C o m b i n e s I n v e s t i g a t i o n A c t as o f J u l y 1, 1976 61 FOREIGN OWNERSHIP ... 65 A. The F o r e i g n I n v e s t m e n t R e v i e w A c t 65 B. The C a n a d a B u s i n e s s C o r p o r a t i o n s A c t .. 66 QUOTAS 67 V. THE IMPACT OF THE FEDERAL GOVERNMENT ON THE F I L M INDUSTRY 71 THE IMPACT ON PRODUCTION 71 A. C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n 71 B. T a x a t i o n 80 C. C o - p r o d u c t i o n A g r e e m e n t s 83 D. I n v e s t m e n t b y Famous P l a y e r s a n d Odeon 84 THE IMPACT ON DISTRIBUTION AND E X H I B I T I O N ........... 85 A. E x h i b i t i o n 88 THE IMPACT ON FOREIGN OWNERSHIP 91 SUMMARY 92 V I . F I L M INDUSTRY INCENTIVES 97 P R I N C I P L E S FOR INTERVENTION 98 FOREIGN S U B S I D I E S 99 v i i i Chapter P a 9 e A. The United Kingdom — . . . . . . . . 99 B. France • • 1 ° 2 C. I s r a e l 103 D. Sweden • 1 ° 5 FILM POLICY PROPOSALS 106 A. Quotas ...... •• 1 ° 6 B. Promotion 109 C. Withholding Tax I l l D. Film Marketing Board .. H I E. Purchase of an E x i s t i n g Chain . * 112 VII. SUMMARY AND CONCLUSIONS H"7 RECOMMENDATIONS 1 2 3 A. Areas of Further Study 12 6 BIBLIOGRAPHY f 1 2 9 APPENDIXES 1 3 4 I Glossary 1 3 4 II Distributors of Feature Length Films In Canada I 3 8 III The U t i l i z a t i o n of Tax Deductions i n the Financing of Canadian Feature Films: An Industry Example .. . 145 IV The Use of Leverage i n Feature Film Investment 156 V CFDC Agreement with Famous Players Ltd 157 VI CFDC Agreement with Odeon Theatres (Canada) Ltd. .. 1 6 0 VII Famous Players Report for the months of August-September, 19 75 1 6 3 ix L I S T OF TABLES* T a b l e P age I I - I SUMMARY OF MOTION PICTURE THEATRE E X H I B I T I O N I N CANADA, 1974 17 I I - I I NEW FILMS SHOWN ON CANADIAN MOTION PICTURE SCREENS BY COUNTRY OF ORIGIN FOR THE YEARS 1 9 7 2 , 1973 AND 1974 22 V - l YEARLY PRODUCTION OF FILMS PRODUCED WITH THE ASSISTANCE OF THE CFDC BETWEEN A P R I L 1, 196 8 AND MARCH 3 1 , 1975 (FRENCH AND ENGLISH) .. 72 V - I I FEATURE F I L M PRODUCTION I N CANADA FOR 1975 GROUPED ACCORDING TO COST 74 V - I I I CANADIAN BOX OFFICE GROSSES OF THE TOP FEATURE FILMS PRODUCED I N ENGLISH CANADA AS OF OCTOBER 3 1 , 19 75 76 V - I V CFDC RETURN ON INVESTMENTS (COMPARATIVE TABLE) 1968-69 t o 1972-73 1973-74 t o 1974-75 78 V-V FAMOUS PLAYERS PERFORMANCE UNDER THE AUGUST 1 5 , 19 75 QUOTA AGREEMENT FOR THE PERIOD AUGUST 1, 1975 TO OCTOBER 3 1 , 1975 89 ACKNOWLEDGEMENT For her persistent encouragement and u n f a i l i n g f a i t h , I thank my wife, Peggi Marie Diebel. For t h e i r assistance i n organizing material and fo r many h e l p f u l suggestions, I am indebted to Dr. Rick Pollay and Dr. Stan Oberg. For typing the f i n a l d r a f t , much praise i s deserved by J i l l Bourne. CHAPTER I INTRODUCTION This study i s an attempt to analyze and evaluate the impact of the federal government on the structure, behav-i o r and performance of the feature f i l m industry i n Canada. Another purpose i s to examine the development of the govern-ment's f i l m p o l i c y and i t s e f f e c t as an impetus to promoting private involvement i n the industry. In part, i t follows the model of Mae D. Huettig's Economic Control of the Motion  Picture Industry and Michael Conant's A n t i t r u s t i n the Motion  Picture Industry. Like these studies, i t recognizes that a f i l m industry i s not l i k e most in d u s t r i e s . The fact that i t i s a service industry with constantly changing product creates somewhat d i f f e r e n t problems of analysis. The f a c t that i t i s a maze of i n t r i c a t e relationships compounds the problem. The nature and history of the motion picture industry - 1 -- 2 -i n Canada, however, makes much of t h i s study unique i n form. More than the American f i l m industry, upon which these works are based, the Canadian f i l m industry works within a frame-work of laws and i n s t i t u t i o n s created by government. I t has been regarded not merely as a c o l l e c t i o n of entrepreneurs producing a service for consumers but as an i n f a n t industry that needs promoting and protection from foreign competition. Previous works on the motion picture industry i n Canada are the report of Mr. Peter White, K.C., Commissioner appointed under the Combines Investigation Act to investigate an alleged combine i n the motion picture industry i n Canada, Eleanor Beattie's A Handbook of Canadian Film and Garth H. Drabinsky's Motion Pictures and the Arts i n Canada. Of these, only the White Report can be considered a true study of the f i l m industry i n Canada. I t , however, was published i n 1931. The Beattie handbook i s an attempt to bring together and to make accessible a l l information about f i l m and f i l m making in Canada. "The whole book i s , i n f a c t , a kind of dictionary, an open ended l i s t i n g which i n v i t e s additions."" 1" Motion  Pictures and the Arts i n Canada " i s meant to present the economic facts f o r day-to-day decisions and actions and to be used as a s i m p l i f i e d guide to common l e g a l concepts that 2 influence business decisions" i n the Canadian feature f i l m industry. There has been no study analyzing the market struc-ture conduct and performance of the industry. Thus, any - 3 -discussions of the government's impact on the industry have -lacked an o v e r a l l framework within which to judge the govern-ment's action or devise a useful f i l m p o l i c y . The present study attempts to f i l l t h i s gap. The second and more important reason for t h i s study i s to report c r i t i c a l l y on the impact of the federal government's actions over the l a s t ten years, on the industry's structure, behavior and performance. Most s i g n i f i c a n t of these was the establishment of the Canadian Film Development Corporation. O r i g i n a l l y a l l o t t e d $10,000,000.00 of public funds "to foster and promote development of a 3 feature f i l m industry i n Canada", the Corporation has since been funded with an additional $15,000,000.00. An e f f o r t i s made herein to measure the e f f e c t of the Corporation on the structure of an performance i n the motion picture markets with p a r t i c u l a r emphasis on the e f f e c t s of the Corporation on the entry of new firms. Analysis on the impact on performance centers on changes i n the r e l a t i v e output of new motion p i c -tures . The remaining sections of Chapter I describe the three aspects of a f i l m industry: production, d i s t r i b u t i o n and exhibition; outline the l i m i t a t i o n s of the present study; and set out a conceptual history of the American f i l m industry with which the Canadian i s clo s e l y t i e d and a b r i e f summary of the results of the White Report. Chapter II describes i n d e t a i l the market structure of a Canadian motion picture industry s e t t i n g out the extent of foreign ownership and focusing on the high degree of concentration therein. Chapter III centers on the trade practices i n the industry included i n the i n t e r r e l a t e d elements of run, centralized booking and block booking. ChapterIV describes the government p o l i c i e s , to date, a f f e c t i n g the industry. These include not only the p o l i c i e s which can be described as pure f i l m p o l i c i e s but also a l l i e d government p o l i c i e s having an e f f e c t not only on the f i l m industry but on a l l industries i n the Canadian economy. Chapter V draws on data from the Annual Reports of the Canadian Film Development Corporation, S t a t i s t i c s Canada, trade journals and various other sources to show the impact of the government's actions on the structure of, and perfor-mance i n , the industry. Chapter VI analyzes the f i l m subsidies of other nations plus various f i l m proposals submitted to the Canadian government as alternatives to those already im-plemented and Chapter VII concludes with an evaluation of the effectiveness of the government's actions and o f f e r s a l t e r n a t i v e s , taking the p o s i t i o n that no amount of government involvement i n the production of motion pictures w i l l a s s i s t the Canadian f i l m industry u n t i l steps are taken to insure that Canadian films are properly marketed. LIMITATIONS I t would be v i r t u a l l y impossible with t h i s type of 5 -st u d y t o a n a l y z e e v e r y a s p e c t o f t h e f i l m i n d u s t r y i n Canada. Time and r e s o u r c e s d i c t a t e o t h e r w i s e . A c c o r d i n g l y , t h e f o l l o w i n g p arameters were p l a c e d on the scope o f the s t u d y . However even w i t h t h e s e g u i d e l i n e s , i t was o f t e n d i f f i c u l t , because o f t h e c o n s t a n t o v e r l a p p i n g t h a t o c c u r s i n t h e i n d u s -t r y , n o t t o make mention o f a s p e c t s o f t h e i n d u s t r y o u t s i d e the scope o f the s t u d y . The s t u d y i s d e s i g n e d t o d e a l o n l y w i t h E n g l i s h -s p e a k i n g s e c t o r o f the co m m e r c i a l f e a t u r e f i l m i n d u s t r y i n Canada. I t does n o t c o v e r i n d u s t r i a l , e d u c a t i o n a l , o r documentary f i l m s . Nor does i t i n c l u d e s h o r t s : f i l m s o f l e s s t h a n 90 minutes r u n n i n g t i m e . The Quebec F r e n c h language i n d u s t r y , u n l i k e the E n g l i s h , "has managed t o a c h i e v e adequate ' d i s t r i b u t i o n ' f o r i t s f i l m s " , 4 and i s t h e r e f o r e e x c l u d e d . The s t u d y i s f u r t h e r l i m i t e d i n t h a t i t c o v e r s o n l y 35mm f e a t u r e l e n g t h m o t i o n p i c t u r e s d e s i g n e d f o r t h e a t r i c a l d i s t r i b u t i o n . I t does n o t i n c l u d e made f o r T.V. f i l m s o r subsequent use, second g e n e r a t i o n p r o d u c t s o f t h e m o t i o n p i c -t u r e such a s : v i d e o t a p e , c a s s e t t e , o r 16mm. A l s o e x c l u d e d from any i n depth a n a l y s i s a re t h e ' f i l m s o f b o t h the Canadian B r o a d c a s t i n g C o r p o r a t i o n and the N a t i o n a l F i l m B oard s i n c e n e i t h e r o f t h e s e Crown c o r p o r a t i o n s i s concerned w i t h t h e p r o d u c t i o n and d i s t r i b u t i o n o f f e a t u r e l e n g t h m o t i o n p i c t u r e s t o t h e a t r e a u d i e n c e s . I s s u e s i n v o l v i n g v a l u e judgments such as c e n s o r s h i p , - 6 -the Etrog awards 5 and what constitutes a 'good' or 'bad' film' are l e f t for f i l m philosophers and c r i t i c s . In a s i m i l a r vein, New Wave or Underground films are not considered nor i s the d i s t r i b u t i o n of films to u n i v e r s i t i e s and f i l m s o c i e t i e s studied. F a c i l i t i e s for the production of feature films such as studios and production laboratories e x i s t throughout Canada and therefore are taken as given. Discussions about labour unions and q u a l i f i e d technicians are s i m i l a r l y excluded. Since the various p r o v i n c i a l governments have been reluctant to become involved i n the Canadian f i l m industry, they too have been excluded. Within the parameters of the study i t s e l f , further li m i t a t i o n s had to be imposed. With a country as geographi-c a l l y and c u l t u r a l l y diverse as Canada and a subject matter as complex as the f i l m industry, i t soon became evident that only c e r t a i n problems i n the areas of production, d i s t r i b u t i o n and e x h i b i t i o n could be considered. An attempt has been made to deal with only the major problems i n each of these areas. While the se l e c t i o n process was admittedly somewhat subjective, i t was carr i e d out only a f t e r extensive and exhaustive research into each of these areas. This study therefore i s an introduction to and an overview of the English-speaking sector of the commercial feature f i l m industry i n Canada and the impact of the federal government thereon. As an introduction, one of the purposes - 7 -i s to point out further areas of research and make recommen- ' dations. As an overview, i t i s a s k e l e t a l framework to which the myriad of d e t a i l s surrounding the f i l m industry i n Canada q may be applied. A. Sources of Data and Information A study of the feature f i l m industry i n Canada i s , at best, a f r u s t r a t i n g undertaking. Because we are dealing with an infant industry, i t i s s t i l l too early to draw any concrete conclusions or make generalizations. But even more f r u s t r a t i n g i s the f a c t that r e l i a b l e data i s simply not re a d i l y available and i s even harder, i f not impossible, without an o f f i c i a l inquiry, to obtain. Howard T. Lewis, i n The Motion Picture Industry points out that: "The industry has made no r e a l attempt to give the public any thorough-going, unbiased discussion of i t s organization, operation or p r o f i t s and that such information as has been given has been frankly biased and intended primarily to promote f r i e n d l y public relations."6 While Lewis was speaking of the American f i l m industry, the s i t u a t i o n i s equally applicable i n Canada. Consequently, thi s study i s based, and r e l i e s heavily on secondary data obtained from sources such as the Annual Reports of the Canadian Film Development Corporation, reports as published i n the various issues of Cinema Canada, s t a t i s t i c s as provided by S t a t i s t i c s Canada, and facts gleaned from the country's major newspapers as substantiated whenever possible. Also - 8 -used are a r t i c l e s by and interviews with those involved i n the industry as reported i n The Journal of the Producers Guild of America, Motion magazine, Cinema Canada, trade jour-nals and again, Canada's leading newspapers. In addition, attempts have been made whenever possible to substantiate the above sources through personal interviews with those involved i n the industry i n Vancouver. PRODUCTION, DISTRIBUTION AND EXHIBITION The motion picture industry i n Canada, l i k e any f i l m . industry has three p r i n c i p a l branches: production, d i s t r i b u -tion and ex h i b i t i o n . The producer as defined by the White Report i s the person "making a motion picture up to and including the 7 negative p r i n t " . This involves assembling a studio, financing, actors, d i r e c t o r and technicians. A f t e r making the f i l m , the producer w i l l license the negative or number of p o s i t i v e prints to a d i s t r i b u t o r , or market i t through his•own integrated d i s t r i b u t i o n department. The producer's copyright on the f i l m enables him to prevent unlicensed duplications of his prints and to control t h e i r d i s t r i b u t i o n . The d i s t r i b u t o r s are the wholesalers i n the f i l m industry. They s e l l the exhibitor the r i g h t to use a p o s i t i v e p r i n t of a f i l m for a fix e d period of time. The d i s t r i b u t o r w i l l perform two services for the producer: f i r s t , the - 9 -p h y s i c a l d i s t r i b u t i o n t o t h e e x h i b i t o r o f c o p i e s o f h i s f i l m ; s econd, the p r o v i s i o n o f f i n a n c e f o r p r o d u c t i o n . "The d i s t r i b u t o r e n t e r s i n t o a c o n t r a c t w i t h t h e p r o d u c e r t o p e r f o r m a l l t h e d u t i e s f o l l o w i n g the c o m p l e t i o n o f a f i l m . He books i t t o e x h i b i t o r s and makes o u t th e e x h i b i t i o n c o n t r a c t s , a r r a n g e s t r a d e showns and d a t e s o f e x h i b i t i o n , sees t o the d i s p a t c h and c o l l e c t i o n o f c o p i e s o f the f i l m and checks t h a t they a r e i n good c o n d i t i o n , c o n t r o l s a d v e r t i s i n g , watches c o p y r i g h t , and c o l l e c t s t h e c a s h . " 8 An e x h i b i t o r i s a t h e a t r e owner o r o t h e r p e r s o n showing f i l m s c o m m e r c i a l l y t o t h e p u b l i c . He i s t h e i n d u s -t r y ' s r e t a i l e r and i t i s w i t h him t h a t the p u b l i c d e a l s . He may be an i n d e p e n d e n t o r p a r t o f a c h a i n . He i's r e s p o n s i b l e f o r c o l l e c t i n g the box o f f i c e g r o s s and f o r r e p o r t i n g t o t h e d i s t r i b u t o r . He r e c e i v e s t h e "cans" o f f i l m from t h e d i s t r i b -u t o r o r t h e c a r r i a g e s e r v i c e h i r e d by t h e d i s t r i b u t o r and i n s u r e s t h a t they a r e d e l i v e r e d back t o same. Depending on the s i z e o f the o p e r a t i o n , t h e e x h i b i t o r may have any number o f p e o p l e w o r k i n g f o r him i n c l u d i n g a s s i s t a n t s , p r o j e c t i o n i s t , box o f f i c e s t a f f , and u s h e r e t t e s . THE AMERICAN FILM INDUSTRY: A SHORT HISTORY 9 S i n c e t h e Canadian f i l m i n d u s t r y has been i n e x t r i c a b l y i n t e r w o v e n w i t h the American s i n c e t h e e a r l y 1900's, i t i s n e c e s s a r y i n o r d e r t o u n d e r s t a n d the f u l l f l a v o r o f t h e problems b e s e t t i n g t h e Canadian i n d u s t r y t o s e t o u t a b r i e f resume o f t h e Ameri c a n . - 10 -A t the b e g i n n i n g o f the 2 0 t h c e n t u r y , t h e s t a n d a r d m o t i o n p i c t u r e was one r e e l o f about 1,000 f e e t w h i c h was o r d i n a r i l y s h o t i n one day. Due t o t h e i r n o v e l t y , a l l p i c -t u r e s produced r e t u r n e d a good p r o f i t r e g a r d l e s s o f t h e i r q u a l i t y . These f i l m s were n o r m a l l y s o l d o u t r i g h t t o e x h i b i t o r s who o r d e r e d them by m a i l from a c a t a l o g u e f o r p r i c e s w h i c h v a r i e d from $10.00 t o $25.00 p e r 100 f o o t f i l m . T h i s method, however, was e x p e n s i v e f o r e x h i b i t o r s because the f i l m ' s a p p e a l waned l o n g b e f o r e the f i l m i t s e l f wore o u t . To a l l e -v i a t e t h i s p r o b l e m , the e x h i b i t o r s s t a r t e d e x c h a n g i n g f i l m s among themselves and exchanges were s e t up t o r e n t f i l m s t o e x h i b i t o r s a t a p e r c e n t a g e o f t h e p u r c h a s e p r i c e f o r a l i m i t e d p e r i o d o f t i m e . S i n c e t h e e x h i b i t o r s were now p a y i n g l e s s p e r p i c t u r e , t h e y were a b l e t o a f f o r d more o f them and t h e r e b y i n c r e a s e the market f o r f i l m s . F o r p r o d u c e r s , t h i s new d i s t r i b u t i o n method meant a few l a r g e c u s t omers, each t a k i n g many f i l m s i n o r d e r t o have a wide v a r i e t y t o o f f e r e x h i b i t o r s . Exchanges i n the same l o c a l i t y b i d a g a i n s t each o t h e r w i t h r e s u l t i n g h i g h e r revenue t o p r o d u c e r s . Then i n 1917: "Paramount (the l e a d i n g d i s t r i b u t o r ) , Famous P l a y e r s - L a s k y (the major p r o d u c e r ) , and 12 l e s s e r p r o d u c e r s combined under Ad o l p h Zukor, w i t h the o b j e c t i v e o f o b t a i n i n g the power t o d i c t a t e terms t o e x h i b i t o r s . " 1 0 S i n c e Paramount dominated p r o d u c t i o n a t t h i s t i m e , - 11 -Zukor took advantage of his control and i n i t i a t e d the pra c t i c e of "block booking". To protect t h e i r p o s i t i o n , the exhibitors combined into c i r c u i t s to obtain pictures at low rentals. The next step, of course, i n the f i g h t for control was complete v e r t i c a l integration. Then i n 194 8, the Anti-Trust D i v i s i o n of the Justice Department obtained a Court Order i n the Paramount decision compelling the divorcement or production and d i s t r i b u t i o n from cinema ownership. This combined with the advent of t e l e v i s i o n f i n a l l y broke the power of the major studios and during 1969-1971, the studios found themselves i n serious f i n a n c i a l d i f f i c u l t i e s . Today, the major f i l m companies have a l l been taken over by conglomerates. THE WHITE REPORT 1 1 While there has been an inquiry into the Canadian 12 feature f i l m industry p a r a l l e l i n g that of the Paramount i n -vestigation i n the United States, the res u l t s were not the same. By an Order i n Council dated September 23, 1930, Mr. Peter White was appointed a Commissioner under the Combines Investigation Act to inquire into an alleged combine i n the Canadian motion picture industry. After nine months, most of i t spent hearing evidence, the Commissioner concluded i n - 12 -h i s e x t e n s i v e and e x h a u s t i v e R e p o r t t h a t such an i l l e g a l combine d i d , i n f a c t , e x i s t and c i t e d e i g h t t h e a t r e c h a i n s and 13 d i s t r i b u t o r s as b e i n g p a r t i e s t o o r who "kn o w i n g l y 13 a s s i s t e d i n the f u n c t i o n and o p e r a t i o n o f t h e combine". Mr. White c o n c l u d e d t h a t because o f t h e agreements between Famous P l a y e r s and t h e d i s t r i b u t o r s : "Famous P l a y e r s has been a b l e t o a c q u i r e , p a r t i c u l a r l y i n the l a r g e c i t i e s and towns i n Canada,...such s u b s t a n t i a l c o n t r o l as t o reduce c o m p e t i t i o n t o a minimum, and t o make i t e x t r e m e l y d i f f i c u l t f o r the i n d e -pendent t o s u r v i v e . " 1 4 Subsequent l e g a l p r o c e e d i n g s i n t h e O n t a r i o C o u r t 15 o f A p p e a l , however, r e s u l t e d i n an a c q u i t t a l f o r the acc u s e d from w h i c h t h e Crown d i d n o t a p p e a l . I n t h e c o u r s e o f h i s judgment Garrow, A. J . , s t a t e d t h a t w h i l e "One does n o t . . . l o o k f o r t h e terms o f t h e combine o r c o n s p i r a c y t o be s e t out i n b l a c k and w h i t e i n the minutes o f the companies i n v o l v e d . . . , i t i s e s s e n t i a l t h a t one i s a b l e t o g a t h e r from a l l the e v i d e n c e t h a t t h e combine o r c o n s p i r a c y a l l e g e d d i d i n f a c t e x i s t between...the accused."16 Mr. J u s t i c e Garrow c o n c l u d e d t h a t from t h e " m a t e r i a l 17 b e f o r e me", he was n o t a b l e t o g a t h e r t h a n the e x i s t e n c e o f a c o m b i n a t i o n between t h e p a r t i e s had been made o u t . - 13 -FOOTNOTES CHAPTER I 1 Eleanor Beattie, A Handbook of Canadian Film (Toronto: Peter Martin Associates Limited, 1973), p. v. 2 Garth H. Drabinsky, Motion Pictures and the Arts  i n Canada (Toronto: McGraw-Hill Ryerson Limited, 1976), p. x v i i . 3 Canadian Film Development Corporation Act 1966-67, c. 78, S. 10T 4 . Michael D. Spencer, "Re: Quotas for Canadian Films i n Canadian Motion Picture Theatres", Cinema Canada, Second E d i t i o n , No. 18 (March/April, 1975), p. 8. 5 The award presented at the annual Canadian Film Awards. 6 quoted from Mae D. Huettig, Economic Control of  the Motion Picture Industry (Philadelphia: University of Pennsylvania Press. 19441. r. , ), p. 54. 7 P e t e r W h i t e , R e p o r t o f an I n v e s t i g a t i o n i n t o an  A l l e g e d Combine i n the M o t i o n P i c t u r e I n d u s t r y i n Canada (Ottawa: K i n g ' s P r i n t e r , 1931), p. 9. 8 Iv a n B u t l e r , The Making o f F e a t u r e F i l m s — A Guide ( U n i t e d Kingdom: Penguin Books L t d . , 1973), p. 172. 9 from W i l l i a m F. H e l l n u t h , J r . , "The M o t i o n P i c t u r e I n d u s t r y " , The S t r u c t u r e o f American I n d u s t r y , ed. W a l t e r Adams 3rd ed., (New York: The M a c m i l l a n Company, 1961), p. 393. 10 I b i d . , p. 397. ^ W h i t e , op. c i t . 12 U n i t e d S t a t e s v. Paramount P i c t u r e s / 334 U.S. 131. 13 Whi t e , op. c i t . , p. 233. - 14 -14 . White, op. cit», p. 232. 15 Rex v . Famous Players (1932) O.R. 307. 1 6 Ibid., p. 349. Ibid. CHAPTER II THE STRUCTURE OF THE MOTION PICTURE INDUSTRY IN CANADA This Chapter describes the structure of the f i l m industry i n Canada by looking at each of the three aspects of the industry: production, d i s t r i b u t i o n and exhib i t i o n , and more p a r t i c u l a r l y the participants i n each sector and the extent of t h e i r involvement. But f i r s t , to set the stage for t h i s discussion, a b r i e f general description of the ex-tent of the f i l m industry i s set out. THE FEATURE FILM INDUSTRY IN CANADA: AN INTRODUCTION There are any number of d i f f e r e n t ways of measuring the role of the f i l m industry i n the Canadian economy, four of which would have to include: (1) the volume of business, (2) the number of establishments, (3) the number of employees, and (4) the per capita expenditure on motion picture enter-tainment. None of these methods i s i n and of i t s e l f d e c i s i v e . - 15 -- 16 -Furthermore to compare the f i l m industry to other industries on t h i s basis would only tend to produce re s u l t s too general to be of any value. The following data, there-fore, i s set out primarily to provide some basic information regarding the industry's s i z e . As shown i n Table I I - I , there were approximately 1,4 23 motion picture theatres i n Canada i n 1974 1 of which 1,116 were regular motion picture theatres and 307 were of the variety commonly known as the d r i v e - i n . Receipts from admissions (excluding taxes) amounted to $172.7 m i l l i o n while amusement taxes amounted to approximately $12.8 m i l l i o n . The number of paid admissions was approximately 90.4 m i l l i o n . The t o t a l number of employees involved i n the exhi-b i t i o n of feature films i n Canada as reported by S t a t i s t i c s Canada was 10,29 5 whose t o t a l s a l a r i e s and wages amounted to $33*9 m i l l i o n , while the t o t a l number of persons employed by f i l m d i s t r i b u t o r s was 729 whose combined s a l a r i e s and wages totaled $7 m i l l i o n . The 1974 per capita expenditure on motion picture entertainment i n Canada was calculated at $8.26 up 12.8% over the $7.32 reported i n 1973 and almost double the $4,33 reported i n 1964. THE CANADIAN FILM INDUSTRY VS. THE FILM INDUSTRY IN CANADA Despite the amount of a c t i v i t y surrounding films i n TABLE I I - I Summary o f M o t i o n P i c t u r e T h e a t r e E x h i b i t i o n i n C a n a d a , 1974* I t e m T h e a t r e s . .. . No. R e c e i p t s f r o m a d m i s s i o n s ( e x c l u d i n g t a x e s ) $'000 Amusement t a x e s $'000 Number o f p a i d a d m i s s i o n s .. '000 T o t a l , a l l t h e a t r e s R e g u l a r t h e a t r e s D r i v e - x n t h e a t r e s 1,423 172,683 12,784 90,392 1,116 149,720 11,184 79,020 307 22,963 1,600 11,372 •SOURCE: S t a t i s t i c s C a n a d a C a t a l o g u e 63-207: M o t i o n P i c t u r e T h e a t r e s a n d F i l m D i s t r i b u t o r s . . - 18 -Canada, i t cannot be s a i d that we have a t r u l y Canadian fea-ture f i l m industry. Canada's production of motion pictures i s so minimal as to be inconsequential, both on Canadian and inte r n a t i o n a l screens while the f a c i l i t i e s for d i s t r i b u t i n g and e x h i b i t i n g films i n Canada are almost exclusively i n the hands of foreign owners. A. Production Canadian feature films f o r t h e a t r i c a l d i s t r i b u t i o n are made ei t h e r by the National Film Board or an independent producer (whether corporate or i n d i v i d u a l ) . The number of English-speaking feature films produced by the N.F.B. i n the past decade i s so few that one can rea d i l y name the various t i t l e s including "Nobody Waved Goodbye", "Prologue", "The Ernie Game", "Waiting f o r Caroline", "Why Rock the Boat", and "Cry of the Wild". Of these, only the l a t t e r has had any sort of success, e i t h e r c r i t i c a l l y or at the box o f f i c e . The reason f o r the N.F.B.'s lack of i n t e r e s t i n the production of Canadian feature films i s primarily one of p r i o r i t i e s . When Sydney Newman, the Canadian government Film Commissioner and N.F.B. Chairman, was asked about the role of the National Film Board i n the production of Canadian feature films, he r e p l i e d that the N.F.B. d i d not intend to make more than two or three features a year. - 19 -"We haven't got the money for i t . Our p r i o r i t i e s are absolutely elsewhere. We are more interested i n education, docu-mentary and information f i l m s . Features are simply something that cer t a i n members of our creative s t a f f can aspire to and we have got to give them the opportunity or we would loose a l o t of good people. That's our main i n t e r e s t . " 2 Independent Producers In 1909, the American Consul-General i n Winnipeg, John Edward Jones, wrote an open l e t t e r i n Moving Picture  World, a New York publication, exhorting American f i l m i n t e r -ests to take over the Canadian market: "In t h i s new country where a l l forms of amusement are scarce, moving pictures are welcome, and there i s no reason why the manufacturers of the United States should not control the business." 3 By the early 1920's, the Americans had taken over the Canadian market i n a l l aspects of the industry including production. This i s not p a r t i c u l a r l y surprising considering that the head of the Canadian government Motion Picture Bureau i n Ottawa, Ray Peck, was of the opinion that Canada could not compete with Hollywood films and should not t r y . On March 3, 1926, Peck wrote a l e t t e r to a man i n Vancouver who compained that there were too many American films i n his l o c a l theatres: "We are attempting at a l l times , as Cana-dians, to induce American c a p i t a l and manufacturing interests to come into Canada and es t a b l i s h branch f a c t o r i e s . I ; look on the American f i l m industry much - 20 -as a b r a n c h f a c t o r y i d e a i n s o f a r as i t a f f e c t s Canada. American m o t i o n p i c t u r e p r o d u c e r s s h o u l d be enouraged t o e s t a b l i s h p r o d u c t i o n branches i n Canada and make f i l m s d e s i g n e d e s p e c i a l l y f o r B r i t i s h Empire c o n s u m p t i o n . " 4 Even t h e Canadian p r o d u c e r s o f the day t h o u g h t i t was f o l l y t o make movies i n Canada. Ben N o r r i s h r a n t h e l a r g e s t Canadian p r o d u c t i o n company i n Canada a t t h a t t i m e , A s s o c i a t e d S c r e e n News. A.S.N, was owned by C.P.R. and N. L. Nathanson. N o r r i s h t h o u g h t i t made about as much sense t o make f e a t u r e f i l m s i n Canada as i t d i d t o grow g r a p e f r u i t i n O n t a r i o . "He f e l t Canada d i d n ' t have a l a r g e enough p o p u l a -t i o n and the c l i m a t e was w r o n g . " 5 W i t h t h i s d u b i o u s b e g i n n i n g , t h e r e i s l i t t l e wonder t h a t the p r o d u c t i o n o f E n g l i s h - s p e a k i n g f e a t u r e f i l m s i n Canada never d i d and n e v e r has g o t t e n o f f t h e ground. I n 19 74, S t a t i s t i c s Canada r e p o r t e d t h a t t h e r e were 187 p r i v a t e m o t i o n p i c t u r e p r o d u c t i o n f i r m s i n Canada, up from 143 i n 1973. But even t h i s i n c r e a s e , S t a t i s t i c s Canada a d m i t s , was due l a r g e l y t o the e f f o r t made by t h a t g o v e r n m e n t a l agency t o improve upon i t s c o v e r a g e . ^ Even i f we a c c e p t t h e s e f i g u r e s , t h e y do n o t t a k e us f a r i n our d i s c u s s i o n o f t h e p r o d u c t i o n o f E n g l i s h - s p e a k i n g f e a t u r e f i l m s i n Canada because t h e y i n c l u d e t h e o p e r a t i o n s o f " p r i v a t e f i r m s and government a g e n c i e s p r i m a r i l y engaged i n the p r o d u c t i o n and p r i n t i n g o f m o t i o n p i c t u r e f i l m s f o r - 21 -7 i n d u s t r y , government, e d u c a t i o n and e n t e r t a i n m e n t " as w e l l , as f i r m s p r i m a r i l y engaged i n v i d e o tape p r o d u c t i o n . S i m i l a r l y o f t h e t o t a l 3,940 o r i g i n a l m o t i o n p i c t u r e f i l m s r e p o r t e d by p r i v a t e f i r m s (3,710) and government a g e n c i e s (230) i n Canada f o r 1974, 2,250 were t e l e v i s i o n com-m e r c i a l s ; 396 were t e l e v i s i o n i n f o r m a t i o n and d o c u m e n t a r i e s and 3 24 were n o n - t h e a t r i c a l i n f o r m a t i o n and p r o m o t i o n p r o d u c -8 t i o n s . I t i s n o t u n t i l we c u t t h r o u g h t h e maze o f f i g u r e s t h a t we r e a l i z e how d i s m a l the p r o d u c t i o n o f E n g l i s h - s p e a k i n g f e a t u r e f i l m s i n Canada r e a l l y i s . Of the t o t a l 27 t h e a t r i c a l f e a t u r e s and 7 t h e a t r i c a l s h o r t f i l m s r e p o r t e d produced by p r i v a t e f i r m s i n Canada i n 19 74, 17 and 5 r e s p e c t i v e l y were r e p o r t e d by f i r m s based i n the P r o v i n c e o f Quebec. Thus i n 1974 i n a l l o f E n g l i s h -s p e a k i n g Canada, o n l y 10 f e a t u r e f i l m s were produced by i n d e p e n d e n t p r o d u c e r s . I n 1972, t h i r t e e n major f e a t u r e s were produced i n E n g l i s h Canada. I n 1973, s i x . I n 1931, t h e White r e p o r t c o n c l u d e d t h a t : "The number o f p i c t u r e s produced i n Canada has been o f such minor i m p o r t a n c e t h a t e x c e p t as s p e c i f i c a l l y m entioned, i t may be d i s r e g a r d e d . The quote i s e q u a l l y a p p l i c a b l e today. T a b l e I I - I I s e t s o u t the number o f new f e a t u r e f i l m s shown on Canadian s c r e e n s f o r the y e a r s 1972, 1973, and 1974 b r e a k i n g them down TABLE I I - I I New F i l m s shown o n C a n a d i a n M o t i o n P i c t u r e S c r e e n s by C o u n t r y o f O r i g i n f o r t h e Y e a r s 1972 , 1973 a n d 1974* COUNTRY OF ORIGIN YEAR 1974 1973 1972 356 294 152 137 134 67 61 71 57 83 116 33 35 141 69 T O T A L 901 811 719 *SOURCE: C o m p i l e d f r o m S t a t i s t i c s C a n a d a C a t a l o g u e 63-207 A n n u a l : M o t i o n P i c t u r e T h e a t r e s a n d F i l m D i s t r i b -u t o r s f o r t h e Y e a r s 1972, 1973 an d 1974 - 23 -f u r t h e r a c c o r d i n g t o t h e c o u n t r y o f o r i g i n . A p p r o x i m a t e l y 98% o f the f i l m s shown on Canadian s c r e e n s are non-Canadian. The b u l k o f f i l m s e x h i b i t e d i n t h i s c o u n t r y a r e produced i n the U n i t e d S t a t e s . Irt 1974, o f a t o t a l number o f 901 f e a t u r e f i l m s r e l e a s e d i n Canada d u r i n g the y e a r , 355 were American m o t i o n p i c t u r e s . The p r i n c i p a l A merican p r o -d u c e r s r e l e a s i n g motion p i c t u r e s i n Canada i n o r d e r o f t h e i r s h a r e o f the Canadian d i s t r i b u t o r s g r o s s e s a r e : Paramount, Warner B r o s . , U n i t e d A r t i s t s , C o l u m b i a , 20th C e n t u r y Fox, M.G.M., U n i v e r s a l , Walt D i s n e y , and N a t i o n a l G e n e r a l . B. D i s t r i b u t i o n S t a t i s t i c s Canada has r e p o r t e d 1 ^ t h a t i n 1974, 82 f i r m s d i s t r i b u t e d f i l m s t o 142 o f f i c e s o r exchanges i n Canada. T o t a l r e c e i p t s amounted t o $87.5 m i l l i o n . T h i s , however, i n c l u d e d f i l m r e n t a l r e c e i p t s from t h e a t r i c a l , t e l e v i s i o n , and o t h e r n o n - t h e a t r i c a l uses and, f u r t h e r m o r e , i n c l u d e d such s h o r t s u b j e c t s as c a r t o o n s and n e w s r e e l s . F o c u s i n g on t o t a l r e n t a l r e c e i p t s from the r e n t a l o f f e a t u r e l e n g t h motion p i c t u r e s f o r t h e a t r i c a l use, t h e s e amounted t o $59.9 m i l l i o n and f u r t h e r , i t i s p r o b a b l y s a f e r t o say t h a t over t h e l a s t t e n y e a r s t h e r e have o n l y been on an average 55 f i r m s d i s t r i b u t i n g 16 and 35mm f e a t u r e l e n g t h f i l m s i n Canada (see Appendix I I ) . Of t h i s $59.9 m i l l i o n , an amazing $54.4 m i l l i o n was p a i d t o n i n e major American d i s t r i b u t i o n companies t h r o u g h - 24 -t h e i r C anadian d i s t r i b u t i o n arms i n c l u d i n g : Columbia P i c t u r e s , r e p r e s e n t e d i n Canada by A s t r o F i l m s L t d ; ; Warner B r o s . D i s t r i b t u i o n L t d . ; U n i t e d A r t i s t s Corp.; Paramount P i c t u r e s Corp. (Canada) L t d . ; U n i v e r s a l F i l m s (Canada) L t d . ; 20th C e n t u r y Fox; Avco Embassy; and W a l t D i s n e y . The l a t t e r t h r e e companies b e i n g r e p r e s e n t e d i n Canada by B e l l e v u e F i l m D i s t r i b u t o r s L t d . Based on t h e s e f i g u r e s , Canada, i n 1974, g a i n e d the d u b i o u s d i s t i n c t i o n o f becoming the l a r g e s t f o r e i g n market i n the. w o r l d f o r American f i l m s . 1 1 I n 1953, E r i c Johnson, who was l a t e r t o become P r e s i d e n t E i s e n h o w e r ' s Economic A d v i s o r , t o l d C o n g r e s s : " I t ' s a l i t t l e known f a c t t h a t n i n e o u t o f t e n U n i t e d S t a t e s f i l m s cannot pay t h e i r way i n t h e d o m e s t i c market a l o n e . I t i s o n l y because o f revenue from abroad t h a t H ollywood i s a b l e t o t u r n out p i c -t u r e s o f h i g h a r t i s t r y and t e c h n i c a l e x c e l l e n c e . " 1 2 Between 1963 and 1973, f i l m s a l e s i n Canada by the seven top H o l l y w o o d majors ( e x c l u d i n g Disney) i n c r e a s e d by 13 . 134.5% a c c o r d i n g t o V a r i e t y . D u r i n g t h a t decade, Canada moved from b e i n g t h e s i x t h most i m p o r t a n t f o r e i g n market t o second w i t h t o t a l r e n t a l s i n 1973 o f $39.5 m i l l i o n . " I n 1974, Canada became t h e t o p f o r e i g n market f o r U.S. f i l m s w i t h 14 b i l l i n g s o f $54.4 m i l l i o n . " S t a t i s t i c s p u b l i s h e d by the C o u n c i l o f C a n a d i a n F i l m Makers (CCFM) i n d i c a t e t h a t t h e named d i s t r i b u t o r s c o n t r o l - 25 -b e t w e e n them more t h a n 80% o f t h e t o t a l t h e a t r i c a l f i l m r e n t a l s i n C a n a d a . 1 ^ A n d f u r t h e r , t h a t r e v e n u e s e a r n e d i n C a n a d a b y f o r e i g n d i s t r i b u t o r s b e l o n g i n g t o t h e M o t i o n P i c t u r e E x p o r t A s s o c i a t i o n o f A m e r i c a h a v e i n c r e a s e d b y 9 8.9% b e t w e e n 1970 a n d 1 9 7 4 . 1 6 U s i n g an a v e r a g e o f 55 d i s t r i b u t i o n c o m p a n i e s and 1974 as a b a s e y e a r , t h i s means t h a t we a r e l e f t w i t h a p p r o x i -m a t e l y $5.5 m i l l i o n i n f i l m r e n t a l s t h a t was e a r n e d by t h e r e m a i n i n g 4 9 C a n a d i a n d i s t r i b u t o r s o r , as t h e y a r e known, i n d e p e n d e n t s . The l a t t e r d e s i g n a t i o n d i s t i n g u i s h i n g them f r o m t h e A m e r i c a n c o n t r o l d i s t r i b u t i o n c o m p a n i e s i n C a n a d a w h i c h a r e r e f e r r e d t o as " t h e m a j o r s " . A n y d i s c u s s i o n o f t h e i n d e p e n d e n t s s o o n becomes a c o n v e r s a t i o n c o n c e r n i n g 49 d i f f e r e n t c o r p o r a t i o n s w i t h 49 d i f f e r e n t p h i l o s o p h i e s a n d p r a c t i c e s . W i t h t h e f o l l o w i n g t h r e e e x c e p t i o n s , g e n e r a l i z a t i o n s become i m p o s s i b l e . The m a j o r i t y o f t h e i n d e p e n d e n t s become d i s t r i b u t o r s f o r numerous i n d e p e n d e n t p r o d u c e r s w i t h no c o n s t a n t f l o w o f p r o d u c t a n d whose p r o d u c t i s o f d u b i o u s c o m m e r c i a l v a l u e . M o s t o f t h e f i l m s h a n d l e d by t h e s e d i s t r i b u t o r s a p p e a l more t o f i l m s o c i e t i e s and r e a l f i l m " b u f f s " a n d n o t t h e a v e r a g e c i n e m a - g o e r as i s i n d i c a t e d b y s u c h t i t l e s as " E a d w e a r d M u y b r i d g e , Z o o p r a x o g r a p h e r " and " S i e g f r i e d & K r i e m h i l d e ' s R e v e n g e " . The s e c o n d g e n e r a l i z a t i o n t h a t c a n be made i s t h a t - 26 -a few Canadian f i l m p r o d u c e r s such as T r e v o r W a l l a c e and Budge Crawley o f Crawley F i l m s a r e d i s t r i b u t o r s i n Canada o f t h e i r own p r o d u c t s . The f o r m e r b e i n g known f o r " C h r i s t i n a " , "The Ground S t a r C o n s p i r a c y " and "Journey i n t o F e a r " . The l a t t e r b e i n g known f o r the money making, semi-documentary " J a n i c e " and t h e O s c a r - w i n n i n g "The Man who S k i e d down Mr. E v e r e s t " . Crawley F i l m s ' d i s t r i b u t i o n arm i n Canada, New Cinema E n t e r -p r i s e s , a l s o d i s t r i b u t e s f i l m s o f o t h e r i n d e p e n d e n t p r o d u c e r s . Beyond t h i s , t h e o n l y g e n e r a l i z a t i o n t h a t can be made w i t h r e g a r d s t o the i n d e p e n d e n t d i s t r i b u t o r s i n Canada i s t h a t they a l s o a t t empt t o o b t a i n t h e Canadian and/or N o r t h A m e r i c a n r i g h t s t o f i l m s produced i n o t h e r c o u n t r i e s . C. E x h i b i t i o n A g a i n b e g i n n i n g w i t h t h e g e n e r a l i z e d d a t a p r o v i d e d . . 17 . . by S t a t i s t i c s Canada, t h e r e a r e 1,116 m o t i o n p i c t u r e t h e a t r e s w i t h a s e a t i n g c a p a c i t y o f 643,406 i n Canada and 307 d r i v e - i n t h e a t r e s w i t h a c a r c a p a c i t y o f 143,758, whose t o t a l s a l e s r e c e i p t s a c c o r d i n g t o the C o u n c i l o f C anadian F i l m Makers 18 exceeds $200 m i l l i o n a n n u a l l y . As was the case w i t h the g e n e r a l i z e d d a t a on t h e d i s t r i b u t i o n s e c t o r o f t h e f i l m i n d u s t r y , t h e s e f i g u r e s b e l i e t h e t r u e p i c t u r e o f what i s happening w i t h r e g a r d s t o e x h i b i t i o n i n Canada. I n a f i l m i n d u s t r y , t h e i n d i v i d u a l who owns one, two, o r , a t most, t h r e e t h e a t r e s i s c o n s i d e r e d an i n d e p e n d e n t . The i n d i v i d u a l who owns o r c o n t r o l s more than t h r e e t h e a t r e s - 27 -i s l o o k e d upon as a c h a i n o r c i r c u i t . I n Canada, t h e r e a r e two major m o t i o n p i c t u r e c h a i n s , Famous P l a y e r s L t d . and Odeon T h e a t r e s (Canada) L i m i t e d , b o th h a v i n g t h e a t r e s t h r o u g h o u t Canada. There are a l s o r o u g h l y 13 s m a l l e r c h a i n s such as B. and F. T h e a t r e s L i m i t e d and Rocca Cinemas L t d . w i t h t h e a t r e c h a i n s t h a t c o v e r p a r t i c u l a r r e g i o n s o f Canada. The l a t t e r , f o r example, b e i n g a s m a l l i ndependent t h e a t r e c h a i n i n t h e M a r i t i m e s . Famous P l a y e r s and Odeon between them c o n t r o l approx- . i m a t e l y 531 s c r e e n s i n Canada. Famous P l a y e r s r u n n i n g 386 19 t h e a t r e s as compared t o Odeon's 145. W h i l e t h i s i s w e l l under 30% o f the t o t a l t h e a t r e s i n Canada, the s c r e e n s c o n t r o l l e d by Famous P l a y e r s and Odeon a c c o u n t f o r 6 3% o f the Canadian market: "Famous P l a y e r s t o o k i n 44% i n 1973 (66.2 m i l l i o n f o r the y e a r ended June 30th) and Odeon a c c o u n t e d f o r 19% (28.1 m i l l i o n f o r the y e a r ended October 3 1st) o f t h a t y e a r ' s 150.6 m i l l i o n box o f f i c e . " 2 0 I n the key c i t i e s such as T o r o n t o , M o n t r e a l , and Vancouver, t h e i r p o s i t i o n i s even s t r o n g e r . F o r example, i n 1972, " f i v e o u t o f seven O n t a r i a n s l i v e d i n towns o v e r 35,000 and Famous P l a y e r s and Odeon t o g e t h e r c o n t r o l l e d 78.3% o f 21 the s c r e e n s i n those p r o f i t a b l e c e n t r e s " . F o r a l l o f O n t a r i o , 22 t h e y c o n t r o l l e d 62.3% o f the i n d o o r s c r e e n s . F u r t h e r m o r e , t h e i r p o s i t i o n has been g r a d u a l l y s t r e n g t h e n i n g o v e r the l a s t 10 t o 15 y e a r s . A g a i n u s i n g the-- 28 -e x a m p l e o f O n t a r i o , i n 1963 t h e two c h a i n s c o n t r o l l e d 44% o f 23 t h e s c r e e n s i n O n t a r i o . T o d a y , a s i n d i c a t e d , t h e y own o r c o n t r o l 6 2 . 3 % . Famous P l a y e r s 24 Famous P l a y e r s C a n a d i a n C o r p o r a t i o n L t d . ( n o t t o be c o n f u s e d w i t h Famous P l a y e r s L t d . ) was o r i g i n a l l y i n c o r p o -r a t e d u n d e r t h e l a w s o f C a n a d a b y L e t t e r s P a t e n t d a t e d J a n u a r y 2 3 , 1920. Upon i t s i n c o r p o r a t i o n , t h e Company l e a s e d o r c o n t r o l l e d 11 m o t i o n p i c t u r e t h e a t r e s i n O n t a r i o a n d two i n B r i t i s h C o l u m b i a . I n A p r i l 1 9 3 0 , a n A m e r i c a n company, P a r a m o u n t P u b l i x C o r p o r a t i o n (now P a r a m o u n t P i c t u r e s C o r p . , a s u b s i d i a r y o f G u l f & W e s t e r n I n d u s t r i e s ) , o f f e r e d t o e x c h a n g e f o u r s h a r e s o f i t s s t o c k f o r f i v e s h a r e s o f Famous P l a y e r s C a n a d i a n C o r p o r a t i o n L i m i t e d , w h i c h o f f e r was a c c e p t e d by t h e m a j o r i t y o f s h a r e h o l d e r s . I n May 1 9 4 1 , N. L. N a t h a n s o n , f o r m e r P r e s i d e n t , a n d f i v e o t h e r members o f t h e B o a r d o f D i r e c t o r s r e s i g n e d . " E f f o r t s w h i c h h a d b e e n made t o r e t u r n c o n t r o l o f t h e Company t o C a n a d a w e r e u n -s u c c e s s f u l , i t was s t a t e d , a n d i t was o n t h i s a c c o u n t t h a t c h a n g e s i n t h e d i r e c t -o r a t e t o o k p l a c e . " 2 5 O v e r t h e y e a r s , Famous P l a y e r s C a n a d i a n C o r p o r a t i o n L t d . i n c r e a s e d i t s number o f t h e a t r e s , b u t a l s o moved i n t o t h e a r e a o f b r o a d c a s t i n g . I n 1 9 7 0 , a s a r e s u l t o f a c o r p o r a t e • r e o r g a n i z a t i o n , Famous P l a y e r s C a n a d i a n C o r p o r a t i o n L t d . changed i t s name t o Canadian Cablesystems L t d . Today, Can a d i a n C a b l e s y s t e m s L t d . i s a h o l d i n g company w i t h i n t e r -e s t s i n c a b l e t e l e v i s i o n and t e l e v i s i o n b r o a d c a s t i n g companies One o f i t s s u b s i d i a r i e s i s Famous P l a y e r s L t d . , formed i n e a r l y 1971 t o a c q u i r e t h e company's t h e a t r e and r e a l e s t a t e a s s e t s under w h i c h Cablesystems has a 48.8% i n t e r e s t . Famous P l a y e r s L t d . o p e r a t e s t h e r e g u l a r m o t i o n p i c t u r e and d r i v e - i n t h e a t r e b u s i n e s s . Odeon T h e a t r e s (Canada) L i m i t e d T h i s company i s a wholly-owned s u b s i d i a r y o f t h e 2 6 Rank O r g a n i z a t i o n L i m i t e d , o r i g i n a l l y i n c o r p o r a t e d i n G r e a t B r i t a i n on F e b r u a r y 20, 1937, as Odeon T h e a t r e s H o l d i n g s L i m i t e d . The Rank O r g a n i z a t i o n i s i n v o l v e d i n the p r o d u c t i o n o f f e a t u r e f i l m s f o r the t h e a t r e as w e l l as t e l e v i s i o n com-m e r c i a l s . I t o p e r a t e s i t s own f i l m s t u d i o i n B r i t a i n as w e l l as d o i n g i t s own f i l m p r o c e s s i n g and h a n d l e s th e d i s t r i b u t i o n o f i t s own f i l m s o u t s i d e t h e U n i t e d Kingdom. As w e l l as owning o v e r 2 30 cinemas i n the U n i t e d Kingdom, m a i n l y under th e names "Odeon". and "Gaumont", i t c o n t r o l s o r o p e r a t e s i n p a r t n e r s h i p s some 600 t h e a t r e s o u t s i d e t h e U n i t e d Kingdom. Of t h e s e , 145 are those l o c a t e d i n Canada and o p e r a t e d by Odeon T h e a t r e s (Canada) L i m i t e d . The S m a l l e r Independent Ch a i n s As Famous P l a y e r s and Odeon own o r c o n t r o l v i r t u a l l y a l l o f the f i r s t r u n t h e a t r e s i n Canada, w h i c h a r e , i n t u r n , - 30 located i n the key c i t i e s , the smaller chains are usually made up of theatres located i n the smaller Canadian communi-t i e s . For example, the already mentioned Rocca Cinemas Ltd. has theatres i n Moncton, N. B., Bridgewater, N. S., Halifax, and i n Truro, N. S. "with a t o t a l of ten screens i n f i v e locations, Rocca Cinemas i s the largest independent i n the 27 Marxtimes." The Independents There are approximately 650 independent theatre operators i n Canada. The majority of these, by f a r , are subsequent run theatres, usually located i n the smaller com-munities. However, there are a number of independents that do operate i n the "key" c i t i e s . Two such examples i n Vancouver would be the City Nights and Hollywood theatres. There are also a number of independents i n the "key" c i t i e s who deal i n films which are directed towards a p a r t i c u l a r ethnic group. Again using Vancouver as an i l l u s t r a t i o n , the Olympia Theatre features I t a l i a n films while the New Harvest theatre imports motion pictures designed to appeal to the Chinese community. - 31 -FOOTNOTES CHAPTER I I The y e a r 1974 i s t h e most r e c e n t y e a r f o r w h i c h t h e r e i s d a t a a v a i l a b l e ; S t a t i s t i c s Canada C a t a l o g u e 63-207: M o t i o n P i c t u r e T h e a t r e s and F i l m D i s t r i b u t o r s . 2 George Csaba R o l l e r , "Sydney Newman", Cinema Canada, Second E d i t i o n , No. 15 (August/September, 1974), p. 45. 3 . K i r w a n Cox, "The Maj o r s and the Mandarins: Through the Y e a r s " , Cinema Canada, T h i r d E d i t i o n , No. 22 (October 1975), p. 19. 4 I b i d . '•' 5 I b i d . ^ see f o o t n o t e 1 above. 7 I b i d . 8 I b i d . 9 . . White , op. c i t . , p. 12. r see f o o t n o t e 1 above. 1 1 Cox, op. c i t . , p. 22. I b i d . 13 _.. , I b i d . 14 T U . , I b i d . 15 James F o r r e s t e r , " C o u n c i l o f Canadian Filmmakers P r e s e n t s P e t i t i o n t o P a r l i a m e n t " , M o t i o n , V o l . 5, No. 3, p. 7. 16 T. • , I b i d . - 32 -17 see footnote 1 above. 18 . , Ibid. 19 . Barry S i l v e r (ed.), The Canadian Film Digest 1975 Yearbook (Toronto: Garth Drabinsky, 1975), p. 55. 20 Kirwan Cox, "Rocca's Big Fight", Cinema Canada, Third E d i t i o n , No. 25 (February 1976), p. 25. Ibid. 22 Ibid., p. 26. 23 J Ibid. 24 "Canadian Cablesystems Limited", The F i n a n c i a l  Post Corporation Service (Toronto: Maclean-Hunter Limited, 1973), p. 2. 25 T, . , Ibid. 2 6 see Standard & Poors Standard Corporation Descriptions Vol. 34, No. 20 (July, 1973) at p. 4028. 27 . Cox, op. c i t . , p. 23. CHAPTER I I I MARKET BEHAVIOUR IN THE MOTION PICTURE INDUSTRY IN CANADA This Chapter examines the market behaviour of the exhi b i t i o n and d i s t r i b u t i o n firms i n the Canadian f i l m indus-tr y . I t shows how Famous Players and Odeon have been able to c u r t a i l the production of Canadian feature films by t h e i r control of f i r s t run theatres. By monopolizing the f i n a l marketing out l e t for films, they have not only affected the independent and small theatre chains and the independent d i s -t r i b u t o r s , they have i n d i r e c t l y affected the supply of Canadian feature films produced by independent producers. Throughout, Canadian can be read f o r independent. Famous Players' and Odeon's control of the exhibition arm of the industry has to be supplemented by the d i s t r i b u t i o n arm and, therefore, we consider the market relations between d i s t r i b u t o r s and exhibitors. - 33 -_ 34 -THE MARKETING OF MOTION PICTURES: AN INTRODUCTION Before considering the trade practices i n the mar-keting of feature films i n Canada, i t w i l l be necessary to discuss the industry's product and the demand for i t generally. A. The Product Motion pictures are not homogeneous. They are constantly changing and market uncertainty i s greater than i n v i r t u a l l y any other industry i n the world. Consumer reaction to any p a r t i c u l a r f i l m i s unpredictable. Marked product d i f f e r e n t i a t i o n i s the rule rather than the exception. "The story, the actors, and the technique i n each picture have some unique q u a l i t i e s which w i l l a f f e c t the number of admissions s o l d . " 1 Further, i t can be said that v i r t u a l l y every cinema i s unique. One may have the advantage of proximity to patrons, another may have more seats, s t i l l another better projection or sound equipment and yet another, a more a t t r a c t i v e lobby. B. The Demand for Motion Pictures To quote Michael Conant, "The demand for any motion picture i s ephemeral; the great majority do not have any l a s t i n g public appeal, even though many of them are based on 2 plays or novels that are c l a s s i c s " . Thus, the most important element to be considered i n marketing pictures i s p e r i s h a b i l -i t y . Not only are movie-goers w i l l i n g to pay for the p r i v i l e g e of looking at films but they are also accustomed to spending - 35 -more to see a newly released f i l m than an old one. "The unique nature of each f i l m , combined with the very short earning l i f e of most, means that success or f a i l u r e i s determined by the end of the major f i r s t run showings, a l l of which take place i n the f i r s t four to s i x weeks of exhibition."3 Further, a feature f i l m can normally be expected to return approximately 90% of i t s p o t e n t i a l income i n the f i r s t 4 two years following i t s release. During that period, the difference i n the value of a given f i l m to the exhibitor varies so greatly i n accordance with i t s newness that r e n t a l for the same picture may range from $150,000.00 on i t s i n i t i a l release to $10.00 before the picture i s f i n a l l y pulled from d i s t r i b u t i o n . One of the conclusions of the Paramount Findings i n the United States was that some form of f i l m a l l o c a t i o n by way of successive showings or runs i s an economic necessity in the f i l m industry. For the 1,486 theatres i n Canada to show the same picture simultaneously, each would have to be i n possession of a p o s i t i v e p r i n t of the f i l m at the same time. However, a p r i n t costs, depending on i t s length, any-where from $800.00 to $1,200.00.5 With the exception of a James Bond f i l m which w i l l 6 have 1,500 p r i n t s , the average number of p r i n t s manufactured for a f i l m i s 350, with more prin t s made a f t e r release i f the picture develops an unusually large demand. "The number manufactured i s not greater because a large proportion of l a t e r run showings do not earn enough rentals to pay the cost 7 of a p r i n t . " A better explanation i s that people prefer a choice of films i n d i f f e r e n t theatres rather than the same picture showing i n a l l cinemas at the same time. TRADE PRACTICES IN THE MARKETING OF FEATURE FILMS IN CANADA The market fo r feature films i n Canada i s affected by two groups of trade p r a c t i c e s : those governing the sale of films by d i s t r i b u t o r s to exhibitors and those governing ex h i b i t i o n . V i r t u a l l y a l l disagreements within the f i l m industry i n Canada center around these practices. To begin our discussion, s u f f i c e i s to say, however, that any disagree-ment i s usually a/disagreement between one of the major companies and one of the independents, whether producer, d i s t r i b u t o r or exhibitor. Disagreements between Famous Players and Odeon or between either of these companies and any one of the major d i s t r i b u t o r s are suspiciously conspicuous by t h e i r absence. One of the b i t t e r e s t disagreements between the independents and majors i n Canada resolves around the issue of block booking. A. Block Booking Block booking has best been defined as "the practice of l i c e n s i n g , or o f f e r i n g to license, one feature or group of features upon condition that' the exhibitor s h a l l also license another feature or group released by the d i s t r i b u t o r i n a 8 given period". Block booking i s , of course, a prime example of a tying agreement and while a pure form of i t does not e x i s t i n Canada, a form of i t does. The problem, however, i s i n determining the extent to which i t e x i s t s . The answer to th i s question can only be determined by examining the d i s t r i -bution agreements between the major d i s t r i b u t o r s and Famous Players or Odeon. Six d i s t r i b u t o r s have stated that "no such documents e x i s t " , at lea s t that i s i n r e l a t i o n to the d i s -t r i b u t i o n of feature films i n one area of Canada, the Maritimes. Most agreed with United A r t i s t s when i t was quoted as saying that i t "has no written agreements or correspondence by which i t allocated f i r s t run films to p a r t i c u l a r theatre owners i n the c i t i e s of Halifax and Dartmouth". 1^ Universal, however, would appear to have some documentation evidencing d i s t r i b u t i o n agreements: "Universal i s not prepared to produce any written agreements or correspondence re-l a t i n g to the a l l o c a t i o n of various f i r s t run films as requested as to do so could be highly p r e j u d i c i a l to Universal's business i n t e r e s t s . " H That tying agreements e x i s t between the American d i s t r i b u t o r s and the major theatre chanins, however, i s not a secret. Most major d i s t r i b u t o r s deal with each chain and supply films on a percentage basis. I t has been reported that - 38 -"Universal deals 75% with Odeon-, 25% with Famous. United A r t i s t s deals more with Odeon. Warners and Paramount deal almost exclusively with Famous i n f i r s t run si t u a t i o n s . " 12 At the University of Manitoba's second annual Canadian Film Symposium, one member of the Symposium was quoted as saying: "In Vancouver...Famous Players contracts to play 100% of the films marketed by Paramount, Metro Goldwyn Mayer, Warner Bros, and 20th Century Fox. Odeon, he said, has s i m i l a r 100% deals with Rank, United A r t i s t s , Universal, and Columbia. Cross overs occur r a r e l y , he claimed, and when they do i t ' s usually at the insistence of a d i s t r i b -utor seeking a s p e c i a l t y market. For years, he said, the Vancouver market was amicably divided up i n t h i s way."13 With regards to Bellevue Film D i s t r i b u t o r s Ltd. who d i s t r i b u t e 2 0th Century Fox, Avco Embassy, and Walt Disney i n Canada, Famous Players has f i r s t c a l l on a l l Disney product but does not have f i r s t c a l l on a l l films handled by Bellevue. The most r e l i a b l e i n d i c a t o r of the extent and nature of the tying agreements i s a recent quote of Famous Players President, George Destounis. In a CBC interview for the Culture series televised March 17, 1976, he stated that "People l i k e Paramount and Warners and United A r t i s t s w i l l play 100% Famous and people l i k e Columbia and two-thirds Universasl 14 and one-third Fox would play Odeon". Irregardless of which d i s t r i b u t i o n company i s t i e d - 39 -to which theatre chain, the f a c t remains that v i r t u a l l y a l l of the screen time of Famous Players and Odeon i s taken up by the product of one or other of the major d i s t r i b u t i o n firms. The e f f e c t of block booking i n Canada, therefore, i s three-f o l d . I t denies the independent exhibitor access to the highly p r o f i t a b l e product of the major d i s t r i b u t o r s ; i t hampers the non-major d i s t r i b u t o r s i n marketing even t h e i r p o t e n t i a l l y p r o f i t a b l e . f i l m s and; without access to the p r o f i t a b l e exhibition and d i s t r i b u t i o n f a c i l i t i e s , i t discour-ages the entry of new firms into the production of Canadian feature films. B. Runs Compounding the problem created by the practice of block booking for the independent, i s Famous Players' and Odeon's insistence that not only do they have f i r s t r i g h t of refusal on f i r s t run showings of the major d i s t r i b u t o r ' s product but also that they be e n t i t l e d to second run showings as w e l l . The underlying concept of motion picture d i s t r i b u t i o n i n Canada i s that i t i s conducted i n waves or runs. Normally a f i l m w i l l have a f i r s t run, a second run and any number of subsequent runs. F i r s t run theatres are located i n the "key" c i t i e s : Toronto, Montreal, Vancouver, Winnipeg, Calgary, and Halifax. A l l f i r s t run theatres i n Canada are owned or controlled by Famous Players and Odeon. Normally a picture w i l l open i n one or two f i r s t run theatres and w i l l then be moved into a neighborhood cinema for i t s second run. The theatre playing the second run i s normally owned by Famous Players or Odeon. In Greater Vancouver, films opening at the Odeon theatre f o r t h e i r f i r s t run w i l l subsequently be shown at ei t h e r the Highlands or Haida. A l l three theatres being controlled by Odeon Theatres (Canada) Ltd. Usually a subsequent run refers to the f a c t that a picture i s playing i n a smaller community. However, i t can also r e f e r to the f a c t that the f i l m i s playing i n a theatre i n one of the "key" c i t i e s , usually at a reduced admission p r i c e , and quite often as part of a double b i l l . In Canada, the small independent chains and indepen-dents are relegated to playing the subsequent runs. Since f i l m revenues are d i r e c t l y proportional to the l i f e of the f i l m , t h e i r p o t e n t i a l p r o f i t i s also predetermined. This practice has also e f f e c t i v e l y barred any new firm from establishing a theatre or theatres i n any of the key c i t i e s . Rokmay Co. of Calgary, a company established i n 1973 by Hector Ross and P h i l i p May of Alberta controls a small independent cinema chain with theatres primarily i n the r u r a l areas: eight i n Saskatchewan, three i n Manitoba, one i n .Alberta, and one i n Ontario. - 41 -Rokmay Co. also has theatres i n V i c t o r i a and Abbotsford, B r i t i s h Columbia. By staying in the smaller c i t i e s , Mr Ross often has a screen available when both Famous Players or Odeon do not. By following t h i s p o l i c y , he has been able to e s t a b l i s h a small chain but has not been able to make any serious threat to e i t h e r Famous Players or Odeon in any of the key c i t i e s . Since a p a r t i c u l a r theatre's run i s f a i r l y well established i n the Canadian f i l m industry, bargaining between d i s t r i b u t o r s and exhibitors on i n d i v i d u a l films centers on the rental to be paid. C. Film Rentals Rental fees are usually computed on one of four bases: (a) the four-wall deal; (b) the s t r a i g h t cash sale; (c) the cash guarantee i n advance; and (d) a s l i d i n g scale percentage. The four-wall deal has two v a r i a t i o n s . Under the f i r s t , the d i s t r i b u t o r , normally an independent, takes over a second or subsequent run theatre and operates i t . He hires the management, and pays the employees and acts as a regular exhibitor would act. Under the second arrangement, the d i s t r i b u t o r , again an independent, pays a weekly sum to the theatre owner to cover his overhead plus an agreed upon p r o f i t . The theatre owner, i n turn, pays the theatre's over-head (including wages). The d i s t r i b u t o r , however, decides ,what films w i l l pay and for how long. - 42 -N o r m a l l y u n d e r t h e f i r s t a r r a n g e m e n t , t h e d i s t r i b -u t o r i s s a t u r a t i n g a n a r e a w i t h h i s p a r t i c u l a r f i l m . The a f o r e m e n t i o n e d N a t i o n a l F i l m B o a r d p r o d u c t i o n o f " C r y o f t h e W i l d " o p e n e d i n t h e New Y o r k a r e a , p l a y i n g 37 c i n e m a s s i m u l -t a n e o u s l y b u t o n l y a f t e r t h e d i s t r i b u t o r h a d s p e n t o n e - q u a r t e r 15 o f a m i l l i o n d o l l a r s m a d v e r t i s i n g i t . The p r o b l e m w i t h t h i s m e t h o d f o r t h e i n d e p e n d e n t p r o d u c e r a n d / o r d i s t r i b u t o r , o f c o u r s e , i s t h e h i g h r i s k f a c t o r i n v o l v e d . I n c r e a s e d c o s t s a r e i n c u r r e d f o r t h e number o f p r i n t s r e q u i r e d and t h e a d v e r t i s i n g e x p e n s e i s s u b s t a n t i a l . F u r t h e r m o r e , i f t h e f i l m i s n o t s u c c e s s f u l , t h e r e i s no c o - o p e r a t i v e s h a r i n g o f l o s s e s b e t w e e n t h e d i s t r i b u t o r a n d t h e e x h i b i t o r . By f a r t h e m o s t common a r r a n g e m e n t i s t h e s l i d i n g s c a l e p e r c e n t a g e . U n d e r t h i s a r r a n g e m e n t , t h e d i s t r i b u t o r r e c e i v e s a n i n c r e a s i n g p e r c e n t a g e o f t h e b o x o f f i c e r e c e i p t s o v e r t i m e . The h i g h e r t h e g r o s s , t h e h i g h e r t h e d i s t r i b u t o r ' s s h a r e o f t h e r e c e i p t s . " I f an e x h i b i t i o n c o n t r a c t h a s a p e r c e n t -age i n i t r e a d i n g ' 2 5 — 5 0 ' , t h i s means t h a t t h e d i s t r i b u t o r r e c e i v e s a minimum o f 25% o f t h e box o f f i c e r e c e i p t s and t h a t t h e p e r c e n t a g e e s c a l a t e s u n t i l a c e i l i n g o f 50% i s r e a c h e d . The d i s t r i b u -t o r a n d e x h i b i t o r w o r k o u t d o l l a r amounts f o r e a c h p e r c e n t a g e . F o r i n s t a n c e , 25% may e q u a l $ 1 0 , 0 0 0 . 0 0 , 26% may e q u a l $ 1 1 , 0 0 0 . 0 0 , 27% may e q u a l $12,000.00 a n d s o on."16 The t h e o r y i s t h a t t h e l o w e s t p e r c e n t a g e i s e q u a l - 43 -t o t h e t h e a t r e ' s o p e r a t i n g e x p e n s e a n d i f t h e b o x o f f i c e r e c e i p t s f o r a p a r t i c u l a r week do n o t e x c e e d t h e l o w e s t f i g u r e , t h e e x h i b i t o r k e e p s a l l o f t h e r e c e i p t s a n d t h e d i s -t r i b u t o r d o e s n o t g e t a n y t h i n g . The t h i r d m e t h o d o f r e n t a l c o m p u t a t i o n i s t h e f l a t f e e o r s t r a i g h t c a s h s a l e . U n d e r t h i s a r r a n g e m e n t , t h e e x h i b i t o r p a y s t o t h e d i s t r i b u t o r , a f i x e d sum f o r t h e e n g a g e -ment. I n r e t u r n , he r e c e i v e s a l l b o x o f f i c e r e c e i p t s b u t mu s t pay a l l a d v e r t i s i n g e x p e n s e s . P a y i n g a f l a t r e n t a l , t h e e x h i b i t o r assumes a g r e a t e r p r o p o r t i o n o f t h e u n c e r t a i n t i e s o f t h e f i l m ' s s u c c e s s a n d t h e r e f o r e p a y s a l o w e r t o t a l r e n t a l t h a n on a p e r c e n t a g e b a s i s . S i n c e t h e d i s t r i b u t o r ' s r e t u r n i s h i g h e r o n a p e r c e n t a g e b a s i s , t h e m a j o r s b r i n g p r e s s u r e t o b e a r o n t h e i n d e p e n d e n t e x h i b i t o r s n o t t o book o n a f l a t f e e b a s i s . T h r e e y e a r s ago a n o t i c e a b l e c h a n g e i n t h e p r o d u c t b e i n g o f f e r e d t o t h e p u b l i c by t h e H o l l y w o o d t h e a t r e i n V a n c o u v e r t o o k p l a c e b e c a u s e t h e owner h a d f i n a l l y r e l e n t e d t o go f r o m a f l a t f e e t o a p e r c e n t a g e b a s i s . The H o l l y w o o d , a s u b s e q u e n t r u n t h e a t r e , saw i t s t o t a l g r o s s e s s l i p p i n g e a c h y e a r o n t h e s t r a i g h t c a s h s a l e b a s i s b e c a u s e t h e f i l m s b e i n g o f f e r e d i t w e r e f a l l i n g f a r t h e r a n d f a r t h e r b e h i n d , " T h a t i s , n o t j u s t a y e a r o l d f i l m , b u t 14, 16, a n d t h e n i n t o 18 m o n t h s " . The f o u r t h t y p e o f e x h i b i t i o n c o n t r a c t i s t h e c a s h g u a r a n t e e i n a d v a n c e . T h i s t y p e o f c o n t r a c t i s u s u a l l y o n l y s i g n e d b y Famous P l a y e r s a n d Odeon a n d o n l y when t h e r e h a s b e e n a v a s t amount o f a d v a n c e p u b l i c i t y f o r t h e p i c t u r e . U n d e r t h i s a r r a n g e m e n t , t h e e x h i b i t o r w i l l a d v a n c e o r g u a r -a n t e e t h e d i s t r i b u t o r a s p e c i f i e d amount. The m o s t r e c e n t e x a m p l e b e i n g "The G r e a t G a t s b y " . H o w e v e r , s h o u l d t h e p i c t u r e f a i l a t t h e b o x o f f i c e , t h e d i s t r i b u t o r w i l l r e f u n d t h e e x h i b i t o r h i s a d v a n c e . T h i s p r o v e d t o be t h e c a s e w i t h "The G r e a t G a t s b y " . The r e a s o n b e i n g , o f c o u r s e , t h a t t h e d i s t r i b -u t o r w i l l w a n t t o u s e t h e t h e a t r e a g a i n , u s u a l l y i n t h e n e a r f u t u r e . D. B o o k i n g P r a c t i c e s B o o k i n g i s t h e p r a c t i c e o f a r r a n g i n g ( c o n t r a c t u a l l y ) t o l e a s e a f i l m f o r s h o w i n g i n a p a r t i c u l a r t h e a t r e . B o o k i n g p o w e r , i n t u r n , i s t h e b a r g a i n i n g p o w e r r e s u l t i n g f r o m t h e c o n t r o l o f o n e o r more t h e a t r e s . The b o o k i n g o f a l l f i r s t a n d s e c o n d r u n Famous P l a y e r s and Odeon t h e a t r e s l o c a t e d i n C a n a d a ' s l a r g e r c i t i e s i s done f r o m t h e h e a d o f f i c e o f t h e s e two c o m p a n i e s i n T o r o n t o . I n B r i t i s h C o l u m b i a , G r e a t e r V a n c o u v e r a n d V i c t o r i a a r e b o o k e d f r o m T o r o n t o w i t h t h e r e s t o f B. C. b e i n g b o o k e d o u t o f t h e V a n c o u v e r o f f i c e s . The k e y b e i n g , o f c o u r s e , t h e number o f p r i n t s a v a i l a b l e . New f e a t u r e s a r e b o o k e d i n t o t h e k e y c i t i e s f i r s t a n d i f e x t r a p r i n t s a r e a v a i l a b l e , t h e n Famous P l a y e r s a n d Odeon u s e them i n t h e i r 18 t h e a t r e s l o c a t e d i n s m a l l e r c o m m u n i t i e s . C o u p l e t h e c e n t r a l i z e d b o o k i n g p r a c t i c e o f b o t h Famous P l a y e r s a n d Odeon w i t h t h e i r b o o k i n g p o w e r a n d t h e y - 45 -can v i r t u a l l y d e c i d e t h e f a t e o f any f i l m . The s i t u a t i o n i s p e r f e c t l y analogous t o t h a t i n E n g l a n d w h e r e i n t h e P a l a c h e Committee c o n c l u d e d , a f t e r s t u d y i n g the power w e i l d e d by two m e n — t h e c i r c u i t b o o k e r s , George P i n c h e s o f Rand and Bob B a r t o n o f ABC t h a t : " I f t h e s e two p e r s o n s s h o u l d d e c i d e n o t t o book a f i l m , o f i f on b o o k i n g i t , t h e y choose t o a l l o t t o i t the l e a s t remunera-t i v e p l a y i n g d a t e s and l o c a t i o n s i n t h e i r c i r c u i t , t h e p i c t u r e i s a l m o s t c e r t a i n t o be a f a i l u r e and t h e p r o d u c e r may i n con-sequence be r u i n e d . " 1 ^ On F r i d a y , A p r i l 19, 1974, "Les M a l e s " by Canadian f i l m maker G i l l e s C a r l e opened a t Odeon's Dunbar t h e a t r e i n Vancouver. I t was p u l l e d the f o l l o w i n g Thursday "because o f p o o r a t t e n d a n c e " . "The maddening t h i n g i s t h a t t h e d e c i s i o n t o t a k e i t o f f t h e Dunbar s c r e e n was made on Monday, o n l y t h r e e days a f t e r t h e r u n began. And i t was made i n T o r o n t o , a l l o f which means t h a t no m a t t e r how many peo p l e went t h i s week, t h e Canadian movie s t i l l comes o f f a f t e r two n i g h t s s h o w i n g s . " 2 0 SUMMARY OF STRUCTURE AND TRADE PRACTICES S i n c e a f i l m i n d u s t r y has t h r e e p r i n c i p a l b r a n c h e s , p r o d u c t i o n , d i s t r i b u t i o n and e x h i b i t i o n , i t cannot h o n e s t l y be s a i d t h a t a C a n a d i a n f e a t u r e f i l m i n d u s t r y e x i s t s . The y e a r l y p r o d u c t i o n o f Canadian f e a t u r e f i l m s i s n o t s u f f i c e n t t o s u p p o r t an i n d u s t r y and o n l y 5% o f the f i l m s shown on m o t i o n p i c t u r e s c r e e n s i n t h i s c o u n t r y a r e C a n a d i a n . By f a r - 46 -t h e m a j o r i t y a r e A m e r i c a n p r o d u c e d . I n t h e d i s t r i b u t i o n s e c t o r , r o u g h l y 55 f i r m s h a n d l e f i l m s i n C a n a d a . S e v e n o f t h e s e a c c o u n t f o r more t h a n 80% o f t h e t o t a l t h e a t r i c a l f i l m r e n t a l s a n d a l l s e v e n a r e A m e r i c a n owned o r c o n t r o l l e d . The e x h i b i t i o n o f f e a t u r e f i l m s i n C a n a d a i s d o m i n a t e d b y Famous P l a y e r s L t d . a n d Odeon T h e a t r e s (Canada) L t d . who b e t w e e n them a c c o u n t f o r a p p r o x i m a t e l y 65% o f C a n a d a ' s r o u g h l y $200 m i l l i o n b o x o f f i c e g r o s s a n d a g a i n b o t h c o m p a n i e s a r e f o r e i g n owned. What r e m a i n s o f t h e e x h i b i t i o n a n d d i s t r i b u t i o n s e c t o r s o f t h e i n d u s t r y i s known a s t h e " C a n a d i a n " o r " i n d e -p e n d e n t " s e g m e n t o f t h e i n d u s t r y . F u r t h e r m o r e , t h e b a r g a i n i n g p o w e r d e r i v e d f r o m con-' t r o l l i n g s o many o f t h e l a r g e , f i r s t r u n t h e a t r e s h a s e n a b l e d Famous P l a y e r s a n d Odeon t o g a i n de f a c t o c o n t r o l o f t h e f i l m i n d u s t r y i n C a n a d a . I n t h e e x h i b i t i o n s e c t o r , t h e i n d e p e n d e n t s a r e a s s i g n e d t o s u b s e q u e n t r u n p l a y i n g s a n d t h e r e b y l e s s e r p r o f i t p o s i t i o n s . T h r o u g h b l o c k b o o k i n g p r o c e d u r e s , i n d e p e n d e n t d i s t r i b u t o r s h a v e b e e n d e n i e d a c c e s s t o t h e p r o f i t a b l e f i r s t r u n t h e a t r e s c r e e n s w h i l e t h e i n d e p e n d e n t e x h i b i t o r s a r e d e n i e d , new p r o d u c t f o r s h o w i n g i n t h e i r t h e a t r e s . The e x h i b i t o r s ' p r o b l e m i s compounded b y t h e f a c t t h a t Famous P l a y e r s a n d Odeon a l s o demand t h e r i g h t s t o s e c o n d r u n s h o w i n g s o f a l l new p r o d u c t s o f t h e d i s t r i b u t o r s . W i t h o u t a c c e s s t o t h e p r o f i t a b l e d i s t r i b t u i o n a n d e x h i b i t i o n o u t l e t s , i n v e s t o r s a r e r e l u c t a n t t o p l a c e f u n d s i n t h e p r o d u c t i o n o f C a n a d i a n f e a t u r e - 47 -f i l m s . E v e n i f a d i s t r i b u t i o n a g r e e m e n t c o u l d be g u a r a n t e e d f o r a C a n a d i a n f e a t u r e w i t h one o f t h e m a j o r s , i t s p o t e n t i a l p r o f i t i s e a s i l y m a n i p u l a t e d a c c o r d i n g t o t h e p l a y d a t e a n d l o c a t i o n i t i s a s s i g n e d i n t h e b o o k i n g s c h e d u l e o f Famous P l a y e r s o r Odeon. As t h i s s i t u a t i o n h a s c o n t i n u e d f o r d e c a d e s , i t i s u n r e a s o n a b l e t o e x p e c t o r d i n a r y m a r k e t c o n d i t i o n s t o u n t r e n c h t h e m a j o r s . The o n l y o t h e r r e c o u r s e i s g o v e r n m e n t i n t e r v e n t i o n . - 48 -FOOTNOTES CHAPTER I I I 1 M i c h a e l C o n a n t , A n t i t r u s t i n t h e M o t i o n P i c t u r e  I n d u s t r y ( B e r k e l e y : U n i v e r s i t y o f C a l i f o r n i a P r e s s , 1 9 6 0 ) , p. 1. 2 I b i d . , p. 2 . 3 I b i d . , p. 3. 4 f r o m t h e A n n u a l R e p o r t o f t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n 1973-1974 a t p . 5. 5 D r a b i n s k y , o p . c i t . , p . 160. c The Sun ( V a n c o u v e r ) , December 6, 1974, p . 5A, c o l . 2. 7 . C o n a n t , o p . c i t . , p . 59. 8 I b i d . , p . 77. q K i r w a n C o x , " R o c c a ' s B i g F i g h t " , C i n e m a C a n a d a , T h i r d E d i t i o n , No. 25 ( F e b r u a r y 1 9 7 6 ) , p . 2 5 . 10 _.. , I b i d . 11 T. I b i d . 12 S t e p h e n C h e s l e y , The B u s i n e s s o f F i l m ( T o r o n t o : C i n e m a Canada M a g a z i n e F o u n d a t i o n , 1 9 7 5 ) , p. 14. 13 The P r o v i n c e ( V a n c o u v e r ) , F e b r u a r y 12, 1 9 7 4 , p. 2 3 , co 1. 4 . 14 Cox, o p . c i t . , p. 25. C a n a d a , Commons, H o u s e , C o m m i t t e e o n B r o a d c a s t i n g , F i l m s a n d A s s i s t a n c e t o t h e A r t s , N a t i o n a l F i l m B o a r d , H e a r i n g , 2 9 t h P a r l i a . , 2nd S e s s i o n , A p r i l 2 3 , 1974 ( O t t a w a : Queen's P r i n t e r , 1 9 7 4 ) , p. 2 1 . - 49 -16 P a u l A. Baumgarten and Donald C. F a r b e r , P r o d u c i n g ,  F i n a n c i n g and D i s t r i b u t i n g F i l m (New York: Drama Book S p e c i a l i s t s / P u b l i s h e r s , 1973), p. 188. 17 from an i n t e r v i e w w i t h M. B r i a n Rogers, Manager o f Famous P l a y e r s L t d . Lougheed M a l l Cinemas J u l y , 1975. 1 8 I b i d . 19 from Terence K e l l y , A C o m p e t i t i v e Cinema (London: The I n s t i t u t e o f Economic A f f a i r s , 1966), p. 72^ 2 0 The Sun (Vanc o u v e r ) , A p r i l 25, 1974, p. 41, c o l . 1. CHAPTER I V THE FEDERAL GOVERNMENT AND THE FEATURE F I L M INDUSTRY I N CANADA T h i s C h a p t e r i s d e v o t e d t o a d e s c r i p t i o n o f t h e p o l i c i e s o f t h e f e d e r a l g o v e r n m e n t d e s i g n e d t o a f f e c t t h e s t r u c t u r e o f , a n d i n f l u e n c e b e h a v i o u r i n , t h e f e a t u r e f i l m i n d u s t r y i n C a n a d a . Some o f t h e s e p o l i c i e s h a v e b e e n f o r m a l -i z e d as l e g i s l a t i o n , o t h e r s t a k e t h e f o r m o f " a g r e e m e n t s " w i t h p a r t i c i p a n t s i n t h e i n d u s t r y . Some h a v e b e e n d e s i g n e d t o h a v e a d i r e c t i m p a c t o n t h e f i l m i n d u s t r y a n d c a n t h e r e -f o r e be d e s c r i b e d a s " f i l m " p o l i c i e s . O t h e r s a r e i n t e n d e d t o i n f l u e n c e a l l i n d u s t r i e s i n t h e C a n a d i a n economy a n d t h e r e b y a f f e c t t h e f i l m i n d u s t r y i n c i d e n t a l l y . C a n a d a does n o t h a v e a f i l m p o l i c y as s u c h . No a t t e m p t i s made t o m e a s u r e t h e i m p a c t o f any o f t h e s e a c t i o n s on t h e s t r u c t u r e o r p e r f o r m a n c e o f t h e i n d u s t r y a t t h i s t i m e . T h i s w i l l be t h e p u r p o s e o f C h a p t e r V. The p r e s e n t a i m i s m e r e l y t o p r e s e n t t h e p o l i c i e s , m o s t o f w h i c h a r e a i m e d d i r e c t l y a t t h e p r o d u c t i o n s e c t o r o f t h e i n d u s t r y . By f a r t h e m o s t a m b i t i o u s o f t h e s e h a s b e e n t h e e s t a b l i s h m e n t o f t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n . To f a c i l i t a t e a n o r d e r l y p r e s e n t a t i o n , t h e g o v e r n -m ent's p o l i c i e s h a v e b e e n o r g a n i z e d u n d e r f o u r m a i n h e a d i n g s : p o l i c i e s i n f l u e n c i n g p r o d u c t i o n ; c o m p e t i t i o n p o l i c y ; f o r e i g n o w n e r s h i p a n d ; q u o t a s . P O L I C I E S INFLUENCING PRODUCTION The f o l l o w i n g a r e d i r e c t a t t e m p t s w h i c h h a v e b e e n made by t h e f e d e r a l g o v e r n m e n t t o p r o m o t e t h e p r o d u c t i o n o f C a n a d i a n m o t i o n p i c t u r e s . A. The C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n A Crown c o r p o r a t i o n c r e a t e d i n 1967 by t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n A c t 1 " t o f o s t e r a n d p r o m o t e t h e 2 d e v e l o p m e n t o f t h e f e a t u r e f i l m i n d u s t r y i n C a n a d a " , t h e CFDC r e p o r t s t o P a r l i a m e n t t h r o u g h t h e S e c r e t a r y o f S t a t e . O r i g i n a l l y a l l o t t e d $10 m i l l i o n o f p u b l i c f u n d s , t h e C o r p o -r a t i o n h a s s i n c e b e e n p r o v i d e d w i t h an a d d i t i o n a l $15 m i l l i o n . I n f u r t h e r a n c e o f i t s o b j e c t i v e t o f o s t e r a n d p r o m o t e t h e d e v e l o p m e n t o f t h e f e a t u r e f i l m i n d u s t r y i n C a n a d a , t h e C o r p o r a t i o n i s empowered t o : (a) i n v e s t i n i n d i v i d u a l C a n a d i a n f e a t u r e f i l m p r o d u c t i o n s i n r e t u r n f o r a s h a r e i n t h e p r o c e e d s f r o m any s u c h p r o d u c t i o n s ; (b) make l o a n s t o p r o d u c e r s o f i n d i v i d u a l C a n a d i a n f e a t u r e f i l m p r o d u c t i o n s a n d c h a r g e i n t e r e s t - 52 -t h e r e o n ; (c) make a w a r d s f o r o u t s t a n d i n g a c c o m p l i s h m e n t s i n t h e p r o d u c t i o n o f C a n a d i a n f e a t u r e f i l m s ; (d) make g r a n t s t o f i l m m a k e r s a n d f i l m t e c h n i c i a n s r e s i d e n t i n C a n a d a t o a s s i s t them i n i m p r o v i n g t h e i r c r a f t s ; a n d (e) a d v i s e a n d a s s i s t t h e p r o d u c e r s o f C a n a d i a n f e a t u r e f i l m s i n t h e d i s t r i -b u t i o n o f s u c h f i l m s and i n t h e a d m i n i s t r a t i v e f u n c t i o n s o f 3 f e a t u r e f i l m p r o d u c t i o n . A " C a n a d i a n f e a t u r e f i l m " o r " C a n a d i a n f e a t u r e f i l m p r o d u c t i o n " i s a f e a t u r e f i l m o r f e a t u r e f i l m p r o d u c t i o n i n r e s p e c t o f w h i c h t h e C o r p o r a t i o n h a s d e t e r m i n e d : " ( a ) t h a t t h e c o m p l e t e d f i l m w i l l , i n t h e j u d g m e n t o f t h e C o r p o r a t i o n h a v e a s i g n i f i c a n t C a n a d i a n c r e a t i v e , a r t i s t i c and t e c h n i c a l c o n t e n t , a n d t h a t a r r a n g e m e n t s h a v e b e e n made t o i n s u r e t h a t t h e c o p y r i g h t i n t h e 1 c o m p l e t e d f i l m w i l l be b e n e f i c i a l l y owned by an i n d i v i d u a l r e s i d e n t i n C a n a d a , by a c o r p o r a t i o n i n c o r p o r a t e d u n d e r t h e l a w s o f C a n a d a o r a P r o v i n c e o r by any c o m b i n a t i o n o f s u c h p e r s o n s ; o r (b) t h a t p r o v i s i o n h a s b e e n made f o r t h e p r o d u c t i o n o f t h e f i l m u n d e r a c o -p r o d u c t i o n a g r e e m e n t e n t e r e d i n t o b e t w e e n C a n a d a a n d any o t h e r c o u n t r y . " 4 To p r o m o t e t h e d e v e l o p m e n t o f t h e i n d u s t r y , t h e CFDC i s a u t h o r i z e d t o p r o v i d e i n v e s t m e n t a n d l o a n f u n d s t o a s s i s t i n t h e p r o d u c t i o n o f : f e a t u r e f i l m s d e s i g n e d f o r r e l e a s e i n m a j o r m o t i o n p i c t u r e t h e a t r e s and on t e l e v i s i o n i n C a n a d a a n d a b r o a d ; and f e a t u r e f i l m s o n l o w b u d g e t s p r o d u c e d p r i m a r i l y f o r t h e p u r p o s e o f d e v e l o p i n g new t a l e n t s . - 53 -The F e a t u r e F i l m I n v e s t m e n t P r o g r a m As a c o n d i t i o n p r e c e d e n t t o CFDC f u n d i n g u n d e r t h i s p r o g r a m , g u a r a n t e e d d i s t r i b u t i o n i n C a n a d a i s r e q u i r e d . The d i s t r i b u t o r w i l l be e x p e c t e d t o e i t h e r ( i ) i n v e s t i n t h e p r o -d u c t i o n c o s t s o f t h e f i l m ; o r ( i i ) g u a r a n t e e p a y m e n t o f an a d v a n c e as s o o n as t h e p i c t u r e i s d e l i v e r e d t o h i m ; o r ( i i i ) g u a r a n t e e a n amount f o r p r i n t s a n d a d v e r t i s i n g w h i c h w i l l be m u t u a l l y a g r e e d w i t h t h e CFDC, t h e p r o d u c e r , a n d t h e o t h e r 6 i n v e s t o r s . U n d e r t h i s p r o g r a m , t h e CFDC's c o n t r i b u t i o n i s r a r e l y more t h a n 50% o f t h e c o s t s o f p r o d u c t i o n o f t h e c o m p l e t e d f i l m and s e l d o m e x c e e d s $ 2 0 0 , 0 0 0 . 0 0 . D e p e n d i n g on t h e a v a i l a b i l i t y o f f u n d s , p r i o r i t y i s g i v e n t o f i l m s a l s o c o n t r a c t e d f o r t e l e v i s i o n r e l e a s e o r f i l m s w i t h a t e l e v i s i o n p o t e n t i a l , p a r -t i c u l a r l y o n t h e i n t e r n a t i o n a l m a r k e t . When t h e CFDC a c t u a l l y i n v e s t s i n a f i l m , i t w i l l p a r t i c i p a t e i n 50% o f t h e p r o f i t s i n p r o p o r t i o n t o i t s s h a r e o f t h e o r i g i n a l f i n a n c i n g . The o t h e r 50% o f t h e p r o f i t s t r a d i t i o n a l l y g o e s t o t h e p r o d u c e r ( t o be s h a r e d w i t h t h e w r i t e r , d i r e c t o r , a c t o r s a n d o t h e r s i n v o l v e d i n t h e p r o d u c t i o n o f t h e f i l m ) . When t h e CFDC makes a l o a n , i t d o e s n o t t a k e a s h a r e i n t h e p r o f i t s b u t i t d o e s r e q u e s t s e c u r i t y o t h e r t h a n t h e f i l m i t s e l f . The r a t e o f i n t e r e s t i s s u b j e c t t o n e g o t i a t i o n . - 54 -The Low B u d g e t P r o g r a m 7 I n 1 9 7 2 , t h e C o r p o r a t i o n a n n o u n c e d t h e e s t a b l i s h m e n t o f a s p e c i a l f u n d o f $600,000.00 p e r y e a r t o f a c i l i t a t e t h e p r o d u c t i o n o f l o w b u d g e t f e a t u r e f i l m s . The p u r p o s e o f t h i s f u n d i s t o p r o v i d e o p p o r t u n i t i e s f o r d e v e l o p i n g f i l m m a k e r s t o p r o d u c e t h e i r f i r s t f e a t u r e l e n g t h f i l m a n d t o i n c r e a s e s k i l l s a n d t a l e n t s i n t h e i n d u s t r y . F i l m m a k e r s w i t h p r e v i o u s f e a t u r e l e n g t h e x p e r i e n c e , h o w e v e r , a r e s t i l l e l i g i b l e . A l o w b u d g e t f e a t u r e i s d e f i n e d a s o n e w h i c h h a s a maximum b u d g e t o f $125,000.00 and t h e CFDC's i n v e s t m e n t w i l l n o t n o r m a l l y e x c e e d 60% o f t h i s amount. The o t h e r 40% w i l l t a k e t h e f o r m o f c a s h i n v e s t e d b y t h e p r i v a t e s e c t o r o r o f c o n t r i -b u t i o n s b y i n d i v i d u a l s o f t h e i r t i m e o r b y c o m p a n i e s o f t h e i r e q u i p m e n t and s e r v i c e s . The CFDC d o e s a l l o w d e f e r m e n t s o f up t o $ 2 0 , 0 0 0 . 0 0 . No d o c u m e n t a r i e s o r e d u c a t i o n a l f i l m s a r e e l i g i b l e a n d a d i r e c t o r c a n p a r t i c i p a t e o n l y o n c e . To q u a l i f y u n d e r t h i s p r o g r a m , a l l t h e c r e w , c r e a t i v e s t a f f a n d p e r f o r m e r s a s w e l l a s t h e w r i t e r , d i r e c t o r a n d p r o -d u c e r must be C a n a d i a n c i t i z e n s o r l a n d e d i m m i g r a n t s w i t h a t l e a s t t h r e e y e a r ' s r e s i d e n c e i n C a n a d a . W h i l e no d i s t r i b u t i o n g u a r a n t e e i s r e q u i r e d , i t i s e x p e c t e d t h a t t h e p r o d u c e r w i l l w o r k t o g e t h e r w i t h t h e CFDC t o o b t a i n d i s t r i b u t i o n o n c e t h e f i l m h a s b e e n c o m p l e t e d . I n t h i s way, f i l m s p r o d u c e d u n d e r t h i s p r o g r a m s h o u l d a t l e a s t r e a c h a n a u d i e n c e t h r o u g h t h e v a r i o u s c o - o p e r a t i v e s a n d o t h e r - 55 -lo w c o s t d i s t r i b u t i o n o p e r a t i o n s i n C a n a d a . T h i s p r o p o s a l d i f f e r s f r o m t h e f e a t u r e f i l m i n v e s t -ment p r o g r a m i n one i m p o r t a n t a s p e c t . U n d e r t h i s p r o g r a m , c o m p a n i e s a nd i n d i v i d u a l s c o n t r i b u t i n g t h e i r t i m e , e q u i p m e n t a n d s e r v i c e s t o t h e p r o d u c t i o n o f t h e l o w b u d g e t f i l m w i l l be i n a f i r s t p o s i t i o n f o r r e c o u p m e n t o n c e t h e p i c t u r e g o e s i n t o d i s t r i b u t i o n . The CFDC r e c e i v e s 2 5 % o f any m o n i e s e a r n e d b y t h e f i l m a f t e r t h e s e i n d i v i d u a l s h a v e b e e n r e i m b u r s e d . B. The C a n a d a C o u n c i l The C a n a d a C o u n c i l was c r e a t e d b y a n A c t o f P a r l i a -ment i n 1957 t o "pr o m o t e t h e a r t s , t h e h u m a n i t i e s a n d t h e 8 s o c i a l s c i e n c e s " , a n d c a r r i e s o u t i t s w o r k m a i n l y t h r o u g h a b r o a d p r o g r a m o f f e l l o w s h i p s a n d g r a n t s . I t s e t s i t s own p o l i c i e s a n d makes i t s own d e c i s i o n s w i t h i n t h e t e r m s o f t h e C a n a d a C o u n c i l A c t and r e p o r t s t o P a r l i a m e n t t h r o u g h t h e S e c r e t a r y o f S t a t e . W h i l e t h e C a n a d a C o u n c i l d o e s n o t d i r e c t l y a s s i s t i n t h e p r o d u c t i o n o f f e a t u r e f i l m s , u n d e r i t s F i l m a n d V i d e o P r o g r a m , d i r e c t g r a n t s f o r f i l m s as w e l l as g r a n t s f o r r e s e a r c h , t r a i n i n g a n d s c r i p t w r i t i n g a r e a v a i l a b l e . A p p l i c a n t s m u s t h a v e p r o d u c e d a t l e a s t one f i l m a n d be C a n a d i a n c i t i z e n s o r l a n d e d i m m i g r a n t s f o r a t l e a s t 12 months b e f o r e t h e d a t e o f 9 a p p l i c a t i o n . The maximum amount a v a i l a b l e f o r a s i n g l e f i l m • p r o d u c t i o n i s $25,000.00, t o c o v e r t o t a l o r p a r t i a l p r o d u c t i o n - 56 -c o s t s . A p p l i c a n t s r e c e i v i n g g r a n t s o f $15,000.00 o r more may r e - a p p l y f o r s u p p l e m e n t a r y f u n d s f o r a t o t a l n o t e x c e e d i n g $ 2 5 , 0 0 0 . 0 0 . 1 0 However, s i n c e a p p l i c a n t s r e c e i v i n g a s s i s t a n c e f r o m o t h e r f e d e r a l f i l m a g e n c i e s , s u c h as t h e CFDC, a r e n o t e l i g i b l e f o r C a n a d a C o u n c i l g r a n t s f o r t h e same p r o j e c t , t h e F i l m a n d V i d e o P r o g r a m o f t h e C a n a d a C o u n c i l i s s e l d o m u s e d by C a n a d i a n f e a t u r e l e n g t h m o t i o n p i c t u r e p r o d u c e r s . C. D e d u c t i o n s f r o m Income T a x : F e a t u r e F i l m I n v e s t m e n t By O r d e r i n C o u n c i l P.C. 1 9 6 0 — 2 2 5 p u b l i s h e d M a r c h 9, 1 9 6 0 , C l a s s 18 was a d d e d t o S c h e d u l e B o f t h e Income Tax R e g u l a t i o n s p e r m i t t i n g a 60% i n c o m e t a x w r i t e - o f f f o r " p r o p e r t y t h a t i s a m o t i o n p i c t u r e f i l m " . 1 1 By O r d e r i n C o u n c i l P.C. 1 9 6 6 — 4 3 1 p u b l i s h e d M a r c h 2 3 , 1966, C l a s s 18 was amended t o a d d t h e w o r d s " o t h e r t h a n a t e l e v i s i o n c o m m e r c i a l m e s s a g e : a n d t h e p h r a s e "A m o t i o n p i c t u r e f i l m t h a t i s a t e l e v i s i o n c o m m e r c i a l m e s s a g e " was a d d e d t o C l a s s 12 o f S c h e d u l e B t o t h e Income Tax R e g u l a t i o n s w h e r e i n . 1 2 a 100% w r i t e - o f f was p e r m i t t e d . F o r r e g u l a r f e a t u r e f i l m s , h o w e v e r , t h e w r i t e - o f f r e m a i n e d a t 6 0 % . 13 A t t h e r i s k o f o v e r s i m p l i f y i n g , t h e way t h i s w o r k s i s t h e i n v e s t o r who b u y s a s h a r e i n a m o t i o n p i c t u r e f i l m h a s an a s s e t w h i c h c a n be d e p r e c i a t e d f o r i n c o m e t a x p u r p o s e s a t a r a t e o f 60% p e r annum on a d e c l i n i n g b a l a n c e b a s i s . T h i s . d e p r e c i a t i o n , o r c a p i t a l c o s t a l l o w a n c e as i t i s c a l l e d , c a n - 57 -be o f f s e t a g a i n s t t h e i n c o m e e a r n e d f r o m t h e s h a r e o f t h e f i l m . I n m o s t c a s e s , h o w e v e r , t h i s w i l l r e s u l t i n a r a t h e r s u b s t a n -t i a l l o s s s i n c e n o t many f i l m s w i l l r e s u l t i n a c a s h r e t u r n e q u a l t o 60% i n t h e f i r s t y e a r . The amount o f t h i s l o s s c a n t h e n be u s e d as a d e d u c t i o n a g a i n s t i n c o m e f r o m o t h e r s o u r c e s , i n c l u d i n g s a l a r y , i n v e s t m e n t a n d p r o f e s s i o n a l i n c o m e . "The e n d r e s u l t i s t h a t i t i s p o s s i b l e , d e p e n d i n g on t h e t a x p a y e r ' s o v e r a l l p o s i t i o n , t o e l i m i n a t e t a x a b l e i n c o m e a l t o g e t h e r a n d p a y no i n c o m e t a x f o r t h e y e a r . " 1 4 When t h e i n t e r e s t i n t h e f i l m i s s o l d , t h e p r o c e e d s f r o m t h e s a l e a r e t a k e n i n t o t h e t a x a b l e i n c o m e o f t h e i n v e s t o r t o t h e e x t e n t t h a t d e p r e c i a t i o n p r e v i o u s l y c l a i m e d f o r t a x p u r p o s e s i s r e c o v e r e d i n t h e s a l e . T h i s amount i s known as r e c a p t u r e d c a p i t a l c o s t a l l o w a n c e a n d , i f i t i s s i m p l y a d d e d t o t h e i n v e s t o r s t a x a b l e i n c o m e , i t c a n e f f e c t i v e l y e l i m i n a t e m o s t o f t h e t a x a d v a n t a g e he h a s g a i n e d i n p r i o r y e a r s . H o w e v e r , s i n c e r e c a p t u r e d c a p i t a l c o s t a l l o w a n c e i s an amount w h i c h i s e l i g i b l e f o r t h e p u r c h a s e o f a n i n c o m e a v e r a g i n g a n n u i t y c o n t r a c t , t h e e f f e c t o f t h e t a x c a n be s p r e a d o v e r a p e r i o d o f "up t o 15 15 y e a r s o r f o r l i f e " . I n t h e m e a n t i m e , " a r e t u r n o f 6% t o 7% p e r annum c a n be e a r n e d on t h e b a l a n c e o f t h e d e f e r r e d i n c o m e " . 1 6 T h i s t a x a d v a n t a g e may be f u r t h e r e n h a n c e d by t h e u s e o f l e v e r a g e . 1 ^ N o r m a l l y , t h e i n v e s t o r ' s i n t e r e s t i n t h e . f i l m i s p a i d f o r by a m o d e s t c a s h downpayment w i t h t h e r e m a i n i n g - 58 -b a l a n c e b e i n g p a y a b l e o n l y o u t o f r e v e n u e s e a r n e d f r o m t h e f i l m . I f t h e f i l m d o e s n o t r e t u r n a n y r e v e n u e s , t h e l i a b i l i t y o f t h e i n v e s t o r i s l i m i t e d t o h i s downpayment. F o r e x a m p l e , an i n v e s t o r p u r c h a s i n g a o n e - h a l f m i l l i o n d o l l a r f i l m m i g h t p u t up a c a s h p a y m e n t o f $120,000.00 a n d t h e r e b y c l a i m t h e $500,000.00 p r i c e as a c o s t b a s e o n w h i c h t o c a l c u l a t e h i s d e p r e c i a t i o n . F e a t u r e F i l m I n v e s t m e n t : The 100% D e d u c t i o n On A u g u s t 5, 1 9 7 5 , t h e S e c r e t a r y o f S t a t e , J . Hugh F a u l k n e r , i n t r o d u c e d a new Income Tax R e g u l a t i o n w h i c h amended t h e c a p i t a l c o s t a l l o w a n c e p e r c e n t a g e on m o t i o n p i c t u r e f i l m s 18 f r o m 60% t o 1 0 0 % . T h i s i n i t i a t i v e was e x p r e s s l y d e s i g n e d t o " i n c r e a s e p r i v a t e s e c t o r s u p p o r t o f t h e C a n a d i a n f e a t u r e 19 f i l m i n d u s t r y " . H owever, i n o r d e r t o be e l i g i b l e f o r t h e i n c r e a s e d c a p i t a l c o s t a l l o w a n c e , a n a p p l i a n t m u s t i n v e s t i n a " c e r t i f i e d f e a t u r e f i l m " , as d e f i n e d u n d e r S u b s e c t i o n 1 1 0 4 ( 2 ) ( h ) o f t h e Income Tax R e g u l a t i o n s . T h a t i s t o s a y , a f i l m : " ( a ) o f a t l e a s t 75 m i n u t e s r u n n i n g t i m e i n r e s p e c t o f w h i c h a l l p h o t o g r a p h y o r a r t w o r k s p e c i f i c a l l y r e q u i r e d f o r t h e p r o d u c t i o n t h e r e o f and a l l f i l m e d i t i n g t h e r e f o r was commenced a f t e r November 18, 1974; a n d (b) p r o d u c e d u n d e r a f o r m a l C a n a d i a n c o -p r o d u c t i o n a g r e e m e n t w i t h a f o r e i g n c o u n t r y ; o r (c) a f i l m i n w h i c h : ( i ) t h e p r o d u c e r i s a C a n a d i a n ; ( i i ) t w o - t h i r d s o r more o f t h e p e r s o n n e l p e r f o r m i n g k e y - 59 -c r e a t i v e f u n c t i o n s a r e C a n a d i a n s ; ( i i i ) a minimum o f 75% o f t h e r e -m u n e r a t i o n p a i d t o p e r s o n n e l o t h e r t h a n t h o s e i n c l u d e d a b o v e i s p a i d t o C a n a d i a n s ; ( i v ) a t l e a s t 75% o f t h e t e c h n i c a l s e r v i c e s a r e p e r f o r m e d i n C a n a d a ; and (v) t h e C a n a d i a n c o p y r i g h t i s b e n e f i c i a l l y owned by C a n a d i a n s f o r n o t l e s s t h a n f o u r y e a r s f o l l o w i n g c o m p l e -t i o n o f t h e f i l m . " 2 0 F i l m s t h a t a r e n o t e l i g i b l e f o r t h e new a l l o w a n c e b e c a u s e t h e y do n o t meet t h e c r i t e r i a s e t o u t a b o v e a r e s t i l l e l i g i b l e f o r t h e 60% c a p t i a l c o s t a l l o w a n c e p r o v i d e d f o r u n d e r C l a s s 18 i n S c h e d u l e B o f t h e Income Tax R e g u l a t i o n s . D. C o - p r o d u c t i o n A g r e e m e n t s " I n o r d e r t o p r o m o t e c u l t u r a l r e l a t i o n s , t h e p r o d u c t i o n o f f i l m s w i t h h i g h a r t i s t i c a n d t e c h n i c a l v a l u e a n d t h e e n c o u r a g e m e n t o f f i l m m a k i n g c o - o p e r a t i o n b e t w e e n c o u n t r i e s , c o - p r o d u c t i o n a g r e e m e n t s h a v e b e e n e n t e r e d i n t o b e t w e e n t h e g o v e r n m e n t s o f v a r i o u s f i l m p r o d u c i n g c o u n t r i e s . " 2 1 A c o - p r o d u c t i o n i s a f i l m f i n a n c e d b y p a r t n e r s i n two ( o r more) c o u n t r i e s . I f a c o - p r o d u c t i o n t r e a t y e x i s t s , t h e f i l m h a s d u a l n a t i o n a l i t y a n d t h e r e b y a v o i d s i m p o r t d u t i e s o r q u o t a s a n d r e c e i v e s any p r o t e c t i v e b e n e f i t s g r a n t e d t o e i t h e r home i n d u s t r y . I t a l s o g u a r a n t e e s t h e f i l m f o r e i g n d i s t r i -b u t i o n a n d t h e r e b y h e l p s t o i n s u r e t h e f i l m ' s ' f i n a n c i a l s u c c e s s . W h i l e t h e c o n t r i b u t i o n o f t h e p r o d u c e r o f e a c h c o u n t r y v a r i e s a c c o r d i n g t o t h e t e r m s o f t h e a g r e e m e n t , t h e p r o d u c t i o n - 60 -company o f e a c h c o u n t r y w i l l a d v a n c e s u c h m o n i e s a n d p r o v i d e s u c h p e r s o n n e l a s i s n e c e s s a r y t o s a t i s f y t h e a g r e e m e n t . " E a c h p r o d u c t i o n company w i l l r e s e r v e i t s n a t i o n a l t e r r i t o r y f o r t h e e x p l o i t a t i o n o f t h e f i l m a nd w i l l s h a r e t h e n e t p r o f i t s f r o m t h e r e s t o f t h e r o l e i n p r o p o r t i o n t o t h e amount o f c a p i t a l a d v a n c e d o r c r e d i t made a v a i l a b l e t o t h e p r o d u c t i o n . " 2 2 C a n a d a h a s e n t e r e d i n t o c o - p r o d u c t i o n a g r e e m e n t s w i t h t h r e e c o u n t r i e s w h i c h came i n t o e f f e c t on t h e f o l l o w i n g d a t e s : F r a n c e , J u n e 7, 1974; I t a l y , J u l y 4, 1974 a n d ; t h e U n i t e d K i n g d o m , S e p t e m b e r 12, 1975. E. C a n a d i a n F i l m I n v e s t m e n t : Famous P l a y e r s a n d Odeon To a n n o u n c e t h e new Income Tax R e g u l a t i o n w h i c h a l l o w e d i n v e s t o r s t o d e d u c t 100% o f t h e i r i n v e s t m e n t i n a C a n a d i a n f e a t u r e f i l m , t h e S e c r e t a r y o f S t a t e i s s u e d a news r e l e a s e o n T u e s d a y , A u g u s t 5, 1975. As p a r t o f t h i s r e l e a s e , Mr. F a u l k n e r a l s o a n n o u n c e d t h a t a f t e r e x t e n s i v e n e g o t i a t i o n s w i t h t h e S e c r e t a r y o f S t a t e , Famous P l a y e r s L t d . a n d Odeon T h e a t r e s (Canada) L t d . h a d v o l u n t a r i l y a g r e e d t o a n i n v e s t m e n t p r o g r a m o f a t l e a s t $1.7 m i l l i o n t o a i d t h e e x h i b i t i o n a n d p r o d u c t i o n o f C a n a d i a n f e a t u r e f i l m s : " I h a v e a l s o a p p r o a c h e d t h e c h a i n s t o i n c r e a s e t h e i r i n v e s t m e n t i n C a n a d i a n f i l m s . They h a v e c o n s e n t e d t o i n v e s t a t l e a s t $1.7 m i l l i o n i n C a n a d i a n f i l m s o v e r a one y e a r p e r i o d . Famous P l a y e r s w i l l p r o v i d e $1.2 m i l l i o n a n d Odeon $500,000.00."23 - 61 -COMPETITION POLICY Canada's c o m p e t i t i o n p o l i c y i s p r e s e n t l y embodied 24 m the Combines I n v e s t i g a t i o n A c t , an A c t t o p r o v i d e f o r " t h e 25 i n v e s t i g a t i o n o f combines, m o n o p o l i e s , t r u s t s and mergers". The purpose o f the Combines I n v e s t i g a t i o n A c t i s t o : " A s s i s t i n m a i n t a i n i n g e f f e c t i v e c o m p e t i -t i o n as a prime s t i m u l u s t o the achievement o f maximum p r o d u c t i o n , d i s t r i b u t i o n and employment i n the mixed system o f p u b l i c and p r i v a t e e n t e r p r i s e . To t h i s end, t h e l e g i s l a t i o n seeks t o e l i m i n a t e c e r t a i n p r a c t i c e s and r e s t r a i n t o f t r a d e , and t o overcome t h e bad e f f e c t s o f c o n c e n t r a t i o n , t h a t t e n d t o p r e v e n t the economic r e s o u r c e s o f Canada from b e i n g used most e f f e c t i v e l y t o t h e advantage o f a l l . " 2 6 On O c t o b e r 17, 1975, the Combines I n v e s t i g a t i o n A c t underwent e x t e n s i v e and e x t r e m e l y i m p o r t a n t changes when B i l l C-2, an A c t t o amend the Combines I n v e s t i g a t i o n A c t p a s s e d t h i r d r e a d i n g i n the House o f Commons. These amendments, t h e l a s t o f which were p r o c l a i m e d i n f o r c e J u l y 1, 1976, c o u l d have a p r o f o u n d e f f e c t on the m o t i o n p i c t u r e i n d u s t r y i n Canada. A. The Combines I n v e s t i g a t i o n A c t as o f J u l y 1, 1976 The f i r s t s i g n i f i c a n t change i n the Combines I n v e s t i -g a t i o n Act, as amended, i s t o e x t e n d the p r o h i b i t i o n s o f t h e A c t ( a g a i n s t combines, mergers and m o nopolies) t o a p p l y t o a l l s e r v i c e s and s e r v i c e i n d u s t r i e s . P r i o r t o t h e amendments, t h e y were, f o r t h e most p a r t , r e s t r i c t e d t o p r o d u c t i o n and t r a d e i n a r t i c l e s o r c ommodities. - 62 -S e c t i o n 2 o f t h e A c t d e f i n e s " p r o d u c t " as i n c l u d i n g an a r t i c l e a n d s e r v i c e ; w h i l e " s e r v i c e " means "a s e r v i c e o f any d e s c r i p t i o n w h e t h e r i n d u s t r i a l , t r a d e , p r o f e s s i o n a l o r 27 o t h e r w i s e . " I n 1 9 6 3 , a n i n v e s t i g a t i o n i n t o t h e d i s t r i b u t i o n a n d r e n t a l o f M o t i o n P i c t u r e F i l m was s t a r t e d u n d e r t h e C o m b i n e s 2 8 I n v e s t i g a t i o n A c t . The i n q u i r y a r o s e o u t o f c o m p l a i n t s by i n d e p e n d e n t t h e a t r e o p e r a t o r s who h a d b e e n u n a b l e t o o b t a i n g o o d f i r s t r u n f i l m s f o r e x h i b i t i o n . The c o m p l a i n a n t s a l l e g e d t h a t s i n c e Famous P l a y e r s a n d Odeon h a d c o n t r o l o v e r a l l s u c h f i l m s , t h e i n d e p e n d e n t s h a v e b e e n r e l e g a t e d t o t h e e x h i b i t i o n o f " s e c o n d o r s u b s e q u e n t r u n s h o w i n g s o r t o t h e e x h i b i t i o n 29 o f a r t f i l m s a n d l e s s e r known f o r e i g n f i l m s " . T h i s i n v e s t i g a t i o n d i d n o t w a r r a n t p r o c e e d i n g s i n t h e o p i n i o n o f t h e A t t o r n e y - G e n e r a l o f C a n a d a b e c a u s e : "The e x h i b i t i o n o f m o t i o n p i c t u r e f i l m i s a s e r v i c e and b e y o n d t h e s c o p e o f t h e Comb i n e s I n v e s t i g a t i o n A c t w h i c h a l l o w s c o m b i n e s t o e x i s t i n ' s e r v i c e industries'."3° The s e c o n d m a j o r c h a n g e a s f a r a s t h e f i l m i n d u s t r y i s c o n c e r n e d i s c o n t a i n e d i n S e c t i o n 3 2 ( 1 ) w h i c h now p r o v i d e s : "32. (1) E v e r y one who c o n s p i r e s , c o m b i n e s , a g r e e s o r a r r a n g e s w i t h a n o t h e r p e r s o n (a) t o l i m i t u n d u l y t h e f a c i l i t i e s f o r t r a n s p o r t i n g , p r o d u c i n g , m a n u f a c t u r i n g , s u p p l y i n g , s t o r i n g o r d e a l i n g i n any p r o d u c t , - 63 -(b) t o p r e v e n t , l i m i t o r l e s s e n , u n d u l y t h e m a n u f a c t u r e o r p r o d u c t i o n o f a p r o d u c t , o r t o e n h a n c e u n r e a s o n a b l y t h e p r i c e t h e r e o f , (c) t o p r e v e n t , o r l e s s e n , u n d u l y , c o m p e t i t i o n i n t h e p r o d u c t i o n , m a n u f a c t u r e , p u r c h a s e , b a r t e r , s a l e , s t o r a g e , r e n t a l , t r a n s -p o r t a t i o n o r s u p p l y o f a p r o d u c t , o r i n t h e p r i c e o f i n s u r a n c e upon p e r s o n s o r p r o p e r t y , o r (d) t o o t h e r w i s e r e s t r a i n o r i n -j u r e c o m p e t i t i o n u n d u l y , i s g u i l t y o f an i n d i c t a b l e o f f e n c e and i s l i a b l e t o i m p r i s o n m e n t f o r f i v e y e a r s o r a f i n e o f one m i l l i o n d o l l a r s , o r b o t h . " 3 1 U n d e r t h e o l d A c t , t h e p e n a l t y p r o v i d e d f o r " i m p r i s -32 onment f o r two y e a r s " . B u t , more i m p o r t a n t l y , S u b s e c t i o n 3 2 ( 1 . 1 ) h a s b e e n a d d e d w h i c h p r o v i d e s t h a t i n e s t a b l i s h i n g t h a t a c o n s p i r a c y o r an a g r e e m e n t i s i n v i o l a t i o n o f S u b s e c t i o n ( 1 ) , i t w i l l n o t be n e c e s s a r y t o p r o v e t h a t t h e c o n s p i r a c y , a g r e e m e n t o r a r r a n g e m e n t w o u l d be l i k e l y t o " e l i m i n a t e , com-33 p l e t e l y o r v i r t u a l l y , c o m p e t i t i o n m t h e m a r k e t " i f c a r r i e d i n t o e f f e c t . O v e r t h e y e a r s , some C o u r t s , m o s t n o t a b l y t h e Supreme C o u r t o f C a n a d a i n L v . Howard S m i t h P a p e r M i l l s L t d . (1957) S.C.R. 403, ( 1 9 5 7 ) , 8 D.L.R. (2nd) 449 h a v e b e e n o f t h e o p i n i o n t h a t b e f o r e a n a g r e e m e n t becomes "undue", i t m u s t c o m p l e t e l y o r v i r t u a l l y e l i m i n a t e a l l c o m p e t i t i o n . C a r t w r i g h t , J . , - 64 -w i t h whom L o c k , J . c o n c u r r e d , a f t e r r e v i e w i n g t h e r e l e v a n t c a s e s , c o n c l u d e d t h a t a n a g r e e m e n t becomes u n l a w f u l o n l y : "When t h e l e s s e n i n g a g r e e d upon r e a c h e s t h e p o i n t a t w h i c h t h e p a r t i c i p a n t s i n t h e a g r e e m e n t become f r e e t o c a r r y o n . . . v i r t u a l l y u n a f f e c t e d by t h e i n f l u e n c e o f c o m p e t i t i o n . " 3 4 W h i l e o t h e r C o u r t s h a v e d i s a g r e e d , S u b s e c t i o n 3 2 ( 1 . 1 ) has b e e n a d d e d t o i n s u r e t h a t s u c h a d e m a n d i n g i n t e r p r e t a t i o n n o t be f o l l o w e d . S e c t i o n 3 3 o f t h e new A c t r e m a i n s e x a c t l y a s i t was, n a m e l y : " E v e r y p e r s o n who i s a p a r t y o r p r i v y t o o r k n o w i n g l y a s s i s t s i n , o r i n t h e f o r m a -t i o n o f , a m e r g e r o r m o n o p o l y i s g u i l t y o f an i n d i c t a b l e o f f e n c e a n d i s l i a b l e t o i m p r i s o n m e n t f o r two y e a r s . " 3 5 S e c t i o n s 32 a n d 33 f a l l w i t h i n P a r t V o f t h e A c t . U n d e r S e c t i o n 7 ( 1 ) , a n y s i x C a n a d i a n r e s i d e n t s o v e r t h e age o f 18 who a r e o f t h e o p i n i o n t h a t a n o f f e n c e h a s b e e n c o m m i t t e d o r i s a b o u t t o be c o m m i t t e d u n d e r P a r t V may a p p l y t o t h e D i r e c t o r f o r an i n q u i r y i n t o s u c h m a t t e r . T h i s amends t h e o l d r e q u i r e m e n t o f t h e s i x i n d i v i d u a l s h a v i n g t o be C a n a d i a n c i t i z e n s , r e s i d e n t i n C a n a d a a n d o v e r t h e age o f 2 1 . P a r t I V . 1 h a s b e e n a d d e d t o t h e A c t a n d s e t s o u t m a t t e r s r e v i e w a b l e by t h e R e s t r i c t i v e T r a d e P r a c t i c e s C o m m i s s i o n . Two o f t h e s e , t h e r e f u s a l t o d e a l p r o v i s i o n s a n d t h e " t i e d s e l l i n g " h a v e d i r e c t a p p l i c a t i o n i n t h e f i l m i n d u s t r y . S e c t i o n 3 1 . 2 ( 1 ) ( a ) p r o v i d e s t h a t w h e r e a p e r s o n i s s u b s t a n t i a l l y - 65 -affected i n his business or i s precluded from carrying on i n business due to his i n a b i l i t y to obtain adequate supplies of a product anywhere i n a market on usual trade terms, the Com-mission may order the supplier to accept that person as a customer. Section 3 1 . 4 ( 1 ) introduces into the Act for the f i r s t time the term " t i e d s e l l i n g " and defines i t to mean, i n t e r  a l i a , any practice whereby a supplier of a product, as a con-d i t i o n of supplying the product to a customer, requires that customer to acquire some other product from the supplier. This, of course, describes the f i l m industry's practice of block booking. Again the Commission i s empowered to p r o h i b i t any such suppliers from continuing to engage i n t i e d s e l l i n g arrangements. FOREIGN OWNERSHIP In the l a s t three years, the federal government has enacted two pieces of l e g i s l a t i o n designed to deal with the problem of foreign ownership such as ex i s t s i n the d i s t r i b u -tion and exhibition arms of the f i l m industry i n Canada. 36 A. The Foreign Investment Review Act The Foreign Investment Review Act received Royal Ascent on December 1 2 , 1973 and came into force on A p r i l 9, 1974. In passing t h i s Act, Parliament was recognizing the extent to which Canadian industry was under foreign control - 66 -and t h e e f f e c t f o r e i g n c o n t r o l h a s on t h e a b i l i t y o f C a n a d i a n s t o m a i n t a i n e f f e c t i v e c o n t r o l o f t h e i r e c o n o m i c e n v i r o n m e n t . " P a r l i a m e n t ' s a i m , t h e n , i n a d o p t i n g t h i s l e g i s l a t i o n was t o r e q u i r e t h e g o v e r n m e n t t o r e v i e w f o r e i g n i n v e s t m e n t i n C a n a d a . a n d t o p r e v e n t s u c h i n v e s t m e n t when i t f a i l s t o o f f e r s i g n i f i c a n t b e n e f i t t o Canada."37 The p u r p o s e o f t h e A c t a s s e t o u t i n S e c t i o n 2 ( 1 ) i s t o c o n t r o l t h e e x t e n t t o w h i c h " C a n a d i a n b u s i n e s s e n t e r p r i s e s may be a c q u i r e d by p e r s o n s o t h e r t h a n C a n a d i a n s , and new b u s i n e s s e s may be e s t a b l i s h e d i n C a n a d a by p e r s o n s o t h e r t h a n 3 8 C a n a d i a n s " . B. The C a n a d a B u s i n e s s C o r p o r a t i o n s A c t On M a r c h 24, 1 9 7 5 , B i l l C-29 r e c e i v e d R o y a l A s c e n t and i s now t h e C a n a d a B u s i n e s s C o r p o r a t i o n s A c t , S.C. 1 9 7 4 -7 5-76, C h a p t e r 3 3 . The A c t became e f f e c t i v e on December 1 5 , 1975. U n d e r t h e new A c t , a l l c o r p o r a t i o n s a r e r e q u i r e d t o h a v e a m a j o r i t y o f r e s i d e n t C a n a d i a n s o n t h e i r b o a r d o f d i r e c -t o r s ( S e c t i o n 1 0 0 ( 3 ) ) . S e c t i o n 2 d e f i n e s a r e s i d e n t C a n a d i a n as a n i n d i v i d u a l who i s a C a n a d i a n c i t i z e n o r d i n a r i l y r e s i d e n t i n C a n ada o r "a l a n d e d i m m i g r a n t , e x c e p t a l a n d e d i m m i g r a n t who h a s b e e n o r d i n a r i l y r e s i d e n t i n C a n a d a f o r more t h a n one y e a r a f t e r t h e t i m e when he became e l i g i b l e t o a p p l y f o r C a n a d i a n c i t i z e n s h i p " . S e c t i o n 1 0 9 ( 3 ) f u r t h e r p r o v i d e s t h a t e x c e p t f o r c e r t a i n h o l d i n g c o m p a n i e s , no b u s i n e s s may be c o n -d u c t e d a t b o a r d m e e t i n g s u n l e s s a m a j o r i t y o f t h e d i r e c t o r s p r e s e n t a r e r e s i d e n t C a n a d i a n s . QUOTAS As a n i n c e n t i v e d e s i g n e d t o i n c r e a s e p r i v a t e s e c t o r s u p p o r t o f t h e C a n a d i a n f e a t u r e f i l m i n d u s t r y , t h e S e c r e t a r y 39 o f S t a t e r e a c h e d an a g r e e m e n t w i t h Famous P l a y e r s a n d 40 . . Odeon w h i c h g u a r a n t e e d s c r e e n t i m e i n t h e i r t h e a t r e s f o r C a n a d i a n f e a t u r e f i l m s . Mr. F a u l k n e r a n n o u n c e d t h a t t h e two c h a i n s h a d v o l u n t a r i l y a g r e e d " t o a q u o t a s y s t e m by w h i c h C a n a d i a n f e a t u r e f i l m s w i l l be g u a r a n t e e d n o t l e s s t h a n f o u r w e eks o f s c r e e n t i m e p e r t h e a t r e p e r y e a r i n Famous P l a y e r s 41 a n d Odeon o u t l e t s i n C a n a d a " . The CFDC was a s s i g n e d t o m o n i t o r t h e s i t u a t i o n . "They w i l l s u b m i t q u a r t e r l y r e p o r t s t o me w h i c h w i l l b e made p u b l i c s o t h a t we w i l l know how e f f e c t i v e l y t h e q u o t a i s b e i n g • 4 . ..42 met." Mr. F a u l k n e r was g r a t i f i e d " t h a t Famous P l a y e r s a n d Odeon h a d s e i z e d t h e i n i t i a t i v e a n d r e s p o n d e d p o s i t i v e l y t o 43 t h i s i n c r e a s e d q u o t a p l a n " . - 68 -FOOTNOTES CHAPTER I V 1 C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n A c t 1 9 6 6 - 6 7 , C. 78, S. 10. 2 I b i d . 3 I b i d . 4 I b i d . , S. 1 1 . 5 C.C.H. C a n a d i a n G o v e r n m e n t P r o g r a m s a n d S e r v i c e s R e p o r t s a t p a r a g r a p h 4 5 , 0 5 7 . 6 I b i d . 7 I b i d . 8 f r o m p a g e 14 o f a b r o c h u r e p u b l i s h e d by t h e Ca n a d a C o u n c i l on J u l y 1 9 7 5 . 9 I b i d . 10 ., I b i d . 1 1 Income Tax A c t S.C. 1 9 7 0 - 7 1 - 7 2 , c. 63 as amended. 1 2 - r - i ' J I b i d . 13 . se e a l s o A p p e n d i x I I I . 1 4 " G e t t i n g i n t o t h e M o v i e s " , T a x B r a c k e t A u g u s t 10, 197 3 , p. 5. 15 T, • , r I b i d . p. 6. I b i d . 17 . , s e e a l s o A p p e n d i x I V 1975 18 S e c r e t a r y o f S t a t e News R e l e a s e d a t e d A u g u s t 5, I b i d . 1975 20 . Income Tax A c t , o p . c i t . 21 D r a b m s k y , o p . c i t . , p. 134. 22 I b i d . 23 S e c r e t a r y o f S t a t e News R e l e a s e d a t e d A u g u s t 5, 24 . Co m b i n e s I n v e s t i g a t i o n A c t R.S., c. 314 as amended 25 I b i d . 2 6 C a n a d a , Consumer and C o r p o r a t e A f f a i r s , P r o p o s a l s  f o r a New C o m p e t i t i o n P o l i c y f o r C a n a d a : F i r s t S t a g e , I n f o r m a t i o n C a n a d a C a t . No. RG52-4/1973 ( O t t a w a : Queen's P r i n t e r ) , p. 1. 27 . . Co m b i n e s I n v e s t i g a t i o n A c t R.S., c. 314 a s amended 28 Cox, " R o c c a ' s B i g F i g h t " , op. c i t . , p. 22. 29 . I b i d . 30 T. . , I b i d . , p . 23 . 31 C o m b i n e s I n v e s t i g a t i o n A c t R.S., c. 314 as amended, 3 2 I b i d . , S e c t i o n 3 2 ( 1 ) . 4 0 3 . 33 R- v . Howard S m i t h P a p e r M i l l s L t d . (1957) S.C.R. 34 T. • , I b i d . J J C o m b i n e s I n v e s t i g a t i o n A c t R.S., c. 314 as amended. 36 F o r e i g n I n v e s t m e n t R e v i e w A c t S.C. 1973-74 c . 46. 37 f r o m page 2 o f a b r o c h u r e p u b l i s h e d b y t h e F o r e i g n I n v e s t m e n t R e v i e w A g e n c y , O t t a w a , A p r i l 1 974. 3 8 F o r e i g n I n v e s t m e n t R e v i e w A c t S.C. 1973-74 c. 46. 39 s e e A p p e n d i x V f o r a c o p y o f t h i s A g r e e m e n t . 40 s e e A p p e n d i x V I f o r a c o p y o f t h i s A g r e e m e n t . 41 S e c r e t a r y o f S t a t e News R e l e a s e d a t e d A u g u s t 5, 1975 42 .,. I b i d . I b i d . CHAPTER V THE IMPACT OF THE FEDERAL GOVERNMENT ON THE F I L M INDUSTRY T h i s C h a p t e r m e a s u r e s t h e i m p a c t o f t h e f e d e r a l g o v e r n m e n t o n t h e f i l m i n d u s t r y a n d , more p a r t i c u l a r l y , o n t h e s t r u c t u r e a n d p e r f o r m a n c e t h e r e i n . The m o s t n o t e w o r t h y c h a n g e h a s b e e n i n t h e p r o d u c t i o n s e c t o r , some i n r o a d s h a v i n g b e e n made i n t h e d i s t r i b u t i o n a n d e x h i b i t i o n s e c t o r s a s w e l l . The o v e r a l l e f f e c t , h o w e v e r , h a s n o t b e e n s i g n i f i c a n t . The s e c o n d p u r p o s e o f t h i s C h a p t e r i s t o a n a l y z e t h e g o v e r n m e n t ' s a c t i o n s as s e t o u t i n C h a p t e r I V a n d e x p l a i n why t h i s i s s o . A s h o r t summary i s p r o v i d e d a t t h e e n d o f t h e C h a p t e r . THE IMPACT ON PRODUCTION Of t h e v a r i o u s m e a s u r e s t a k e n b y t h e f e d e r a l g o v e r n -ment t o i n f l u e n c e t h e p r o d u c t i o n o f f e a t u r e f i l m s , t h e m o s t s i g n i f i c a n t h a s b e e n t h e c r e a t i o n o f t h e CFDC. A. C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n By t h e e n d o f t h e C o r p o r a t i o n ' s 1974-75 f i s c a l y e a r , - 71 -- 72 -i t h a d a s s i s t e d i n t h e p r o d u c t i o n o f 168 f e a t u r e f i l m s . The t o t a l b u d g e t s o f t h e s e f i l m s a m o u n t e d t o $44,336,482.00 o f w h i c h $17,144,656.00 was i n v e s t e d b y t h e C F D C . 1 T a b l e V - I p r e s e n t s t h e y e a r l y p r o d u c t i o n o f f i l m s p r o d u c e d w i t h t h e a s s i s t a n c e o f t h e C o r p o r a t i o n , f o r t h e y e a r s 1968 t h r o u g h 1 9 7 5, c o m b i n i n g t h e p e r i o d 1968 t o 1970 as one e n t r y . D u r i n g t h i s p e r i o d , t h e p r o d u c t i o n o f C a n a d i a n f e a t u r e f i l m s was j u s t g e t t i n g u n d e r way. P r i o r t o 1968, t h e r e w e r e o n l y s p o r a d i c a t t e m p t s t o p r o d u c e C a n a d i a n f e a t u r e f i l m s a n d , i n f a c t , t h e r e w e re v e r y f e w f i l m m a k e r s e v e n " c a p a b l e o f 2 p r o d u c i n g , d i r e c t i n g a n d w r i t i n g f e a t u r e s " . TABLE V - l Y e a r l y P r o d u c t i o n o f F i l m s P r o d u c e d w i t h t h e A s s i s t a n c e o f t h e CFDC b e t w e e n A p r i l 1, 1968 a n d M a r c h 3 1 , 1975 ( F r e n c h a n d E n g l i s h ) * Y e a r E n g l i s h F r e n c h T o t a l 19 6 8 1970 1971 1972 1973 1974 70 71 72 73 74 75 7 14 7 18 10 12 11 13 12 13 9 14 18 27 19 31 19 2 6 1 4 0 * * *SOURCE: C o m p i l e d f r o m t h e CFDC A n n u a l R e p o r t s : 1 9 7 2 - 73; 1973-74; 1 9 7 4 - 7 5 . ** NOTE The d i s c r e p a n c y r e s u l t s f r o m a c h a n g e i n t h e C o r p o r a t i o n ' s r e p o r t i n g m e t h o d s . (The f i g u r e s - f o r t h e p e r i o d 1968-71 a r e e s t i m a t e d . ) - 73 -A c c o r d i n g t o t h e C o r p o r a t i o n ' s s t a t i s t i c s , t h e 168 f i l m s h a v e p r o v i d e d "70 8 a s s i g n m e n t s f o r C a n a d i a n d i r e c t o r s , p r o d u c e r s a n d p r o d u c t i o n m a n a g e r s , 8,611 r o l e s f o r a c t o r s a n d e m p l o y m e n t f o r 2,45 8 t e c h n i c i a n s i n t h e C a n a d i a n f i l m 3 i n d u s t r y . " M o r e o v e r , l a b o r a t o r i e s h a v e e a r n e d more t h a n $ 5,3000,000.00 a n d e q u i p m e n t a n d r e n t a l c o m p a n i e s , some $ 2 , 7 0 0 , 0 0 0 . 0 0 . 4 S i n c e 1 972, a t t e m p t s h a v e a l s o b e e n made t o i m p r o v e t h e q u a l i t y o f t h e p r o d u c t . I n f l a t i o n n o t w i t h s t a n d i n g , t h e •' a v e r a g e c o s t o f a f e a t u r e f i l m p r o d u c e d w i t h t h e a s s i s t a n c e o f t h e C o r p o r a t i o n i n 1972 was a r o u n d $ 3 1 0 , 0 0 0 . 0 0 , w h i c h com-p a r e s w i t h $335,000.00 f o r 1973 a n d $374,000.00 f o r 1 9 7 4 . 5 The 1974 f i g u r e s , h o w e v e r , i n c l u d e f i v e f i l m s p r o d u c e d w i t h b u d g e t s o f l e s s t h a n $ 1 0 0 , 0 0 0 . 0 0 . The a v e r a g e c o s t o f t h e r e m a i n i n g 14 f i l m s p r o d u c e d i n 1974 w i t h t h e C o r p o r a t i o n ' s a s s i s t a n c e was $ 4 7 7 , 0 0 0 . 0 0 . 6 I n 19 75, t h e h i g h e s t b u d g e t o f t h e f i l m p r o d u c e d w i t h t h e a s s i s t a n c e o f t h e C o r p o r a t i o n i n t h e E n g l i s h - s p e a k i n g s e c t o r was $1,200,00.00 a nd t h e l o w e s t , $ 2 0 0 , 0 0 0 . 0 0 : t h e 7 a v e r a g e was $59 4,179.00. T h e s e f i g u r e s compare t o t h e i n -d u s t r y ' s t o t a l p r o d u c t i o n f o r 1 9 7 5 . T a b l e V - I I b r e a k s down t h e t o t a l f e a t u r e f i l m o u t p u t f o r t h e a t r i c a l c o n s u m p t i o n i n t o t h r e e m a i n c a t e g o r i e s : C a t e g o r y A: up t o $ 3 0 0 , 0 0 0 . 0 0 ; C a t e g o r y B: $300,000.00 t o $ 6 0 0 , 0 0 0 . 0 0 ; a nd C a t e g o r y C: o v e r $ 6 0 0 , 0 0 0 . 0 0 . T h e r e w e r e 14 f e a t u r e s p r o d u c e d i n C a t e g o r y A TABLE V - I I F e a t u r e F i l m P r o d u c t i o n i n Canada f o r 1975* G r o u p e d a c c o r d i n g t o C o s t CATEGORY NUMBER OF FILMS PRODUCED TOTAL AVERAGE COST WITH CFDC WITHOUT CFDC ASSISTANCE ASSISTANCE A: Up t o $300,000.0.0 9 5 14 $ 123,000.00 B: $300,000.00 - $600,000.00 8 2 10 $ 402,000.00 C: O v e r $600,000.00 2 2 4 $1,150,000.00 *SOURCE: C o m p i l e d f r o m d a t a o b t a i n e d f r o m C i n e m a C a n a d a V o l . 26. - 75 -a t a n a v e r a g e c o s t o f $ 1 2 3 , 0 0 0 . 0 0 . I n C a t e g o r y B, t h e r e w e r e 10 f i l m s made a t an a v e r a g e c o s t o f $402,000.00 e a c h a n d i n C a t e g o r y C, t h e a v e r a g e c o s t o f t h e f o u r f e a t u r e s p r o d u c e d was $ 1 , 1 5 0 , 0 0 0 . 0 0 . T h i s t r e n d r e f l e c t s t h e p h i l o s o p h y t h a t " i t t a k e s a t l e a s t $ 1,000,000.00 t o make a f i l m w i t h t h e s t a r names a n d g p r o d u c t i o n v a l u e s w h i c h w i l l a t t r a c t t h e mass a u d i e n c e " t o t h e b o x o f f i c e . When a f i l m h a s t h i s k i n d o f a p p e a l " i t c a n be s o l d i n f o r e i g n m a r k e t s a n d e v e n i n t h e U n i t e d S t a t e s . I t i s v i r t u a l l y i m p o s s i b l e t o r e c o u p i n v e s t m e n t i n e v e n t h e 9 l e a s t e x p e n s i v e f i l m s o l e l y i n C a n a d a . " As an i n d u s t r y a v -e r a g e , a f i l m m u s t r e t u r n 2.5 t i m e s i t s p r o d u c t i o n c o s t a t t h e b o x o f f i c e b e f o r e i t shows a p r o f i t . As o f O c t o b e r 3 1 , 1 9 7 5 , "The A p p r e n t i c e s h i p o f Duddy K r a v i t z " h a d a C a n a d i a n b o x o f f i c e g r o s s o f $ 1 , 8 0 0 , 0 0 0 . 0 0 . As o f May 3 1 , 1975, i t h a d g r o s s e d n e a r l y $2.5 m i l l i o n i n t h e U n i t e d S t a t e s . C o m p l e t e b o x o f f i c e r e c o u p m e n t i s e x p e c t e d t o be i n t h e n e i g h b o r h o o d o f $4.5 m i l l i o n . " K r a v i t z " c o s t $910,000.00 t o m a k e . 1 0 " B l a c k C h r i s t m a s " h a d r e t u r n e d $1,200,000.00 a t t h e b o x o f f i c e by O c t o b e r 31, 1975 a n d h a d o r i g i n a l l y c o s t $700,000.00 t o m a k e . 1 1 0 ' " B l a c k C h r i s t m a s " a n d "The A p p r e n t i c e s h i p o f Duddy K r a v i t z " a r e C a n a d a ' s t o p g r o s s i n g f e a t u r e f i l m s . T a b l e V - I I I d s a t a b u l a t i o n o f t h e C a n a d i a n b o x o f f i c e g r o s s e s o f t h e t o p - 76 -TABLE V-III Canadian Box Off i c e Grosses of the Top Feature Films Produced i n English Canada as of October 31, 1975* Film (Title) " Box Off i c e Gross **The Apprenticeship of Duddy Kravitz $1,800,000. 00 **Black Christmas $1,200,000. 00 **Paperback Hero $740,000. 00 **The Pyx $625,000. 00 **Face Off $600,000. 00 **The Neptune Factor $450,000. 00 The Rowdy Man $364,000. 00 **Wedding i n White $325,000. 00 **Going Down the Road $250,000. 00 *SOURCE: Motion Pictures and the Arts i n Canada by Garth H. Drabinsky **Denotes films i n which the CFDC has pa r t i c i p a t e d . - 77 -f e a t u r e f i l m s p r o d u c e d i n E n g l i s h - s p e a k i n g C a n a d a as o f O c t o b e r 3 1 , 1 9 7 5 . I t i s n o t e w o r t h y t h a t s i n c e 1972 t h e r e h a s b e e n a p r o g r e s s i v e r i s e i n t h e i n v e s t m e n t r e t u r n s f r o m t h e E n g l i s h l a n g u a g e m a r k e t . I n 1 9 7 2 - 7 3 , o n l y 8% was r e c o v e r e d f r o m E n g l i s h f i l m s w h e r e a s t h e F r e n c h f i l m s b r o u g h t i n t h e r e m a i n -12 i n g 9 2 % . D u r i n g 1 9 73-74, t h e E n g l i s h m a r k e t r e t u r n s r o s e t o 48% and i n 1974-75 t o 7 1 % o r $ 6 1 3 , 7 2 0 . 0 0 , c o m p a r e d t o 29% o r $25,290.00 f r o m F r e n c h f i l m s . 1 3 B u t o n l y t h r e e f i l m s , " B l a c k C h r i s t m a s " ( r e l e a s e d i n 1 9 7 5 ) , "The A p p r e n t i c e s h i p o f Duddy K r a v i t z " ( d i s t r i b u t e d i n 1 9 7 4 ) , a n d "The N e p t u n e F a c t o r " ( r e l e a s e d i n 1973) c o n t r i b u t e d t o t h e g r o w t h o f t h e r e v e n u e s " i n t h e i n d u s t r y and t h e C o r p o r a t i o n " . 1 4 As o f M a r c h 3 1 , 1975, t h e C o r p o r a t i o n h a d r e c o v e r e d $ 2 , 707,458.00 o f t h e t o t a l $ 1 7,144,656.00 t h a t i t h a s i n v e s t e d 15 i n f e a t u r e f i l m s s i n c e i t s i n c e p t i o n . A g a i n , t h e f i s c a l y e a r 1972-73 i s s i g n i f i c a n t . I n t h a t y e a r , t h e C o r p o r a t i o n r e c o v e r e d $ 3 3 9 , 7 4 5 . 0 0 . I n 1973-74: $ 7 8 6 , 0 2 8 . 0 0 ; i n 1 9 7 4 - 7 5 : $ 8 6 4 , 0 1 1 . 0 0 . The b a l a n c e h a s r e s u l t e d f r o m i n v e s t m e n t s p r i o r t o t h e y e a r 1972. " S i n c e i t s b e g i n n i n g , t h e C o r p o r a t i o n h a s i n v e s t e d a t o t a l o f $ 1 7 , 1 4 4 , 6 5 6 . 0 0 . . . t h i s amount i n c l u d e s $14,437,198.00 f r o m P a r l i a m e n t a r y a p p r o p r i a t i o n s , $ 2 , 7 0 7 , 4 5 9 . 0 0 , o r 1 8 . 7 5 % r e t u r n f r o m i t s i n v e s t m e n t s . " 1 6 As T a b l e V - I V i n d i c a t e s , t h e amounts r e t u r n e d f r o m i n v e s t m e n t s i n c r e a s e d c o n s i d e r a b l y d u r i n g t h e l a s t two y e a r s . - 78 -TABLE V - I V CFDC RETURN ON INVESTMENTS* ( C o m p a r a t i v e T a b l e ) 1968-69 t o 1972-73 1973-74 t o 1974-75 T o t a l amount i n v e s t e d i n t h e i n d u s t r y (by t h e C o r p o r a t i o n ) Amounts p r o -v i d e d t h r o u g h P a r l i a m e n t a r y a p p r o p r i a t i o n I n v e s t m e n t r e t u r n s (amounts r e - i n v e s t e d ) T O T A L 1968-69 t o 1972-73 F i r s t 5 y e a r s $10,464,490 $9,407,070 $1,057,420 (11.24%) A V E R A G E p e r y e a r $ 2,092,898 $1,881,414 $ 211,494 T O T A L 1973- 74 t o 1974- 75 L a s t 2 y e a r s $ 6,680,166 $5 ,030,127 $1,650,039 (32.80%) A V E R A G E p e r y e a r $ 3,340,083 $2,515,064 $ 825,020 *SOURCE: A n n u a l R e p o r t o f t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n : 1974-75 - 79 -The a v e r a g e r o s e f r o m 11.24% f o r t h e f i r s t f i v e y e a r s o f t h e C o r p o r a t i o n ' s o p e r a t i o n t o 3 2 . 8 0 % f o r t h e p e r i o d 1973 t o 1 9 7 5 . I n t h e l a t t e r p e r i o d , i n v e s t m e n t r e t u r n s w e r e $1,605,038.00 r e p r e s e n t i n g a y e a r l y a v e r a g e o f $ 8 2 5 , 0 2 0 . 0 0 , w h e r e a s f r o m 1968 t o 1973, r e t u r n s w e r e $1,057,420.00 o r a y e a r l y a v e r a g e o f $ 2 1 1 , 4 9 4 . 0 0 . 1 7 P a r l i a m e n t ' s p u r p o s e i n e s t a b l i s h i n g t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n , h o w e v e r , was " t o p r o m o t e t h e f e a t u r e f i l m i n d u s t r y i n C a n a d a " w h i c h w o u l d h a v e t o i n c l u d e e n c o u r a g i n g i n v e s t m e n t by t h e p r i v a t e s e c t o r . The p a r t i c i p a -t i o n by p r i v a t e i n v e s t o r s i n C a n a d i a n f i l m s , h o w e v e r , h a s b e e n d i s a p p o i n t i n g . I n t h e f i s c a l y e a r 1 9 7 1 - 7 2 , p r i v a t e s e c t o r i n v e s t -ment was a p p r o x i m a t e l y 1 8%, and i n 19 72-73 " o t h e r C a n a d i a n i n v e s t o r s ' p r o p o r t i o n i n c l u d i n g t h e f i l m i n d u s t r y i t s e l f i n c r e a s e d by 7%, m a i n l y due t o t h e f a c t t h a t C a n a d i a n b a n k s 18 i n v e s t e d i n f e a t u r e f i l m s d u r i n g t h e y e a r " . B u t i n 1973-74, p r i v a t e money o n l y a c c o u n t e d f o r 1 5 % . The c o m b i n e d b u d g e t s o f t h e f i l m s i n 1973-74 amounted t o $7,095,801.00 o f w h i c h t h e C o r p o r a t i o n i n v e s t e d $2,644,000.00 o r 30% o f t h e t o t a l . P e r c e n t a g e o f i n v e s t m e n t by t h e f i l m i n d u s t r y ( l a b o r a t o r i e s , d i s t r i b u t o r s , e x h i b i t o r s ) was 3 2 % , w h i l e f o r e i g n p r o d u c e r s 20 i n v e s t e d 16%. I n 1 9 7 4 - 7 5 , t h e p i c t u r e becomes e v e n b l e a k e r . The c o m b i n e d b u d g e t s o f t h e 12 f e a t u r e f i l m s i n t h e E n g l i s h - s p e a k i n g - 80 -s e c t o r a m o u n t e d t o $ 3 , 3 2 4 , 9 6 0 . 0 0 . O f t h i s , t h e C o r p o r a t i o n i n v e s t e d $ 1 ,086,103.00 o r 3 3 % o f t h e t o t a l . The f i l m i n d u s -t r y a c c o u n t e d f o r $1,180,000.00 w h i l e o n l y $410,000.00 o r 12% o f t h i s sum was r a i s e d o u t s i d e t h e i n d u s t r y f r o m p r i v a t e 21 . . . . s o u r c e s . P a r t o f t h e p r o b l e m i n t h i s r e g a r d i s t h e i n f l u e n c e o f C a n a d a ' s t a x l a w s on f e a t u r e f i l m i n v e s t m e n t . B. T a x a t i o n P r i v a t e s e c t o r i n v e s t m e n t i n t h e f i l m i n d u s t r y was a t i t s p e a k d u r i n g t h e p e r i o d 1971 t h r o u g h 1973. D u r i n g t h i s p e r i o d , i n v e s t o r s w e r e w r i t i n g o f f t h e l e v e r a g e d p o r t i o n o f t h e i r i n v e s t m e n t a g a i n s t t h e i r o t h e r i n c o m e a n d t h e r e b y l e s s e n i n g t h e i r o v e r a l l t a x b u r d e n . To t h i s p o i n t i n t i m e , t h e r e h a d b e e n no p r o n o u n c e m e n t f r o m t h e D e p a r t m e n t o f N a t i o n a l R e venue as t o w h e t h e r t h i s p r a c t i c e w o u l d be p e r m i t t e d a n d i n v e s t o r s t o o k t h e p o s i t i o n t h a t u n t i l t h e D e p a r t m e n t s p e c i f -i c a l l y d i s a l l o w e d i t , w r i t i n g o f f t h e l e v e r a g e d p o r t i o n o f t h e i r i n v e s t m e n t was a b o n a f i d e t a x d e d u c t i o n . On J u n e 5, 19 74, i n I n t e r p r e t a t i o n B u l l e t i n I T - 1 6 4 , t h e D e p a r t m e n t t o o k a s t a n d : "The D e p a r t m e n t t a k e s t h e p o s i t i o n t h a t t h e c a p i t a l c o s t o f t h e f i l m t o t h e i n -v e s t o r f o r t h e p u r p o s e o f p a r a g r a p h 2 0 ( 1 ) (a) i s o n l y t h a t c o s t w h i c h h a s b e e n l a i d o u t o r i n f a c t p u t a t r i s k by t h e i n v e s t o r , e i t h e r t h r o u g h i n v e s t m e n t o f c a s h o r b o r r o w e d f u n d s u n c o n d i t i o n a l l y r e p a y a b l e w h a t e v e r t h e f o r t u n e s o f t h e f i l m i n q u e s t i o n may be."22 T h i s a n n o u n c e m e n t was f o l l o w e d by t h e Tax R e v i e w B o a r d ' s d e c i s i o n i n C u r r i e v . M i n i s t e r o f N a t i o n a l R e v e n u e (1975) 29 D.T.C. 57. T h i s c a s e i n v o l v e d a t a x p a y e r who, i n 1972, p u r c h a s e d a v i d e o t a p e o f a m o t i o n p i c t u r e f o r $10,000.00 The downpayment was $2,500.00 a n d t h e b a l a n c e was t o be p a i d by a p p l y i n g h a l f t h e amount due t o t h e t a x p a y e r u n d e r t h e t e r m s o f a d i s t r i b u t i o n a g r e e m e n t s i g n e d o n t h e same d a y , by w h i c h t h e t a x p a y e r p u r p o r t e d t o g i v e t h e d i s t r i b u t o r t h e e x c l u s i v e r i g h t t o d i s t r i b u t e t h r o u g h o u t t h e w o r l d a l l p r i n t s o f t h e v i d e o t a p e . Any r e m a i n i n g b l a n c e was t o be p a i d by November 30, 1979. The a s s e t , b e i n g o f C l a s s 12, S c h e d u l e B, was d e p r e c i a b l e a t a r a t e o f 100% and t h e t a x p a y e r , t h e r e f o r e , c l a i m e d a d e d u c t i o n o f $10,000.00 f o r t h e 1972 t a x a t i o n y e a r . The M i n i s t e r d i s a l l o w e d t h e d e d u c t i o n o n t h e b a s i s t h a t t h e v i d e o t a p e was n o t a c q u i r e d as a n i n v e s t m e n t f o r t h e p u r p o s e o f g a i n i n g o r p r o d u c i n g i n c o m e a n d t h a t t h e t r a n s a c t i o n was a sham p r o h i b i t e d by S e c t i o n 245 o f t h e A c t . On a p p e a l t o t h e Tax R e v i e w B o a r d , t h e M i n i s t e r ' s d e c i s i o n was u p h e l d , and t h e t a x p a y e r was n o t e n t i t l e d t o t h e d e d u c t i o n . The B o a r d h e l d t h a t t h e t r a n s a c t i o n was n o t a b o n a f i d e p u r c h a s e f o r t h e p u r p o s e o f c l a i m i n g a d e d u c t i o n w i t h r e s p e c t t o c a p i t a l c o s t a l l o w a n c e . The M i n i s t e r a r g u e d s u c c e s s f u l l y t h a t i n 1972 t h e t a x p a y e r was n o t i n any b u s i n e s s c o n n e c t e d w i t h v i d e o t a p e s , and t h a t t h e p o s s i b i l i t y o f h i s e a r n i n g i n c o m e o u t o f t h i s t r a n s a c t i o n was s o r e m o t e t h a t no s e r i o u s b u s i n e s s m a n w o u l d h a v e c o n t e m p l a t e d s u c h a n i n v e s t m e n t - 82 -u n l e s s i t was t o u s e i t as a t a x s h e l t e r t o u n d u l y o r a r t i -f i c i a l l y r e d u c e h i s i n c o m e . The c o m b i n e d e f f e c t o f t h e D e p a r t m e n t ' s p r o n o u n c e -ment i n I n t e r p r e t a t i o n B u l l e t i n I T - 1 6 4 a n d t h e B o a r d ' s d e c i s i o n i n C u r r i e h a s b e e n i n p a r t , t o c u r t a i l p r i v a t e s e c t o r i n v e s t m e n t i n t h e i n d u s t r y . I n 1 9 7 2 - 7 3 , p r i v a t e i n v e s t o r s c o n t r i b u t e d some 20% o f t h e t o t a l b u d g e t s p r o d u c e d by t h e CFDC t h a t y e a r . I n 1973-74, t h i s d r o p p e d t o 15% a n d i n 1974-75, i t s l i p p e d e v e n f u r t h e r t o 1 2 % . A t f i r s t b l u s h , t h i s w o u l d seem t o i n d i c a t e t h a t p r i v a t e s e c t o r i n v e s t m e n t i n C a n a d i a n f e a t u r e f i l m s i s r e l a t i v e o n l y t o t h e amount o f t h e t a x d e d u c t i o n p e r m i t t e d : The more l i b e r a l t h e w r i t e - o f f , t h e more p r i v a t e i n v e s t m e n t t h e r e w i l l b e . A n o t h e r c o n s i d e r a t i o n t h a t m u s t be w e i g h e d , h o w e v e r , i s t h a t t h e r e a l r e a s o n f o r t h e p r i v a t e s e c t o r i n v e s t i n g i n m o v i e s i s t o make money f r o m t h e f i l m r e v e n u e and t h a t w i t h i s o l a t e d e x c e p t i o n s , C a n a d i a n f i l m s a r e s i m p l y n o t r e t u r n i n g a p r o f i t . U n d e r C l a s s 18 o f S c h e d u l e B o f t h e Income Tax R e g u l a t i o n s , a l l f i l m s , w h e t h e r C a n a d i a n o r f o r e i g n p r o d u c t i o n s , a r e e n t i t l e d t o t h e 60% c a p i t a l c o s t a l l o w a n c e , w h i l e u n d e r t h e new Income Tax R e g u l a t i o n s , C a n a d i a n f i l m s a r e e n t i t l e d t o a 100% w r i t e - o f f . Y e t d e s p i t e t h e a d d e d t a x b e n e f i t o f i n v e s t i n g i n C a n a d i a n f i l m s , money c o n t i n u e s t o f l o w t o f o r e i g n p r o d u c t i o n s (where t h e c h a n c e s .of a s u c c e s s f u l i n v e s t m e n t a r e c o n s i d e r e d much b e t t e r ) s u c h - 83 -as " C o n d u c t U n b e c o m i n g " , " S t o r y o f 0", "The O d e s s a F i l e " , 23 " C l a n s m e n " , a n d "Won Ton Ton: The Dog who S a v e d H o l l y w o o d " . " T h a t i s more t h a n h a s b e e n i n v e s t e d i n C a n a d i a n f e a t u r e s i n t h e r e c e n t f a l l s u r g e . " 2 4 A n o t h e r r e a s o n f o r t h e a t t r a c t i o n o f f o r e i g n p r o -d u c t i o n s , i t i s a r g u e d , i s b e c a u s e t h e r e q u i r e m e n t t h a t a f i l m be a " c e r t i f i e d f e a t u r e f i l m " as d e f i n e d u n d e r S u b s e c t i o n 1 1 0 4 ( 2 ) ( h ) o f t h e Income Tax R e g u l a t i o n s i s t o o o n e r o u s a b u r d e n t o p l a c e on a n y f i l m . S o p h i s t i c a t e d i n v e s t o r s k n o w i n g t h e h i g h r i s k f a c t o r i n v o l v e d i n m o t i o n p i c t u r e i n v e s t m e n t w i l l o n l y p l a c e f u n d s i n f i l m s w i t h i n t e r n a t i o n a l a p p e a l . The new t a x r e g u l a t i o n s by r e q u i r i n g a f i l m t o be C a n a d i a n as o p p o s e d t o i n t e r n a t i o n a l , i m m e d i a t e l y r e s t r i c t s i t s p o t e n -t i a l m a r k e t t o C a n a d a a n d c o n s e q u e n t l y i t s p o t e n t i a l p r o f i t . Any a d v a n t a g e t h a t i s b e i n g t a k e n o f t h e new 100% c a p i t a l c o s t a l l o w a n c e i s i n t h e a r e a o f c o - p r o d u c t i o n a g r e e m e n t s w i t h f o r e i g n c o u n t r i e s . C. C o - p r o d u c t i o n A g r e e m e n t s W h i l e i t i s s t i l l t o o e a r l y t o draw any d e f i n i t i v e c o n c l u s i o n s r e g a r d i n g c o - p r o d u c t i o n a g r e e m e n t s , e a r l y i n d i c a t i o n s a r e t h a t t h e y w i l l c o n t r i b u t e more t o t h e d e v e l o p m e n t o f a c o m m e r c i a l f e a t u r e f i l m i n d u s t r y i n C a n a d a t h a n any o t h e r i n c e n t i v e t o d a t e . The C o - p r o d u c t i o n A g r e e m e n t b e t w e e n t h e U n i t e d K i n g d o m and C a n a d a was n o t i n f o r c e u n t i l S e p t e m b e r 1 2 , 1 9 7 5 . - 84 -Y e t by December 4, 19 75, Q u a d r a n t F i l m s o f T o r o n t o h a d n o t o n l y a g r e e d t o f i n a n c e t h e f i r s t f i l m u n d e r t h i s a g r e e m e n t , 25 " F i n d t h e L a d y " , t h e y h a d a l r e a d y s t a r t e d s h o o t i n g . I t i s s i g n i f i c a n t t h a t C a n a d i a n p r o d u c e r s a r e t u r n i n g t o c o - p r o d u c t i o n s w h e t h e r o r n o t C a n a d a h a s s i g n e d a n o f f i c i a l a g r e e e m e n t w i t h t h e c o u n t r y o f w h i c h t h e o t h e r p r o d u c e r i s a c i t i z e n . T a k i n g a d v a n t a g e o f t h e a d d i t i o n a l m a r k e t o f a c o - p r o d u c i n g c o u n t r y a n d t h e s p r e a d i n g o f t h e r i s k , H a r o l d G r e e n b e r g o f C a n a d a , h a s c o - p r o d u c e d w i t h A m e r i c a n c o m p a n i e s " E c h o s o f a Summer", "The N e p t u n e F a c t o r " a n d " B r e a k i n g P o i n t " and "has a n n o u n c e d f i v e o t h e r p r o j e c t s w i t h b u d g e t s r a n g i n g up t o $3,000,000.00 f o r 1976". U n d e r t h e o f f i c i a l a g r e e m e n t w i t h F r a n c e , G r e e n b e r g h a s s h o t "The L i t t l e G i r l who L i v e s 2 6 down t h e L a n e " . C i n e v i d e o , a company owned by t h e H e r o u x B r o s , o f M o n t r e a l , h a s a l s o b e e n h e a v i l y i n v o l v e d i n c o - p r o d u c t i o n s . I n 1974, C i n e v i d e o s h o t t h e $ 1,000,000.00 " J a c q u e s B r e l i s A l i v e a nd W e l l a n d L i v i n g i n P a r i s " u n d e r t h e o f f i c i a l c o -p r o d u c t i o n a g r e e m e n t w i t h F r a n c e a n d i n 1975 became i n v o l v e d i n " B o r n f o r H e l l " , a n e a r m i l l i o n , f o u r c o u n t r y ( C a n a d a -27 F r a n c e - G e r m a n y - I t a l y ) c o - p r o d u c t i o n . D. I n v e s t m e n t by Famous P l a y e r s and Odeon U n d e r t h e t e r m s o f t h e a g r e e m e n t r e a c h e d b e t w e e n t h e S e c r e t a r y o f S t a t e ' s o f f i c e a n d t h e two m a j o r e x h i b i t i o n c h a i n s a n n o u n c e d A u g u s t 5, 1 9 7 5 , Famous P l a y e r s i n a l e t t e r t o t h e - 85 -CFDC d a t e d F e b r u a r y 24, 1976 was a b l e t o c o n f i r m t h a t i t h a d , d u r i n g t h e p r o g r a m p e r i o d f r o m A u g u s t 1 t o O c t o b e r 3 1 , 1 9 7 5 , i n v e s t e d i n C a n a d i a n f e a t u r e f i l m s t h e sum o f $8 8 5 , 0 0 0 . 0 0 . Famous P l a y e r s , h o w e v e r , h a d made i t a p r a c t i c e p r i o r t o t h e a g r e e m e n t t o i n v e s t i n C a n a d i a n f i l m s a l b e i t n o m i n a l l y . I n November 1974, G e o r g e D e s t o u n i s , P r e s i d e n t o f Famous P l a y e r s L t d . , r e p o r t e d t h a t t h e company h a d i n v e s t e d " $2,000,000.00 2 8 i n s o m e t h i n g l i k e 36 C a n a d i a n f e a t u r e s " . P r i o r t o t h e a n n o u n c e m e n t , Odeon T h e a t r e s L t d . h a d n o t i n v e s t e d i n a s i n g l e C a n a d i a n f e a t u r e f i l m . They s t i l l h a v e n o t . However u n d e r t h e t e r m s o f Odeon's a g r e e m e n t w i t h t h e S e c r e t a r y o f S t a t e , t h e i r i n v e s t m e n t p r o g r a m was n o t due t o commence u n t i l December 1, 19 75 a n d any r e p o r t b y Odeon t o t h e CFDC h a s n o t y e t b e e n made p u b l i c . THE IMPACT ON DISTRIBUTION AND E X H I B I T I O N The m o s t i m m e d i a t e a n d , f o r t h e C a n a d i a n f i l m i n d u s -t r y , m o s t p o t e n t i a l l y i m p o r t a n t e f f e c t o f t h e amendments t o t h e Combines I n v e s t i g a t i o n A c t s i n c e t h e i r t a k i n g e f f e c t o n J a n u a r y 1, 1976 h a s b e e n a n a p p l i c a t i o n f o r an i n q u i r y i n t o t h e m a r k e t p r a c t i c e s o f t h e f o r e i g n c o n t r o l l e d d i s t r i b u t i o n a n d e x h i b i t i o n s y s t e m i n C a n a d a . The a p p l i c a t i o n was f i l e d b y n i n e C a n a d i a n c i t i z e n s p u r s u a n t t o S e c t i o n 7 o f t h e A c t , w i t h t h e C o m b i n e s I n v e s t i g a t i o n B r a n c h o f t h e D e p a r t m e n t o f Consumer a n d C o r p o r a t e A f f a i r s i n O t t a w a on F e b r u a r y 4, 1976. - 86 -The a p p l i c a n t s a r e a u t h o r ( " H o l l y w o o d ' s C a n a d a " ) , P i e r r e B e r t o n , Quebec f i l m d i r e c t o r , M i c h e l B r a u l t , f i l m p r o -d u c e r , K i r w a n Co x , f i l m c r i t i c / " S a t u r d a y N i g h t " e d i t o r , R o b e r t F u l f o r d , C o u n c i l o f C a n a d i a n F i l m M a k e r s C h a i r p e r s o n , S a n d r a G a t h e r c o l e , f i l m d i r e c t o r , A l a n K i n g , f i l m d i r e c t o r , P e t e r P e a r s o n , f i l m p r o d u c e r / Budge C r a w l e y , a n d C a n a d i a n a c t o r / w r i t e r , G o r d o n P i n s e n t . P r a c t i c e s o f t i e d s e l l i n g ; e x c l u s i v e a g r e e m e n t s ; and r e f u s a l t o d e a l w i t h i n d e p e n d e n t s a r e c i t e d i n t h e a p p l i -c a t i o n as e x a m p l e s o f a b u s e o f m a r k e t c o n t r o l . The a p p l i c a n t s s t a t e d t h a t t h e y b e l i e v e t h a t s u c h p r a c t i c e s h a v e b e e n e m p l o y e d i n t h e C a n a d i a n f e a t u r e f i l m m a r k e t f r o m " a t l e a s t t h e e a r l y 4 0 ' s t o t h e p r e s e n t " , 3 0 a n d t h a t t h e y c o n s t i t u t e an o f f e n c e u n d e r S e c t i o n 3 2 ( 1 ) ( c ) a n d ( d ) , a n d S e c t i o n 33, o f t h e C o m b i n e s I n v e s t i g a t i o n A c t . S a n d r a G a t h e r c o l e s t a t e d t h a t 10 d i s t r i b u t i o n a n d e x h i b i t i o n c o m p a n i e s w e r e named i n t h e a p p l i c a t i o n , i n c l u d i n g : Famous P l a y e r s , Odeon, U n i t e d A r t i s t s , P a r a m o u n t P i c t u r e s , C o l u m b i a P i c t u r e s , A s t r a l F i l m s , W a r n e r B r o s . , U n i v e r s a l F i l m s , 2 0 t h C e n t u r y F o x , A v c o Embassy, a n d W a l t D i s n e y . I n t h e i r a p p l i c a t i o n , t h e a p p l i c a n t s s t a t e d t h a t t h e y h a d c o n c l u d e d t h a t t h e e x t e n t o f f o r e i g n c o n t r o l o f t h e C a n a d i a n m a r k e t h a d r e s t r i c t e d l e g i t i m a t e c o m p e t i t i o n i n t h e d i s t r i b u t i o n and e x h i b i t i o n o f f i l m s and h a d p l a c e d C a n a d i a n , f i l m s a t an immense d i s a d v a n t a g e i n t h e i r own c o u n t r y , a n d t h a t t h i s s i t u a t i o n was c o n t r a r y t o t h e p u b l i c i n t e r e s t , as w e l l as t h e i n t e r e s t s o f t h e C a n a d i a n f i l m p r o d u c e r , d i s t r i b -u t o r a n d e x h i b i t o r . The d i f f i c u l t y , h o w e v e r , i s t h a t t h e a p p l i c a t i o n u n d e r S e c t i o n 7 o f t h e A c t a s amended i s b u t t h e f i r s t o f many t i m e c o n s u m i n g s t e p s o n t h e r o a d t o a p r o s e c u t i o n w h i c h i t s e l f i s u n c e r t a i n . U n d e r S e c t i o n 8 o f t h e A c t , t h e D i r e c t o r o f I n v e s t i g a t i o n a n d R e s e a r c h i s u n d e r a s t a t u t o r y d u t y t o i n i t i a t e a n i n q u i r y now t h a t h e i s i n r e c e i p t o f an a p p l i c a t i o n , p u r s u a n t t o S e c t i o n 7. T h i s i n q u i r y w i l l be c o n d u c t e d i n a p r e l i m i n a r y manner b u t , i f t h e d i r e c t o r a t any s t a g e o f t h e i n q u i r y , i s o f t h e o p i n i o n t h a t t h e e v i d e n c e o b t a i n e d d i s c l o s e s a s i t u a t i o n c o n t r a r y t o S e c t i o n s 32 o r 33 o f t h e A c t he may p r e p a r e a s t a t e m e n t o f t h e e v i d e n c e o b t a i n e d i n t h e i n q u i r y w h i c h m u s t be s u b m i t t e d t o t h e R e s t r i c t i v e T r a d e P r a c t i c e s C o m m i s s i o n . The C o m m i s s i o n t h e n h e a r s a r g u m e n t and r e c e i v e s e v i d e n c e on b e h a l f o f a n y p e r s o n s a g a i n s t whom a l l e g a t i o n s h a v e b e e n made and a f t e r a l l p a r t i e s h a v e h a d an o p p o r t u n i t y t o be h e a r d , t h e C o m m i s s i o n p r e p a r e s i t s r e p o r t . C o m m i s s i o n r e p o r t s a r e t h e n s u b m i t t e d t o t h e M i n i s t e r o f Consumer a n d C o r p o r a t e A f f a i r s a n d m u s t be made p u b l i c w i t h i n 30 d a y s o f r e c e i p t by t h e M i n i s t e r u n l e s s t h e C o m m i s s i o n s t a t e s i n i t s r e p o r t why i t b e l i e v e s t h e p u b l i c i n t e r e s t w o u l d be b e t t e r s e r v e d by w i t h h o l d i n g p u b l i c a t i o n ( S . 1 9 ( 4 ) ) . I n t h i s c a s e , t h e M i n i s t e r d e c i d e s i f t h e r e p o r t w i l l be made p u b l i c , e i t h e r i n w h o l e o r i n p a r t . - 88 -When an i n q u i r y h a s become a s u b j e c t o f a r e p o r t b y t h e C o m m i s s i o n : "The M i n i s t e r n o r m a l l y r e f e r s i t t o t h e A t t o r n e y - G e n e r a l , w i t h a r e q u e s t t h a t i t be r e v i e w e d t o d e t e r m i n e w h a t C o u r t p r o -c e e d i n g s , i f a n y , a r e w a r r a n t e d by t h e e v i d e n c e . The M i n i s t e r a l s o c o n s i d e r s w h e t h e r any o t h e r r e m e d i e s o u g h t t o be i n s t i t u t e d . " 3 1 The d e c i s i o n as t o how f a r t o p u r s u e an i n i t i a l i n -q u i r t y , h o w e v e r , i s l a r g e l y a t t h e d i s c r e t i o n o f t h e d i r e c t o r who may " d i s c o n t i n u e a n i n q u i r y a t any s t a g e i f h e i s o f t h e o p i n i o n t h e m a t t e r b e i n g i n q u i r e d i n t o d o e s n o t j u s t i f y f u r t h e r i n q u i r y " ( S . 1 4 ( 1 ) ) . A. E x h i b i t i o n The i n i t i a l r e p o r t b y t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n on Famous P l a y e r s p e r f o r m a n c e f o r i t s f i r s t q u a r t e r u n d e r t h e q u o t a s y s t e m a n n o u n c e d A u g u s t 5, 197 5 o f f e r s e n -c o u r a g i n g r e s u l t s . T a b l e d i n t h e House o f Commons o n M a r c h 3, 32 1976, i t shows t h a t f r o m A u g u s t t o O c t o b e r , 1 9 7 5 , Famous P l a y e r s p r o v i d e d 184 weeks a n d f o u r d a y s o f s c r e e n i n g t i m e f o r 19 C a n a d i a n f e a t u r e f i l m s . A c o m p l e t e b r e a k d o w n o f t h e t o t a l s by P r o v i n c e i s s e t o u t i n T a b l e V-V. What i s p a r t i c u l a r l y e n c o u r a g i n g i s t h e number o f f i l m s t h a t Famous P l a y e r s h a s s e l e c t e d t o f u l f i l i t s q u o t a . E q u a l l y as e n c o u r a g i n g i s t h e f a c t t h a t t h e f i l m s a r e a l s o b e i n g shown t h r o u g h o u t t h e c o u n t r y , i n s m a l l t o w n s , as w e l l a s i n t h e l a r g e r c i t i e s . - 89 -TABLE V-V FAMOUS PLAYERS PERFORMANCE UNDER THE AUGUST 1 5 , 1975 QUOTA AGREEMENT FOR THE PERIOD AUGUST 1, 1975 TO OCTOBER 3 1 , 1 9 7 5 * T o t a l by P r o v i n c e No. T h e a t r e s No. o f F i l m s No. Weeks No. Days B r i t i s h C o l u m b i a 6 4 10 33 A l b e r t a 2 2 1 4 S a s k a t c h e w a n 8 4 7 9 M a n i t o b a 3 2 3 O n t a r i o 39 8 77 17 Quebec 18 9 63 Nova S c o t i a 7 5 6 8 New B r u n s w i c k 6 4 6 9 N e w f o u n d l a n d 4 2 21 GRAND TOTAL 93 173 81 (11 weeks & 4 days) NUMBER OF FILMS 1 q *SOURCE: C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n R e p o r t on Famous P l a y e r s P l a y e r P e r f o r m a n c e f o r t h e p e r i o d f r o m A u g u s t t o O c t o b e r 1975 t a b l e d i n t h e House o f Commons March 3 , 1 9 7 6 . - 90 -The r e a l i t y o f t h e s i t u a t i o n , h o w e v e r , i s t h a t Famous P l a y e r s a n d Odeon h a v e b o t h a g r e e d t o t h i s v o l u n t a r y q u o t a t o a v o i d h a v i n g one l e g i s l a t e d u p o n them. Any l e g i s l a t e d q u o t a i s t h e c o n s t i t u t i o n a l r e s p o n s i b i l i t y o f t h e P r o v i n c e s u n d e r t h e B r i t i s h N o r t h A m e r i c a A c t a n d i t i s h i g h l y l i k e l y t h a t a n y b i l l s s o i n t r o d u c e d w o u l d p r o v i d e f o r a c o m p u l s o r y s h o w i n g o n Famous P l a y e r s a n d Odeon s c r e e n s f o r a c e r t a i n 33 number o f weeks o f a l l C a n a d i a n f e a t u r e f i l m s , some o f w h i c h t o p u t i t m i l d l y , h a v e b e e n b o t h c r i t i c a l a n d f i n a n c i a l f l o p s . . . A n o t h e r d i s c o u r a g i n g f e a t u r e o f t h e v o l u n t a r y q u o t a i s t h e e a r l y i n d i c a t i o n t h a t Famous P l a y e r s i s a d h e r i n g t o t h e l e t t e r o f t h e a g r e e m e n t a n d i s t a k i n g no i n i t i a t i v e o n i t s own t o meet o t h e r t h a n t h e b a r e r e q u i r e m e n t s a s s e t o u t 34 t h e r e i n . T h i s r e a l l y i s 3 u s t h i s t o r y r e p e a t i n g i t s e l f m t h e s h o r t l i f e o f t h e C a n a d i a n f e a t u r e f i l m i n d u s t r y . I n J u l y 197 3, Mr. F a u l k n e r h a d made a p r i o r v o l u n t a r y q u o t a a g r e e m e n t w i t h Famous P l a y e r s a n d Odeon w h i c h p r o v i d e d as f o l l o w s : " 1 . C a n a d i a n 35mm f e a t u r e f i l m s p r o d u c e d o r d u b b e d i n E n g l i s h a r e g u a r a n t e e d two w e e k s ' t h e a t r e t i m e i n M o n t r e a l , • T o r o n t o and V a n c o u v e r . The r e s p o n -s i b i l i t y f o r . t h i s i s d i v i d e d b y Famous P l a y e r s (2/3 p r o p o r t i o n ) a n d Odeon (1/3 p r o p o r t i o n ) . 2. I f t h e r e l e a s e s a r e s u c c e s s f u l , t h e f i l m s a r e a s s u r e d a f u r t h e r d i s t r i -b u t i o n i n 18 t o 20 c i t i e s a c r o s s C a n a d a s e r v e d b y t h e two c h a i n s . A n d a g o o d a u d i e n c e r e s p o n s e i n t h o s e w i l l g e t t h e f i l m s c r e e n e d w i d e l y a c r o s s C a n a d a . " 3 5 - 91 -The results of th i s agreement were such that seven Canadian feature films were provided 119 weeks almost exclu-s i v e l y i n Montral, Toronto, and Vancouver and seldom outside these large urban centres. Under the terms of the August 5, 1975 announcement, the voluntary quota conditions were not binding on Odeon Theatres (Canada) Ltd. u n t i l December 1, 1975 and, as yet, no report by the CFDC on Odeon's performance has been made public. ; THE IMPACT ON FOREIGN OWNERSHIP The Foreign Investment Review Act and the Canadian  Business Corporations Act have had absolutely no impact at a l l on the foreign ownership issue i n the feature f i l m indus-try i n Canada. The f a t a l flaw i n the Foreign Investment Review Act as f a r as the f i l m industry i s concerned i s that i t does not apply to Canadian companies which are presently foreign owned or controlled, even i f the extent of such ownership extends to 100% control of the Canadian company. I t only applies to the takeover of e x i s i t i n g Canadian businesses and the establishment of new ones by foreigners. Under the Canada Business Corporations Act, the residency requirement of directors does not apply to an e x i s t i n g company, u n t i l i t applies for a " C e r t i f i c a t e of Continuance". - 92 -U n d e r t h e A c t , a company m u s t a p p l y f o r a C e r t i f i c a t e w i t h i n f i v e y e a r s f r o m t h e d a t e o f t h e A c t c o m i n g i n t o f o r c e , t h a t i s , b e f o r e December 1 5 , 1 9 8 0 . The m a j o r s s t i l l h a v e f o u r y e a r s . SUMMARY W h i l e s i g n i f i c a n t i n r o a d s h a v e b e e n made i n t h e number o f C a n a d i a n f e a t u r e f i l m s p r o d u c e d e a c h y e a r a n d e f f o r t s a r e b e i n g made t o i n c r e a s e t h e q u a l i t y o f t h e p r o d u c t as i s e v i d e n c e d by t h e r e t u r n s o n f i l m s , s u c h as " K r a v i t z " , " B l a c k C h r i s t m a s " , a n d "The N e p t u n e F a c t o r " , C a n a d a , d e s p i t e t h e f e d e r a l g o v e r n m e n t ' s e f f o r t s , s t i l l d o e s n o t h a v e a f e a t u r e f i l m i n d u s t r y . The CFDC, due l a r g e l y t o t h e a b o v e t h r e e f i l m s , i s a b l e t o b o a s t a h e a l t h y r e t u r n on i t s i n v e s t m e n t , y e t t h e f a c t r e m a i n s , m o s t C a n a d i a n f i l m s do n o t r e t u r n a p r o f i t t o t h e i r i n v e s t o r s , e s p e c i a l l y i f we c o n s i d e r o n l y t h e C a n a d i a n b o x o f f i c e r e c e i p t s . As a r e s u l t , t h e p r i v a t e s e c t o r o f t h e C a n a d i a n economy i s r e l u c t a n t t o i n v e s t i n C a n a d i a n f e a t u r e f i l m s , p r e f e r r i n g i n s t e a d t o i n v e s t i n f o r e i g n f e a t u r e s w h e r e t h e p o s s i b i l i t y o f a s u c c e s s f u l i n v e s t m e n t i s c o n s i d e r e d g r e a t e r — a s u b s t a n t i a l t a x s a v i n g n o t w i t h s t a n d i n g . N o n - d e d u c t i b i l i t y o f t h e l e v e r a g e d p o r t i o n o f an i n -v e s t m e n t a nd a s t r i c t d e f i n i t i o n o f a c e r t i f i e d C a n a d i a n f i l m o n l y s e r v e t o a g g r a v a t e t h e s i t u a t i o n . The s i g n i n g o f f u r t h e r - 93 -c o - p r o d u c t i o n a g r e e m e n t s may s e r v e t o a l l e v i a t e t h i s p r o b l e m b u t i t i s s t i l l t o o e a r l y t o t e l l . The i n v e s t m e n t o f $ 1,700,000.00 b y t h e f o r e i g n owned t h e a t r e c h a i n s i s n o m i n a l when c o m p a r e d t o t h e a v e r a g e c o s t o f b e t w e e n $2 and $3 m i l l i o n f o r e a c h o f t h e 300 o d d A m e r i c a n f i l m s t h e y show on C a n a d i a n s c r e e n s e a c h y e a r and w i t h w h i c h C a n a d i a n f i l m s ( a v e r a g e c o s t o f a p p r o x i m a t e l y $500,000.00) must c o m p e t e . I n t h e d i s t r i b u t i o n / e x h i b i t i o n s e c t o r , an i n q u i r y h a s b e e n l a u n c h e d i n t o t h e i n d u s t r y ' s t r a d e p r a c t i c e s b u t how l o n g i t w i l l t a k e r e m a i n s t o be s e e n . I t i s a l s o p o s s i b l e h i s t o r y i s r e p e a t i n g i t s e l f a l o n g t h e l i n e s o f t h e W h i t e R e p o r t i n 19 3 1 . P u r s u a n t t o a v o l u n t a r y q u o t a , C a n a d i a n f i l m s a r e b e i n g shown t h r o u g h o u t C a n a d a b u t i n an a p p a r e n t a t t e m p t t o a v o i d a l e g i s l a t e d q u o t a a n d t h u s t h e b a r e minimum o f t h e a g r e e m e n t i s b e i n g a d h e r e d t o . The l e s s s a i d a b o u t t h e f a i l i n g s o f t h e f e d e r a l g o v e r n m e n t ' s p o l i c y o n t h e f o r -e i g n o w n e r s h i p i s s u e t h e b e t t e r . I n s h o r t , more C a n a d i a n f i l m s a r e b e i n g p r o d u c e d , a f e w , v e r y f e w , a r e r e t u r n i n g a p r o f i t a n d a number a r e b e i n g shown t h r o u g h o u t C a n a d a . B e y o n d t h i s , n o t h i n g h a s c h a n g e d , we a r e s t i l l no c l o s e r t o h a v i n g a C a n a d i a n f i l m i n d u s t r y . • - 9 4 -FOOTNOTES CHAPTER V 1 Canadian F i l m Development C o r p o r a t i o n (Annual R e p o r t 1974-75) p. 4. 2 M a r s h a l l Delaney, "Movies: You S h o u l d Know How Bad T h i s F i l m I s . A f t e r A l l , You P a i d F o r I t " , S a t u r d a y N i g h t , V o l . 90, No. 4 (September 1975), p. 84. 3 Canadian F i l m Development C o r p o r a t i o n (Annual R e p o r t 1974-75) p. 4. 4 I b i d . 5 from the Ann u a l R e p o r t s o f t h e Canadian F i l m Development C o r p o r a t i o n . Canadian F i l m Development C o r p o r a t i o n (Annual R e p o r t 1973-74) p. 4. 7 Canadian F i l m Development C o r p o r a t i o n (Annual R e p o r t 1974-75) p. 4. 8 D. John T u r n e r , " F i n a n c i a l Trends I n T h e a t r i c a l P r o d u c t i o n 1975", Cinema Canada, T h i r d E d i t i o n , No. 26, (March 1976), p. 42. 9 I b i d . 10 • . . D r a b m s k y , op. c i t . , p. 1 4 3 . 1 1 I b i d . 12 R e p o r t 1974-75")?^? D e V e l o ^ e n t C o r p o r a t i o n (Annual 1 3 I b i d . I b i d . - 95 -I b i d . I b i d . I b i d . 18 C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n ( A n n u a l R e p o r t 1 9 7 2 - 7 3 ) , p. 3. 19 C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n ( A n n u a l R e p o r t 197 3 - 7 4 ) , p. 4. I b i d . 21 a u t h o r ' s c a l c u l a t i o n f r o m d a t a o b t a i n e d f r o m 1974-75 A n n u a l R e p o r t o f t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a i o n . 22 I n t e r p r e t a t i o n B u l l e t i n I T - 1 6 4 p u b l i s h e d u n d e r t h e a u t h o r i t y o f t h e D e p u t y M i n i s t e r o f N a t i o n a l Revenue f o r T a x a t i o n on J u n e 5, 1974 a t p . 3. 23 S t e p h e n C h e s l e y , " F i l m News: Random N o t e s " , C i n e m a C a n a d a , T h i r d E d i t i o n , No. 29, ( J u n e / J u l y 1 9 7 6 ) , p. 7. 2 4 T K ^ I b i d , 25 , T h e S u n ( V a n c o u v e r ) , December 4, 1 9 7 5 , p . 45, c o l . 1. 2 6 m T u r n e r , o p . c i t . , p. 4 3 . 27 I b i d . 28 c o l . .1. The S u n ( V a n c o u v e r ) , November 20, 1974, p. 4 5 , 29 S a n d r a G a t h e r c o l e , "Combines I n v e s t i g a t i o n " , C i n e m a C a n a d a , T h i r d E d i t i o n , No. 26, ( M a r c h 1 9 7 6 ) , p . 10. 3 0 TV,"* I b i d . - 96 -31 C a n a d a , D e p a r t m e n t o f Consumer a n d C o r p o r a t e A f f a i r s , R e p o r t o f The D i r e c t o r o f I n v e s t i g a t i o n a n d R e s e a r c h  C o m b i n e s I n v e s t i g a t i o n A c t f o r t h e Y e a r E n d e d M a r c h 31, 1975, I n f o r m a t i o n C a n a d a C a t . No. RG51-1975 ( O t t a w a : Queen* s P r i n t e r ) , p. 21. 32 f o r a c o p y o f t h e r e p o r t s e e A p p e n d i x V I I . 33 s e e C h a p t e r V I . 34 As i s i n d i c a t e d f r o m t h e i n f o r m a t i o n p r o v i d e d m A p p e n d i x V I I . 35 " C a n a d i a n F i l m n e w s " , C i n e m a C a n a d a , S e c o n d E d i t i o n , No. 9 ( A u g u s t / S e p t e m b e r , 1973), p. 6. CHAPTER V I F I L M INDUSTRY INCENTIVES T h e r e a r e many ways o f s u b s i d i z i n g a f e a t u r e f i l m i n d u s t r y w h i c h h a v e n o t y e t b e e n i m p l e m e n t e d b y t h e f e d e r a l g o v e r n m e n t . The p u r p o s e o f t h i s C h a p t e r i s t o a n a l y z e a n d e v a l u a t e some o f t h e s e i n c e n t i v e s t o d e t e r m i n e w h i c h , i f a n y , w o u l d p r o m o t e t h e C a n a d i a n f e a t u r e f i l m i n d u s t r y , g i v e n i t s p r e s e n t s t r u c t u r e . Some o f t h e s e i n c e n t i v e s h a v e b e e n g l e a n e d f r o m a s t u d y o f f o r e i g n f i l m s u b s i d i e s , w h i l e o t h e r s a r e t a k e n f r o m C a n a d i a n f i l m p o l i c y p r o p o s a l s s u b m i t t e d t o t h e S e c r e t a r y o f S t a t e . The e x t e n t t o w h i c h t h e f e d e r a l g o v e r n m e n t s h o u l d t r y t o i n f l u e n c e a n d be i n v o l v e d i n t h e f i l m i n d u s t r y i s , o f c o u r s e , t h e c e n t r a l i s s u e i n any d i s c u s s i o n o f f i l m s u b s i d i z a t i o n . To t h i s e n d , we m u s t b e g i n by s e t t i n g o u t p r i n c i p l e s f o r i n -t e r v e n t i o n , a f a c t w h i c h i s a l m o s t w i t h o u t e x c e p t i o n o v e r l o o k e d by t h o s e who w o u l d d e s i g n a f i l m p o l i c y f o r C a n a d a . - 97 -- 98 -P R I N C I P L E S FOR I N T E RVENTION 1 F i l m m a k i n g i s a b u s i n e s s . The e n d p r o d u c t may some-t i m e s be a w o r k o f a r t w h i c h p e r m i t s t h e p r o d u c t i o n o f f i l m s t o be l a b e l l e d a n a r t - i n d u s t r y , b u t t h e f a c t r e m a i n s t h a t i t i s a n i n d u s t r y . L i k e a l l i n d u s t r i e s , " I t s u r v i v e s o n i t s a b i l i t y t o p l e a s e t h e m a j o r i t y o f i t s c u s t o m e r s — a m a j o r i t y whose j u d g m e n t and d i s c r i m i n a t i o n a r e o f a s u b s t a n t i a l l y l o w o r d e r . B u t i f we w i s h t o c a t e r t o t h e m i n o r i t y o f f i l m g o e r s s e e k i n g p r o d u c t s o f a h i g h a r t i s t i c o r d e r , we c a n n o t do s o w i t h o u t s u f f e r i n g g i g a n t i c l o s s e s . " 2 The f i r s t p r i n c i p l e t o be c o n s i d e r e d t h e n i n p r o p o s i n g p o l i c i e s f o r f u r t h e r p u b l i c i n t e r v e n t i o n i n t h e f i l m i n d u s t r y i s t h a t any r e c o m m e n d a t i o n s be b a s e d o n s o u n d b u s i n e s s p r i n -c i p l e s . The u l t i m a t e c r i t e r i a b e i n g t h e r e t u r n on p r o f i t . The f i l m i n d u s t r y i s a l l t o o c a p a b l e o f l o o s i n g l i t e r a l l y m i l l i o n s o f d o l l a r s a n n u a l l y a n d t h e r e i s no j u s t i f i c a t i o n f o r t h i s b e i n g b o r n e by t h e p u b l i c p u r s e . T h i s i s n o t t o s a y , h o w e v e r , t h a t t h e g o v e r n m e n t s h o u l d n o t a i d s p e c i f i c l i m i t e d p r o j e c t s b u t , f o r t h e i n d u s t r y a s a w h o l e , w h a t m u s t be s o u g h t i s a s t r u c t u r e t h a t w i l l p r o v i d e a c o m m e r c i a l l y f e a s i b l e b a s i s f o r a c o n t i n u e d f l o w o f C a n a d i a n f i l m s . S e c o n d l y , t h e f e d e r a l g o v e r n m e n t m u s t t a k e s t e p s t o i n s u r e t h a t c o m p e t i t i o n i s i n j e c t e d i n t o t h e f i l m i n d u s t r y i n C a n a d a . T h e r e must be c o m p e t i t i o n a n d v a r i e t y b o t h i n t h e p i c t u r e s w h i c h a r e p r o d u c e d a n d i n t h e means by w h i c h t h e y r e a c h - 99 -the public. "The amount of money made available by the state for loans to f i l m makers and the terms on which i t i s lent influence the number and variety of films from which the public can choose." 3 FOREIGN SUBSIDIES V i r t u a l l y every f i l m producing country i n the world, except the United States, provides aid to i t s f i l m industry by subsidizing production and est a b l i s h i n g quotas. A. The United Kingdom Of a l l the subsidy plans, the best known and most 4 e f f e c t i v e system i s the Eady Plan of Great B r i t a i n . O r i g i n a l l y , a voluntary agreement under which a small amount known as a levy was co l l e c t e d by exhibitors on each seat sold i n t h e i r cinemas, and subsequently turned over to producers of B r i t i s h films as a subsidy, t h i s program was made mandatory by the 5 Cinematograph Film Act of 1957. The Act i s administered by the Board of Trade and has been implemented by various s t a t -utes providing for the c o l l e c t i o n of a statutory levy from exhibitors and for the d i s t r i b u t i o n by the B r i t i s h Film Fund Agency of the proceeds of the levy to makers of c e r t a i n B r i t i s h f i l m s . 6 Only B r i t i s h quota films q u a l i f y for subsidy payments from the B r i t i s h Film Fund. E s s e n t i a l l y , a " B r i t i s h Quota" f i l m i s 35mm f i l m : (a) the maker of which i s a B r i t i s h or - 100 -I r i s h s u b j e c t o r a company i n c o r p o r a t e d u n d e r t h e l a w s o f t h e U n i t e d K i n g d o m , I r e l a n d o r any Commonwealth c o u n t r y ; (b) made i n a s t u d i o w i t h i n B r i t a i n , t h e Commonwealth, o r I r e l a n d i f any s t u d i o i s u s e d a t a l l ; (c) 75% o r 80% o f l a b o r c o s t s h a v e b e e n p a i d t o B r i t i s h s u b j e c t s o r t o p e r s o n s d o m i c i l e d i n t h e Commonwealth o r I r e l a n d . The q u a l i f i c a t i o n as a " B r i t i s h Q u o t a " f i l m e n t i t l e s s u c h f i l m s t o i n c l u s i o n i n t h e B r i t i s h s c r e e n q u o t a b u t i t d o e s n o t a u t o m a t i c a l l y e n t i t l e a p i c t u r e t o E a d y P l a n s u b s i d y p a y m e n t s , b e i n g o n l y one o f t h e r e q u i r e -m e nts t h a t must be met. S u c h p a y m e n t s a r e made o n l y t o p r o d u c e r s o r d i n a r i l y r e s i d e n t i n , o r c o m p a n i e s r e g i s t e r e d a n d c e n t r a l l y managed and c o n t r o l l e d i n t h e U n i t e d K i n g d o m . C o m p a n i e s i n c o r p o r a t e d i n Commonwealth c o u n t r i e s a r e n o t e n t i t l e d t o s u b s i d y b e n e f i t s . The l e v y i s b a s e d o n a p e r c e n t a g e o f t h e t o t a l b o x o f f i c e g r o s s b e y o n d a s p e c i f i e d amount. B o t h t h e p e r c e n t a g e a n d s t a t e d amount may be v a r i e d f r o m t i m e t o t i m e . T h e a t r e s w i t h g r o s s b o x o f f i c e r e c e i p t s b e l o w a s p e c i f i e d amount a r e a l s o e x e m pt f r o m p a y i n g t h e l e v y . The F i l m s A c t o f 195 7 p r o -v i d e d a c e i l i n g f o r t h e c o l l e c t i o n o f t h e l e v y i n any o n e y e a r . P a y m e n t s f r o m t h e f u n d t o t h e p r o d u c e r s a r e made p r o r a t a i n p r o p o r t i o n t o e a r n i n g s o f q u a l i f i e d f i l m s a t t h e b o x o f f i c e . The l i f e o f a q u o t a f i l m i s f o u r y e a r s a f t e r i t h a s b e e n r e g i s t e r e d . C l a i m s a r e made w i t h r e s p e c t t o i n d i v i d u a l f i l m s . They a r e s u b m i t t e d m o n t h l y a n d i n c l u d e a s t a t e m e n t - 101 -o f r e n t a l s e a r n e d by t h e f i l m d u r i n g t h e p e r i o d c o v e r e d by t h e c l a i m . The s u b s i d y i s p a i d i n m o n t h l y i n s t a l m e n t s a n d e a c h i n d i v i d u a l p r o d u c e r ' s a l l o t m e n t b e a r s t h e same r e l a t i o n t o t h e t o t a l amount o f E a d y money a l l o t t e d d u r i n g t h e month as h i s r e n t a l s b e a r t o t h e r e n t a l s o f a l l q u a l i f i e d f i l m s d u r i n g t h e month. A t t h e e n d o f e a c h y e a r when t h e r e n t a l s f o r t h e w h o l e y e a r a r e known, t h e t h i r t e e n t h a l l o c a t i o n i s made o f t h e b a l a n c e on h a n d . I t i s i m p o r t a n t t o n o t e t h a t t h e e x h i b i t o r s a l o n e do n o t s h o u l d e r t h e b u r d e n o f t h e E a d y P l a n , s i n c e t h e p a y m e n t s t h e y make t o d i s t r i b u t i o r s a r e c a l c u l a t e d a f t e r t h e E a d y p a y -ment i s d e d u c t e d . T h i s means p a r t o f t h e l e v y b u r d e n i s p a i d by t h e d i s t r i b u t o r s a n d , i n t u r n , t h e p r o d u c e r s . I t h a s b e e n c a l c u l a t e d t h a t o u t o f e v e r y $100.00 c o l l e c t e d i n l e v y , $67.50 i s c o n t r i b u t e d by t h e e x h i b i t o r s , $12.50 by t h e d i s t r i b u t o r s , $11.00 by n o n - B r i t i s h p r o d u c e r s a n d $9.00 by B r i t i s h p r o d u c e r s t h e m s e l v e s . The a r g u m e n t s f o r a l e v y , p r e f e r a b l y one b a s e d on t h e E a d y P l a n , i n C a n a d a a r e v i r t u a l l y o v e r w h e l m i n g . The b u l k o f t h e e x h i b i t o r ' s s h a r e o f t h e l e v y w o u l d be b o r n e by Famous P l a y e r s and Odeon who a r e p r e s e n t l y t a k i n g i n 65% o f C a n a d a ' s r o u g h l y $200 m i l l i o n b o x o f f i c e a n d a r e r e t u r n i n g o n l y $1.7 m i l l i o n by way o f i n v e s t m e n t . The m a j o r i t y o f t h e s m a l l e r , m a r g i n a l l y o p e r a t e d i n d e p e n d e n t s w o u l d be e x e m pt f r o m t h e l e v y . The m a j o r d i s t r i b u t o r s w o u l d b e g i n t o c o n t r i b u t e a p o r t i o n - 102 -o f t h e $55,000,000.00 t h a t t h e y r e c e i v e a n n u a l l y w h i l e t h e C a n a d i a n d i s t r i b u t o r s w o u l d c o n t r i b u t e n o m i n a l l y . I n e s s e n c e , a l e v y w o u l d b e g i n t o b a l a n c e t h e s c a l e s b e t w e e n t h e f o r e i g n owned m a j o r s a n d t h e C a n a d i a n i n d e p e n d e n t s b u t , more i m p o r -t a n t l y , i t w o u l d a d d t h e much n e e d e d i m p e t u s t o p r i v a t e s e c t o r i n v e s t m e n t i n t h e p r o d u c t i o n o f C a n a d i a n f i l m s . W i t h o u t t h e E a d y P l a n , t h e r e w o u l d be no c o m m e r c i a l f i l m i n d u s t r y i n B r i t a i n a n d t h e r e a s o n i s s i m p l e : "The money a r i s i n g f r o m t h e E a d y scheme p r e s e n t l y adds n e a r l y 50% t o t h e p r o d u c e r s ' g r o s s o f e a c h B r i t i s h f i l m d i s t r i b u t e d i n t h e U n i t e d Kingdom."9 W h i l e t h i s b e n e f i t b y no means g u a r a n t e e s f i n a n c i a l s u c c e s s t o e a c h B r i t i s h f i l m p r o d u c e d , " p o t e n t i a l m o n e t a r y b e n e f i t a c c r u i n g e n c o u r a g e s t h o s e who f i n a n c e t h e f i l m m a k er t o u n d e r t a k e a r i s k t h e y o t h e r w i s e w o u l d n o t " . 1 0 B. F r a n c e F i n a n c i a l a i d t o t h e F r e n c h f i l m i n d u s t r y comes f r o m a s p e c i a l a c c o u n t a d m i n i s t e r e d by t h e M i n i s t r y o f C u l t u r a l A f f a i r s w h i c h d e r i v e s i t s i n c o m e f r o m a s p e c i a l a d m i s s i o n t a x , a f i l m r e l e a s e t a x a n d r e i m b u r s e m e n t s f r o m p r i o r l o a n s g r a n t e d t o p r o d u C e r s . i l E a c h y e a r t h e M i n i s t r y d e c i d e s t h e e x a c t amount a v a i l a b l e f o r l o a n s and s u b s i d i e s . A F r e n c h f i l m s u b s i d y i s b a s e d on a p e r c e n t a g e o f i t s g r o s s b o x o f f i c e r e c e i p t s ( b e f o r e d e d u c t i o n o f t a x e s ) f o r f i v e y e a r s f r o m t h e d a t e o f f i r s t - 103 -s h o w i n g , b u t t h i s a i d i s r e d u c e d by 50% f o r f e a t u r e s w i t h a g r o s s o v e r a s p e c i f i e d amount. T h e s e s u b s i d y a m o u n t s , h o w e v e r , a r e n o t a c t u a l l y p a i d o u t a s t h e y a r e i n E n g l a n d a g a i n s t t h e p i c t u r e s * e a r n i n g s b u t a c c u m u l a t e as a c r e d i t a g a i n s t w h i c h a p r o d u c e r may draw f o r f i n a n c i n g h i s n e x t p i c t u r e . To p a r t i c i p a t e i n t h e s u b s i d y , t h e o r i g i n a l v e r s i o n o f t h e f i l m m ust be i n F r e n c h , F r e n c h t e c h n i c i a n s h a v e t o be e m p l o y e d , l e a d i n g p l a y e r s m u s t be F r e n c h a n d t h e f i l m m ust be d e v e l o p e d and e d i t e d i n F r a n c e . S i n c e t h e e n d a c h i e v e d by t h e F r e n c h f i l m s u b s i d y p a r a l l e l s t h a t o f t h e E a d y P l a n i n G r e a t B r i t a i n , i t i s n o t recommended f o r t h e C a n a d i a n f i l m i n d u s t r y . The F r e n c h f i l m i n d u s t r y i s o l d e r a n d more e s t a b l i s h e d t h a n t h e C a n a d i a n w h i c h c a n n o t a f f o r d t h e l u x u r y o f a s u b s i d y p r o g r a m w h i c h b e n e f i t s a p r o d u c e r ' s s e c o n d and s u b s e q u e n t p i c t u r e s i f i t i s o f no a s s i s t a n c e i n f i n a n c i n g h i s f i r s t . C. I s r a e l The I s r a e l i g o v e r n m e n t r e a l i z i n g t h a t i t s a p p r o x i -m a t e l y 300 t h e a t r e s a n d 65,000 f i l m g o e r s c o u l d n o t s u p p o r t . . 12 . a f i l m i n d u s t r y on t h e i r own, h a s p r o v i d e d a w i d e r a n g i n g p r o g r a m o f a s s i s t a n c e a n d f i n a n c i a l i n c e n t i v e s a n d g r a n t s d e s i g n e d t o b e n e f i t a c a t e g o r y o f f i l m s c o n s i s t i n g o f " a p p p r o v e d " I s r a e l i f e a t u r e s a n d a n o t h e r c a t e g o r y c o n s i s t i n g o f a l l o t h e r . . , 1 3 . f i l m s . - 104 -The s i t u a t i o n i n t h e I s r a e l i f i l m i n d u s t r y i s s i m i l a r t o t h a t i n C a n a d a . A l t h o u g h I s r a e l i f i l m p r o d u c e r s c a n p o i n t w i t h p r i d e t o a few n o t a b l e a c h i e v e m e n t s "On t h e w h o l e , t h e d e v e l o p m e n t o f t h e f i l m i n d u s t r y i n I s r a e l h a s b e e n c u r t a i l e d by t h e l a c k o f a d e q u a t e a n d p r o p e r f i n a n c i n g . As a r e s u l t , t h e p r o d u c t i o n o f f i l m s was i m p r o p e r l y a n d i n s u f f i c i e n t l y p l a n n e d a n d o r g a n i z e d , t h u s r a i s i n g c o s t s a n d l o w e r i n g t h e q u a l i t y o f t h e f i l m s p r o d u c e d . L a c k o f f u n d s a l s o made i t i m p o s s i b l e f o r I s r a e l i p r o d u c e r s t o s e a r c h f o r s u i t a b l e d i s t r i b u t i o n o u t l e t s a b r o a d . " 1 4 T h u s , C e n f i l c o - I s r a e l L t d . was e s t a b l i s h e d t o p r o v i d e '• f i n a n c i n g f o r f i l m p r o d u c t i o n i n I s r a e l , b y way o f " l o a n s , i n v e s t m e n t and p a r t i c i p a t i o n s as w e l l a s t o p r o v i d e c o m p l e t i o n g u a r a n t e e s and o t h e r f i n a n c i a l s e r v i c e s r e q u i r e d by p r o d u c e r s " . 1 P r i m a r i l y a f i n a n c i n g b o d y w h i c h p a r t i c i p a t e s i n s e l e c t e d f i l m p r o d u c t i o n s , C e n f i l c o makes i t s s e r v i c e s a v a i l a b l e t o b o t h f o r e i g n p r o d u c e r s w o r k i n g i n I s r a e l as w e l l a s t o I s r a e l i p r o d u c e r s . F o r t h o s e f i l m s q u a l i f y i n g as " I s r a e l i f e a t u r e f i l m s " , t h e y a r e g r a n t e d a d d i t i o n a l f i n a n c i a l i n c e n t i v e s i n c l u d i n g a t a x r e f u n d o n t i c k e t s e q u a l t o 32% o f t h e g r o s s t i c k e t p r i c e w i t h a p o s s i b l e a d d i t i o n a l b o n u s i f t h e f i l m q u a l i f i e s as a " q u a l i t y f i l m " . 1 6 T h i s i s , o f c o u r s e , a v a r i a t i o n o f t h e F r e n c h and E n g l i s h l e v y w h i c h i n I s r a e l i s a d m i n i s t e r e d u n d e r t h e I s r a e l i F i l m C e n t r e . The p o i n t b e i n g t h a t t h e I s r a e l i g o v e r n m e n t b y e s -t a b l i s h i n g C e n f i l c o h a s i n c r e a s e d t h e s t a b i l i t y o f c o n d i t i o n s - 105 -i n t h e I s r a e l i f i l m i n d u s t r y . The s t a t e d a i m o f C e n f i l c o i s t o " s t i m u l a t e t h e f u r t h e r g r o w t h o f an a l r e a d y e s t a b l i s h e d i n d u s t r y i n I s r a e l w h i l e , a t t h e same t i m e , e a r n i n g a f a i r p r o f i t f o r i t s s h a r e h o l d e r s " . O u t o f t h e I s r a e l i e x p e r i e n c e comes t h e o b v i o u s s u g g e s t i o n t h a t C a n a d a e s t a b l i s h a c o r p o r a t i o n l i k e C e n f i l c o t o a t t a c t f o r e i g n p r o d u c e r s t o C a n a d a . W h e t h e r o r n o t a new o r g a n i z a t i o n h a s t o be e s t a b l i s h e d o r w h e t h e r t h i s c o u l d be an a d j u n c t t o t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n , t h e p r i n c i p l e r e m a i n s t h e same. By a t t r a c t i n g f o r e i g n p r o d u c e r s t o C a n a d a , a d d i t i o n a l s o u r c e s o f e m p l o y m e n t w i l l be a v a i l a b l e f o r t h o s e now w o r k i n g i n t h e C a n a d i a n f i l m i n d u s t r y w h i c h w i l l , a t t h e same t i m e , p r o v i d e t h o s e new t o t h e i n d u s t r y w i t h t h e p r a c t i c a l means o f l e a r n i n g t h e i r t r a d e , t h e p u r p o s e o f t h e p r o f e s s i o n a l i n v e s t m e n t p r o g r a m o f t h e CFDC. A t t h e same t i m e , t h e r e i s no r e a s o n t o b e l i e v e t h a t t h e s e f o r e i g n p r o -d u c t i o n s w i l l i n any way a f f e c t t h e p r o d u c t i o n o f C a n a d i a n f i l m s . D. Sweden "> Sweden p r o v i d e s a n o t h e r v a r i a t i o n on t h e l e v y more i m p o r t a n t f o r t h e c r i t e r i a f o r p a r t i c i p a t i o n t h a n f o r t h e means o f f u n d i n g t h i s s u b s i d y . A l l S w e d i s h t h e a t r e s g i v i n g more t h a n f i v e p e r f o r m a n c e s a week m u s t s u b m i t 10% o f t h e i r 18 b o x o f f i c e r e v e n u e t o t h e S w e d i s h F i l m I n s t i t u t e . T h i r t y p e r c e n t o f t h i s amount i s u s e d f o r d i r e c t s u b s i d i e s t o f i l m - 106 -p r o d u c t i o n , i n p r o p o r t i o n t o b o x o f f i c e e a r n i n g s o f e l i g i b l e f i l m s . T w e n t y p e r c e n t , h o w e v e r , i s u s e d f o r p r i z e s t o " q u a l i t y " f i l m s o f o u t s t a n d i n g a r t i s t i c a n d t e c h n i c a l q u a l i t y a n d a f u r t h e r 15% i s u s e d t o o f f s e t any l o s s e s w h i c h m i g h t be i n c u r r e d by t h e s e f i l m s . The r e s t i s u s e d f o r n o n - p r o d u c t i o n p u r p o s e s . By a d o p t i n g t h i s p o l i c y , t h e C a n a d i a n F i l m D e v e l o p -ment C o r p o r a t i o n c o u l d a c h i e v e i n t h e a r e a o f f e a t u r e f i l m s w h a t t h e N a t i o n a l F i l m B o a r d h a s b e e n a b l e t o a c c o m p l i s h i n t h e d o c u m e n t a r y f i e l d . N a m e l y , t o p r o d u c e a p r o d u c t o f h i g h t e c h n i c a l , a r t i s t i c a n d c r i t i c a l a c c l a i m t h r o u g h o u t t h e w o r l d . F I L M POLICY PROPOSALS The m o s t c o n t r o v e r s i a l o f a l l t h e p r o p o s a l s p u t f o r t h by t h o s e a s s o c i a t e d w i t h t h e f e a t u r e f i l m i n d u s t r y i n C a n a d a i s t h e r e q u e s t f o r a l e g i s l a t e d q u o t a . A. Q u o t a s V a r i o u s q u o t a p r o p o s a l s h a v e b e e n p u t f o r t h t o t h e f e d e r a l g o v e r n m e n t o f w h i c h t h e f o l l o w i n g i s b u t a s a m p l e . P r e s e n t i n g them c h r o n o l o g i c a l l y , t h e f i r s t i s t h e r e s u l t o f a R e p o r t , c o m m i s s i o n e d by t h e O n t a r i o g o v e r n m e n t , made 19 p u b l i c J a n u a r y 26, 19 73. The R e p o r t was c o m m i s s i o n e d by J o h n W h i t e when he was t h e O n t a r i o M i n i s t e r o f I n d u s t r y a n d T o u r i s m a n d t h e r e f o r e t h e r e c o m m e n d a t i o n s r e l a t e o n l y t o t h e P r o v i n c e o f O n t a r i o . J o h n F, B a s s e t t , C h a i r m a n o f t h e n i n e man B o a r d - 107 -recommended i n h i s r e p o r t t h a t e v e r y O n t a r i o m o v i e h o u s e show C a n a d i a n made f i l m s f o r a t l e a s t e i g h t weeks e v e r y two y e a r s . On F e b r u a r y 10, 1 9 7 3 , t h e F i l m C o m m i t t e e o f D i r e c t i o n O n t a r i o f o r t h e C a n a d i a n C o n f e r e n c e o f t h e A r t s recommended t h a t a l l P r o v i n c e s i n s t i t u t e "a C a n a d i a n c o n t e n t q u o t a i n a l l c o m m e r c i a l c i n e m a s a t a minimum o f 15% ( o r a p p r o x i m a t e l y s e v e n weeks p e r t h e a t r e p e r y e a r ) f o r f e a t u r e f i l m s a n d 50% f o r s h o r t f i l m s ( t o be m a i n t a i n e d a t t h e p r e s e n t r a t i o o f s h o r t s 20 p l a y e d p e r f e a t u r e ) " . I n i t s p o l i c y s t a t e m e n t on f e a t u r e f i l m s , t h e C o u n c i l o f C a n a d i a n F i l m M a k e r s i n O c t o b e r o f 1973 t o o k a more f l e x i b l e a t t i t u d e , c a l l i n g f o r a s y s t e m o f q u o t a s f o r s h o r t s as w e l l as f e a t u r e s , w h i c h " w h i l e i t m i g h t b e g i n a t a r e a l i s t i c a l l y m o d e s t l e v e l , i t s h o u l d q u i c k l y r e a c h o r e x c e e d 20% o f t h e 21 a v a i l a b l e s c r e e n t i m e " . . H o w e v e r , t h e f o l l o w i n g y e a r t h e same bo d y was s u g g e s t i n g t h a t 10% o r f i v e weeks o f e a c h y e a r f o r e v e r y c o m m e r c i a l c i n e m a i n C a n a d a s h o u l d be t h e minimum i n i -t i a l l y . They f u r t h e r recommended t h a t w i t h i n 10 y e a r s " t h a t f i g u r e be i n c r e a s e d t o 25% o r 13 weeks e a c h y e a r f o r e v e r y 22 c o m m e r c i a l c i n e m a i n C a n a d a " . A t t h e a n n u a l C a n a d i a n F i l m Symposium h e l d i n W i n n i p e g i n t h e s p r i n g o f 1 9 7 5 , M i c h a e l S p e n c e r , t h e E x e c u t i v e D i r e c t o r o f t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n i n a d -v e r t e n t l y , i t w o u l d a p p e a r , r e l e a s e d h i s r e p o r t on q u o t a s . An e x t e n s i v e t r e a t i s e o f t h e s u b j e c t , i t recommended t h a t e a c h - 108 -P r o v i n c e a g r e e t o a b a s i c q u o t a r e q u i r i n g e a c h m o t i o n p i c t u r e t h e a t r e t o r u n a C a n a d i a n f i l m f o r "two weeks i n e a c h q u a r t e r . T h i s w o u l d mean e i g h t w eeks a y e a r a n d n o t l e s s t h a n f o u r 23 C a n a d i a n f i l m s " . The q u o t a was i n t e n d e d t o c o v e r o n l y t h o s e f i l m s w i t h a r u n n i n g t i m e o f n o t l e s s t h a n 75 m i n u t e s . I t a l s o drew a d i s t i n c t i o n b e t w e e n f i r s t r u n t h e a t r e s a n d t h e s m a l l town s i t u a t i o n w h e r e one m o t i o n p i c t u r e t h e a t r e s e r v e s t h e w h o l e c o m m u n i t y . F o r t h e f i r s t r u n t h e a t r e s , t h e y w o u l d h a v e t o " p r o g r a m 24 new C a n a d i a n f i l m s p e r y e a r f o r n o t l e s s t h a n two weeks e a c h s p r e a d e v e n l y o v e r t h e f o u r q u a r t e r s o f t h e y e a r " . 2 4 F o r t h e s m a l l town t h e a t r e , i t was recommended t h a t t h e y be o b l i g e d t o show "one C a n a d i a n f i l m p e r q u a r t e r 25 f o r n o t l e s s t h a n two d a y s " . Any d i s c u s s i o n o f t h e number o f d a y s o r weeks o f p l a y i n g t i m e t o be g i v e n C a n a d i a n f i l m s , h o w e v e r , o n l y s e r v e s t o c l o u d t h e r e a l i s s u e . The q u e s t i o n i s n o t how much s c r e e n t i m e s h o u l d be l e g i s l a t e d f o r C a n a d i a n f i l m s b u t w h e t h e r any s h o u l d be l e g i s l a t e d a t a l l . The b e t t e r a n d r e a l i s t i c s o l u -t i o n i s t h a t t h e r e be no l e g i s l a t e d q u o t a f o r C a n a d i a n f e a t u r e f i l m s i n t h i s c o u n t r y . As p r o v i d e d f o r u n d e r S e c t i o n 9 2 ( 9 ) o f t h e B r i t i s h N o r t h A m e r i c a A c t , t h e l i c e n s i n g o f m o t i o n p i c t u r e t h e a t r e s i s a p r o v i n c i a l r e s p o n s i b i l i t y , one w h i c h t h e P r o v i n c e s a r e 2 6 r e l u c t a n t t o become i n v o l v e d i n . O n l y O n t a r i o and S a s -k a t c h e w a n h a v e i n d i c a t e d any w i l l i n g n e s s t o d i s c u s s t h e q u e s t i o n o f q u o t a s and e v e n t h e y h a v e t a k e n no s t e p s t o w a r d s - 109 -i m p l e m e n t a t i o n o f same. I n t h e i n t e r e s t s o f c o n t i n u i t y t h r o u g h o u t t h e c o u n t r y , p e r h a p s t h i s i s b e s t . W i t h a l i m i t e d o u t p u t o f f e a t u r e f i l m s p e r y e a r a n d some o f t h o s e b e i n g o f q u e s t i o n a b l e a u d i e n c e a p p e a l , i t i s s u g g e s t e d we r e m a i n w i t h t h e v o l u n t a r y q u o t a as p r o v i d e d f o r i n t h e a g r e e m e n t b e t w e e n Famous P l a y e r s , Odeon, and t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n a n d i n s t e a d t u r n o u r e n e r g i e s t o w a r d s t h e q u e s t i o n o f p r o p e r p r o m o t i o n o f C a n a d i a n f e a t u r e f i l m s . B. P r o m o t i o n I t i s i r o n i c a n d , a t t h e same t i m e , d i s c o u r a g i n g t h a t i n a n i n d u s t r y w h i c h r e l i e s s o h e a v i l y o n t h e p r o p e r p r o m o t i o n o f i t s p r o d u c t t h a t s o l i t t l e a t t e n t i o n h a s b e e n g i v e n t o t h i s a s p e c t by t h o s e i n v o l v e d i n t h e C a n a d i a n f i l m i n d u s t r y . I n i t s p o l i c y s t a t e m e n t on f e a t u r e f i l m s d a t e d 27 O c t o b e r 1973/ t h e C o u n c i l o f C a n a d i a n F i l m M a k e r s made one o f t h e few r e f e r e n c e s t o t h i s p r o b l e m w h i c h i t s e l f was d i s -a p p o i n t i n g i n i t s g e n e r a l i t y . R e a l i z i n g t h a t t h e b e s t f i l m s , j i n t h e w o r l d a r e " u s e l e s s u n l e s s p e o p l e know e n o u g h a b o u t 28 them t o w a n t t o go a n d s e e them", t h e C o u n c i l c o u l d o n l y s u g g e s t t h a t " i n d i v i d u a l f i l m s n e e d i n c r e a s e d p r o m o t i o n b u d g e t s , and ways must be f o u n d t o i n s u r e t h a t t h i s p r o m o t i o n t a k e s p l a c e " . 2 9 A t t h e minimum a n d as a f i r s t s t e p t o t h e p r o p e r p r o m o t i o n o f C a n a d i a n f e a t u r e f i l m s , i t i s s u g g e s t e d t h a t - 110 -Famous P l a y e r s a n d Odeon be r e q u i r e d t o l i v e up t o t h e s p i r i t o f t h e i r v o l u n t a r y q u o t a a g r e e m e n t b y b e i n g r e q u i r e d t o p r o p e r l y p r o m o t e t h e C a n a d i a n f e a t u r e s t h e y p l a y . The d i s -t r i b u t o r s o f t h e s e C a n a d i a n f e a t u r e s w o u l d h a v e t o be i n v o l v e d , o f c o u r s e , and i t i s s u g g e s t e d t h a t t h e d i s t r i b u t o r a n d e x h i b i t o r be r e q u i r e d t o c o n t r i b u t e a s e t p e r c e n t a g e o f t h e f i l m ' s t o t a l p r o d u c t i o n c o s t t o w a r d s p r o m o t i n g i t . When a s k e d i n November o f 1974 why C a n a d i a n f i l m s a r e n o t shown i n C a n a d i a n t h e a t r e s , Odeon T h e a t r e s ' C h r i s S a l m o n s u g g e s t e d t h a t C a n a d i a n f i l m s a r e j u s t n o t g o o d e n o u g h , t h a t C a n a d i a n s do n o t make m o v i e s t h a t a r e s u c c e s s f u l a t t h e b o x o f f i c e . . Y e t R o c c a C i n e m a s L t d . a n d i t s P r e s i d e n t , J o h n P. R o c c a , i s r e p o r t e d as s a y i n g : "We h a v e p l a y e d many C a n a d i a n made m o v i e s t h a t Famous P l a y e r s and Odeon r e j e c t e d f o r 14 o u t o f 52 weeks i n o u r t h e a t r e i n S t . J o h n i n o u r f i r s t y e a r o f o p e r a t i o n , and we made money on a l l t h e f i l m s e x c e p t o n e . I n f a c t , t h e p r o f i t we made f r o m t h e s e C a n a d i a n f i l m s was g r e a t e r t h a n t h e p r o f i t f r o m m o s t o f t h e p i c t u r e s o f a l l t h e m a j o r d i s t r i b u t o r s . " 3 0 One r e a s o n why Mr. R o c c a was s u c c e s s f u l w i t h t h e C a n a d i a n f i l m s i s h i s a g g r e s s i v e p r o m o t i o n o f t h e m i n a l l t h e m e d i a . He " r u n s t r a i l e r s o f h i s . u p c o m i n g f i l m s a t l e a s t f o u r weeks i n a d v a n c e ( i n s t e a d o f o n e ) ; h i s n e w s p a p e r ads a r e two o r t h r e e t i m e s l a r g e r t h a n Famous o r Odeon a d s ; t a k e s s p o t s o n b o t h t e l e v i s i o n a n d r a d i o . T h i s b l i t z c a m p a i g n i s done f o r e v e r y f i l m he p l a y s . I n t h e c a s e o f C a n a d i a n f i l m s , he s o m e t i m e s h a s t o make up t h e p r o m o t i o n a l m a t e r i a l h i m s e l f . " 3 1 - I l l -C. W i t h h o l d i n g Tax On A p r i l 28, 1 9 7 4 , P e t e r P e t e r s o n on b e h a l f o f t h e 32 C o u n c i l o f C a n a d i a n F i l m M a k e r s w r o t e t o M i c h a e l S p e n c e r , E x e c u t i v e D i r e c t o r o f t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a -t i o n p r o p o s i n g t h a t t h e g o v e r n m e n t s h o u l d i m m e d i a t e l y i n c r e a s e i t s w i t h h o l d i n g t a x f r o m 10% t o 15% o n f i l m r e v e n u e s e x p o r t e d o u t o f t h e c o u n t r y . The r e a s o n t h i s i s n o t a v a l i d f i l m p o l i c y p r o p o s a l f o r C a n a d a i s p o i n t e d o u t by Mr. P e t e r s o n h i m s e l f . I n d i c a t i n g t h a t t h i s a r g u m e n t h a d o f t e n b e e n s t a t e d e l s e w h e r e , he s t a t e d i n h i s l e t t e r t h a t "we r e a l i z e s u c h i n c r e a s e d r e v e n u e s c o u l d n o t come d i r e c t l y b a c k i n t o t h e 33 C a n a d i a n f i l m i n d u s t r y . . . " . F u r t h e r m o r e as was p o i n t e d o u t t o t h e C o u n c i l b y Mr. S p e n c e r i n h i s r e p l y i n g l e t t e r o f May 9, 1 9 7 4 , t h i s i s p r i m a r i l y a m a t t e r o f t h e D e p a r t m e n t o f F i n a n c e . I t h a s t o " b a l a n c e a number o f f a c t o r s h a v i n g n o t h i n g t o do w i t h t h e C a n a d i a n f i l m i n d u s t r y i n d e a l i n g w i t h t h e U n i t e d S t a t e s , w i t h w h i c h c o u n t r y we h a v e a r e c i p r o c a l t a x a g r e e m e n t " . Mr. S p e n c e r a l s o p o i n t e d o u t t h a t C a n a d i a n - o w n e d d i s t r i b u t i o n c o m p a n i e s w h i c h i m p o r t f o r e i g n f i l m a r e n o t i n f a v o u r o f t h i s i n c r e a s e b e c a u s e " t h e f o r e i g n s u p p l i e r s u s u a l l y i n s i s t o n t h e C a n a d i a n d i s t r i b u t o r a d d i n g t h e amount o f t h e t a x t o t h e 35 s a l e p r i c e o f t h e f i l m " . D. F i l m M a r k e t i n g B o a r d A number o f p r o p o s a l s h a v e b e e n p u t f o r t h r e c o m m e n d i n g t h a t a C a n a d i a n f i l m m a r k e t i n g b o a r d be e s t a b l i s h e d t o . p r o m o t e - 112 -an d d e a l i n t h e d i s t r i b u t i o n o f C a n a d i a n f i l m s i n i n t e r n a t i o n a l m a r k e t s . One o f t h e d u t i e s o f t h e f i l m m a r k e t i n g b o a r d w o u l d be t o i n s u r e t h e p r o p e r p r o m o t i o n a nd m a r k e t i n g o f a l l C a n a d i a n - . 36 f e a t u r e s . T h i s i s s u r e l y an u n n e c e s s a r y and u s e l e s s e x p e n s e i f t h e f i l m h a s an i n t e r n a t i o n a l a u d i e n c e a p p e a l . I t h a s a l r e a d y b e e n s u g g e s t e d t h a t C a n a d i a n f e a t u r e f i l m s be p r o d u c e d f o r b o t h C a n a d i a n a n d i n t e r n a t i o n a l a u d i e n c e s . E. P u r c h a s e o f an E x i s t i n g C h a i n I n o r d e r t o i n s u r e t h a t C a n a d i a n f i l m s be shown o n t h e a t r e s c r e e n s i n C a n a d a , i t h a s b e e n s u g g e s t e d t h a t t h e g o v e r n m e n t p u r c h a s e e i t h e r Famous P l a y e r s L t d . o r Odeon T h e a t r e s 37 (Canada) L t d . T h i s p r o p o s a l makes o n l y l i t t l e more s e n s e t h a n t h e CFDC's a n n o u n c e m e n t i n May o f 1971 t h a t i t was c o n s i d e r i n g s e t t i n g up i t s own m o v i e c h a i n t o show C a n a d i a n f i l m s i n com-3 8 p e t i t i o n w i t h t h e two m a j o r c h a i n s . F o r t u n a t e l y i t was a n n o u n c e d i n F e b r u a r y 1975 b y Des L o f t u s , M e d i a O f f i c e r o f t h e S e c r e t a r y o f S t a t e ' s d e p a r t m e n t t h a t t h e f e d e r a l g o v e r n m e n t d e f i n i t e l y was " n o t i n t e r e s t e d " 39 • i n . b u y i n g Famous P l a y e r s . H owever s i n c e t h e t a l k s h a v e b e e n g o i n g on i n New Y o r k a b o u t t h e p o s s i b i l i t y o f O t t a w a p u r c h a s i n g Famous P l a y e r s " t h e c o n c l u s i o n i s t h a t t h e A m e r i c a n s — w h o 40 own 50.8% o f t h e C a n a d i a n t h e a t r e c h a i n — s a i d no t o any d e a l " . I n November o f 1974, Odeon T h e a t r e s ' C h r i s S a l m o n - 113 -was q u o t e d a s s a y i n g " i f t h e g o v e r n m e n t i s w i l l i n g t o buy Odeon, i t ' s w e l c o m e t o i t . I w o u l d be p r e p a r e d t o recommend 41 t h e s a l e t o my B o a r d o f D i r e c t o r s " . A g a i n , f o r t u n a t e l y , no a c t i o n h a s b e e n t a k e n i n t h i s r e g a r d . - 114 -FOOTNOTES CHAPTER V I 1 K e l l y , o p . c i t . , p . 4 . 2 e s t u r d a j ^ ^ ^ ^ ; ^ . ^ ™ « ! - be S u b s i d i z e d ? " 3 K e l l y , o p . c i t . , p. 5. T h S _ J 2 ^ " , 5 C n e ? U f S 2 7 , 1 | f I . a t F ° r e i 9 n P i l m S u b s i d i e s " ' 5 I b i d . 6 D r a b i n s k y , o p . c i t . , p. 129. 7 The J o u r n a l , o p. c i t . , p. 6. 8 P!an ?" m e ^ S l ? ^ ^ ' ^ S P ° U ^ * * * 9 I b i d . I b i d . 1 1 "The J o u r n a l L o o k s a t F o r e i g n F i l m S u b s i d i e s " , The J o u r n a l , J u n e , 1 9 6 7 , p. 7. 12 J o s e f S r y c k , "Where T h e r e i s L i f e T h e r e i s Hope — A n d I s r a e l F i l m s " The J o u r n a l , December, 1 9 7 0 , p . 9. 13 D r a b i n s k y , o p . c i t . , p. 1 3 3 . 14 E. Addy C o h e n , "The C a r e a n d F i n a n c i n g o f I s r a e l ' s F i l m I n d u s t r y " , The J o u r n a l , December, 1970, p. 7. I b i d . , p. 8. 16 D r a b i n s k y , o p . c i t . , p. 1 3 3 . - 115 -17 C o h e n , o p . c i t . , p. 8. 18 "The J o u r n a l L o o k s a t F o r e i g n F i l m S u b s i d i e s " , The J o u r n a l , J u n e , 1 9 67, p. 11. 19 r e p o r t e d i n C a n a d i a n News ( J a n u a r y 16 - J a n u a r y 31 1973) a t p . 957. 20 " D i r e c t i o n O n t a r i o ' s F i l m B r i e f " , C i n e m a C a n a d a , S e c o n d E d i t i o n , No. 7 ( A p r i l / M a y 1 9 7 3 ) , p . 70. 21 " P o l i c y S t a t e m e n t o n F e a t u r e F i l m s " , C i n e m a C a n a d a S e c o n d E d i t i o n , No. 12 ( F e b r u a r y / M a r c h 1 9 7 4 ) , p. 48. 22 " C o u n c i l o f C a n a d i a n F i l m m a k e r s " , C i n e m a C a n a d a , S e c o n d E d i t i o n , No. 14 ( J u n e / J u l y 1 9 7 4 ) , p. 64. 23 S p e n c e r , o p . c i t . / p. 9. 2 4 TU-A I b i d . 2 5 T , ., • " I b i d . 2 6 I b i d . 27 " P o l i c y S t a t e m e n t on F e a t u r e F i l m s " , C i n e m a C a n a d a , S e c o n d E d i t i o n , No. 12 ( F e b r u a r y / M a r c h 1 9 7 4 ) , p . 50. 2 8 T. I b i d . 29 I b i d . 30 Cox, " R o c c a ' s B i g F i g h t " , o p . c i t . , p. 2 3 . 31 _.. , I b i d . 32 " C o u n c i l o f C a n a d i a n F i l m m a k e r s " , C i n e m a C a n a d a , S e c o n d E d i t i o n , No. 14 ( J u n e / J u l y 1 9 7 4 ) , p. 64. 33 I b i d . - 116 -34 I b i d . , p. 65. 35 I b i d . 3 6 I b i d . , p. 64. 37 The Sun ( V a n c o u v e r ) , F e b r u a r y 13, 1975, p. 3 1 , c o l . 1. 3 8 The Sun ( V a n c o u v e r ) , May 7, 1 9 7 1 , p. 6, c o l . 1. 39 The Sun ( V a n c o u v e r ) , F e b r u a r y 1 3 , 1975, p. 3 1 , c o l . 3. 4 0 x w . . I b i d . 41 The Sun ( V a n c o u v e r ) , November 18, 1974, p. 19, c o l . 2. CHAPTER V I I SUMMARY AND CONCLUSIONS The p u r p o s e o f t h i s C h a p t e r i s t o p r e s e n t a summary o f t h e s t r u c t u r e a n d b e h a v i o u r o f t h e f e a t u r e f i l m i n d u s t r y i n C a n ada t o g e t h e r w i t h a summary o f t h e f e d e r a l g o v e r n m e n t ' s i m p a c t t h e r e o n . I t i s a l s o t h e i n t e n t i o n o f t h i s C h a p t e r t o s u m m a r i z e t h e c o n c l u s i o n s d r a w n i n C h a p t e r V c o n c e r n i n g t h e r o l e o f t h e f e d e r a l g o v e r n m e n t i n t h e i n d u s t r y a n d on t h e b a s i s o f t h e s e c o n c l u s i o n s , t o s u m m a r i z e t h e r e c o m m e n d a t i o n s o f f e r e d i n C h a p t e r s V and V I . As t h e s t u d y was an i n t r o d u c t i o n t o t h e C a n a d i a n f i l m i n d u s t r y , a r e a s o f p o s s i b l e f u r t h e r r e s e a r c h a r e a l s o p r e s e n t e d . SUMMARY AND CONCLUSIONS C o n c e p t u a l l y , t h e C a n a d i a n f e a t u r e f i l m i n d u s t r y h a s t h r e e m a i n b r a n c h e s : p r o d u c t i o n , d i s t r i b u t i o n a n d e x h i b i t i o n . Y e t a C a n a d i a n i n d u s t r y , as s u c h , d o e s n o t e x i s t . - 117 -- 118 -C a n a d i a n f e a t u r e f i l m s f o r t h e a t r i c a l p r e s e n t a t i o n a r e made e i t h e r by t h e N.F.B. o r i n d e p e n d e n t p r o d u c e r s . P r i o r t o 1968, t h e r e was no p r o d u c t i o n b e i n g c a r r i e d on a n d s i n c e t h a t p o i n t i n t i m e , C a n a d i a n f e a t u r e s h a v e b e e n p r o d u c e d b u t n o t i n numbers s u f f i c i e n t t o s u p p o r t a n i n d u s t r y . T o d a y , a t m o s t o n l y 5% o f t h e f i l m s shown o n C a n a d i a n s c r e e n s a r e p r o d u c e d i n C a n a d a . The l a r g e s t s i n g l e c o n t r i b u t o r o f f i l m s shown i n t h i s c o u n t r y i s t h e U n i t e d S t a t e s . I n t h e d i s t r i b u t i o n s e c t o r o f t h e i n d u s t r y , t h e r e a r e r o u g h l y 55 f i r m s p r o m o t i n g f i l m s i n C a n a d a . On t h e a v e r -a g e , i n e x c e s s o f 80% o f t h e t o t a l t h e a t r i c a l f i l m r e n t a l o f r o u g h l y $55 m i l l i o n i s p a i d t o e i g h t A m e r i c a n d i s t r i b u t i o n c o m p a n i e s t h r o u g h t h e i r C a n a d i a n d i s t r i b u t i o n a r m s . T o d a y C a n a d a i s t h e l a r g e s t f o r e i g n m a r k e t i n t h e w o r l d f o r A m e r i c a n f i l m s . The r e m a i n i n g d i s t r i b u t i o n c o m p a n i e s a r e i n d e p e n d e n t , t h a t i s , C a n a d i a n , a n d a r e l e f t t o d i v i d e t h e l e s s t h a n 20% o f t h e r e m a i n i n g f i l m r e n t a l s b e t w e e n them* I n t h e e x h i b i t i o n b r a n c h o f t h e i n d u s t r y , t h e r e a r e a p p r o x i m a t e l y 1,100 t h e a t r e s a n d 350 d r i v e - i n s whose t o t a l g r o s s b o x o f f i c e r e c e i p t s e x c e e d s $200 m i l l i o n a n n u a l l y . Of t h e s e , a p p r o x i m a t e l y 530 a r e owned o r c o n t r o l l e d b y two t h e a t r e c h a i n s : Famous P l a y e r s L t d . a n d Odeon T h e a t r e s (Canada) L t d . W h i l e t h i s i s w e l l u n d e r 30% o f t t f e t o t a l t h e a t r e s i n C a n a d a , t h e s e two c o m p a n i e s b e t w e e n them a c c o u n t f o r a p p r o x i m a t e l y 65% o f C a n a d a ' s t o t a l b o x o f f i c e r e c e i p t s . - 119 -The r e m a i n i n g 70% o f C a n a d a ' s t h e a t r e s c r e e n s a r e owned o r c o n t r o l l e d e i t h e r by i n d e p e n d e n t s o r by t h e s m a l l e r i n d e p e n -d e n t t h e a t r e c h a i n s . The m a j o r i t y o f t h e a t r e s u n d e r t h e c o n t r o l o f Famous P l a y e r s a n d Odeon a r e t h e l a r g e r f i r s t r u n t h e a t r e s l o c a t e d i n t h e m a j o r c e n t e r s o f C a n a d a w h i l e t h o s e owned o r c o n t r o l l e d b y t h e i n d e p e n d e n t s a r e s i t u a t e d i n t h e s u b u r b s a n d s m a l l e r C a n a d i a n c o m m u n i t i e s . C o n t r o l o f t h e l a r g e r f i r s t r u n t h e a t r e s h a s g i v e n Famous P l a y e r s and Odeon c o n s i d e r a b l e b a r g a i n i n g p ower w h i c h i s f e l t t h r o u g h o u t t h e i n d u s t r y . I n t h e e x h i b i -t i o n s e c t o r , t h e s m a l l i n d e p e n d e n t c h a i n s a n d i n d e p e n d e n t t h e a t r e o w n e r s a r e r e l e g a t e d t o p l a y i n g s u b s e q u e n t r u n s a n d s i n c e f i l m r e v e n u e s a r e t i e d t o t h e l i f e o f t h e f i l m , t h e i r p o t e n t i a l p r o f i t i s t h e r e b y p r e d e t e r m i n e d . T h r o u g h b l o c k b o o k i n g a r r a n g e m e n t s w i t h t h e m a j o r d i s t r i b u t o r s , i n d e p e n d e n t t h e a t r e o w n e r s a r e f u r t h e r f r u s t r a t e d b y b e i n g d e n i e d new p r o d u c t f o r s h o w i n g on t h e i r s c r e e n s . S m a l l i n d e p e n d e n t d i s t r i b u t o r s a r e p u t a t a d i s a d v a n t a g e b e c a u s e t h e y h a v e now b e e n d e n i e d a c c e s s t o t h e p r o f i t a b l e f i r s t r u n t h e a t r e s c r e e n s . . W i t h o u t a c c e s s t o t h e p r o f i t a b l e d i s t r i b u t i o n a n d e x h i b i t i o n o u t l e t s , i n v e s t o r s a r e r e l u c t a n t t o p l a c e f u n d s i n t h e p r o d u c t i o n o f C a n a d i a n f e a t u r e f i l m s a n d C a n a d i a n p r o d u c e r s go w a n t i n g . E v e n i f a d i s t r i b u t i o n a g r e e m e n t c o u l d be g u a r a n t e e d f o r a C a n a d i a n f e a t u r e w i t h one o f t h e m a j o r s , i t s p o t e n t i a l - 120 -p r o f i t i s e a s i l y m a n i p u l a t e d a c c o r d i n g t o t h e p l a y d a t e a n d l o c a t i o n i t i s a s s i g n e d i n t h e b o o k i n g s c h e d u l e o f Famous. P l a y e r s o r Odeon. One a l t e r n a t i v e t o t h e i n d e p e n d e n t p r o d u c e r a n d / o r d i s t r i b u t o r i s t o r e n t a number o f t h e a t r e s h i m s e l f a n d " f o u r - w a l l " h i s f i l m . The p r o b l e m , h o w e v e r , i s t h e h i g h r i s k f a c t o r i n v o l v e d . I n c r e a s e d c o s t s a r e i n c u r r e d f o r t h e number o f p r i n t s r e q u i r e d a n d t h e a d v e r t i s i n g e x p e n s e i s s u b -s t a n t i a l . , S i n c e t h e s i t u a t i o n h a s e x i s t e d i n t h e i n d u s t r y f o r d e c a d e s a nd t h e m a j o r s ' p o s i t i o n h a s , i f a n y t h i n g , become s t r o n g e r i n r e c e n t t i m e s , i t i s u n r e a s o n a b l e t o e x p e c t o r d i -n a r y m a r k e t c o n d i t i o n s t o a l t e r t h e o l i g o p o l y j u s t d e s c r i b e d . The r e c o u r s e t h e n i s t o g o v e r n m e n t i n t e r v e n t i o n . The g o v e r n m e n t ' s i m p a c t o n t h e i n d u s t r y , h o w e v e r , h a s n o t b e e n s i g n i f i c a n t . P a r t o f t h e p r o b l e m i s b e c a u s e t h e f o c u s h a s b e e n on t h e p r o d u c t i o n s e c t o r o f t h e i n d u s t r y a n d u n t i l p r o p e r a t t e n t i o n i s p a i d t o t h e d i s t r i b u t i o n a n d e x h i b i t i o n o f C a n a d i a n f e a t u r e f i l m s , t h e r e w i l l n o t be a C a n a d i a n f i l m i n d u s t r y . T h e r e h a s a l s o b e e n a p r o b l e m w i t h some o f t h e p r o d u c t i o n i n c e n t i v e s i m p l e m e n t e d b y t h e g o v e r n m e n t . I n 1968, t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n was e s t a b l i s h e d t o p r o m o t e a n d d e v e l o p t h e f e a t u r e f i l m i n d u s t r y i n C a n a d a . And w h i l e a p p r o x i m a t e l y 160 f e a t u r e s h a v e b e e n p r o d u c e d w i t h CFDC a s s i s t a n c e s i n c e i t s i n c o r p o r a t i o n a n d a t t e m p t s h a v e b e e n made o f l a t e t o i n c r e a s e t h e q u a l i t y - 121 -o f i t s p r o d u c t , t h e f a c t r e m a i n s t h a t C a n a d i a n f i l m s do n o t a t t r a c t a mass a u d i e n c e e i t h e r i n C a n a d a o r a b r o a d as i s e v i d e n c e d by t h e r e l a t i v e l y l o w b o x o f f i c e g r o s s e s , and c o n s e q u e n t l y , f e w h a v e r e t u r n e d a p r o f i t t o t h e i r i n v e s t o r s . T h i s i s e s p e c i a l l y t r u e i f we c o n s i d e r o n l y t h e i r C a n a d i a n bo x o f f i c e g r o s s e s . As a r e s u l t , p r i v a t e s e c t o r i n v e s t m e n t i n t h e C a n a d i a n f i l m i n d u s t r y h a s b e e n n o m i n a l . N o r w i l l C a n a d a ' s p r e s e n t t a x i n c e n t i v e s i n c r e a s e t h e p u b l i c s e c t o r i n v e s t m e n t , i t was c o n c l u d e d . F o r e i g n f i l m s q u a l i f y f o r a 60% c a p i t a l c o s t a l l o w a n c e w h i l e C a n a d i a n f e a t u r e f i l m s q u a l i f y f o r a 100% w r i t e o f f . Y e t f u n d s c o n -t i n u e d t o f l o w t o f o r e i g n p r o d u c t i o n s l e a d i n g t o t h e c o n c l u s i o n t h a t i n v e s t o r s p l a c e money i n f i l m v e n t u r e s p r i m a r i l y b e c a u s e o f t h e r e t u r n and n o t s i m p l y b e c a u s e o f t h e t a x s a v i n g . F u r t h e r , i t was s u g g e s t e d t h a t b e c a u s e o f t h e o n e r o u s d e f i -n i t i o n o f a " C a n a d i a n f i l m " t h a t m u s t be c o m p l i e d w i t h i n o r d e r t o be e n t i t l e d t o t h e i n c r e a s e d w r i t e - o f f , t h e p o t e n t i a l a p p e a l d f t h e f i l m i s p r i m a r i l y t o t h e C a n a d i a n m a r k e t a n d f i l m i n v e s t o r s r e a l i z i n g t h a t C a n a d i a n f i l m s do n o t r e t u r n a p r o f i t i f shown o n l y i n C a n a d a a r e u n w i l l i n g t o t a k e t h e r i s k . A n o t h e r d i s i n c e n t i v e as f o u n d i n t h e p r e s e n t C a n a d i a n t a x l a w s i s t h e D e p a r t m e n t o f N a t i o n a l R e v e n u e ' s p r o n o u n c e m e n t t h a t i t w i l l n o t . p e r m i t t h e l e v e r a g e d p o r t i o n o f a n i n v e s t m e n t t o be w r i t t e n o f f a g a i n s t ' o t h e r i n c o m e ' and t h e T a x a t i o n B o a r d ' s d e c i s i o n i n C u r r i e and t h e MNR d e n y i n g d e d u c t i b i l i t y - 1'22 -o f any p o r t i o n o f t h e i n v e s t m e n t i f i t c o u l d n o t r e a s o n a b l y e x p e c t i t t o r e t u r n a p r o f i t . W h i l e c o - p r o d u c t i o n a g r e e m e n t s may s e r v e t o d i s s o l v e some o f t h e p r o b l e m s b e s e t t i n g t h e p r o d u c t i o n s e c t o r o f t h e i n d u s t r y , i t i s s t i l l t o o e a r l y t o s a y . I n t h e d i s t r i b u t i o n and e x h i b i t i o n s e c t o r s o f t h e i n d u s t r y , v i r t u a l l y n o t h i n g t h e g o v e r n m e n t h a s done h a s h a d . a n i m p a c t o n e i t h e r t h e s t r u c -t u r e , b e h a v i o u r o r p e r f o r m a n c e t h e r e i n . I n t h e d i s t r i b u t i o n s e c t o r , w h i l e t h e CFDC was a t t e m p t i n g t o " p r o m o t e a f e a t u r e f i l m i n d u s t r y " , C a n a d a moved f r o m b e i n g t h e s i x t h m o s t i m p o r t a n t f o r e i g n m a r k e t f o r A m e r i c a n f i l m s t o b e i n g t h e l a r g e s t . D u r i n g t h e same p e r i o d , i n d i c a t i o n s a r e t h a t Famous P l a y e r s a n d Odeon h a v e s i m i l a r l y s t r e n g t h e n e d t h e i r p o s i t i o n s i n t h e e x h i b i t i o n s e c t o r . W h i l e an i n q u i r y h a s b e e n l a u n c h e d i n t o t h e i n d u s t r y ' s t r a d e p r a c t i c e s , how l o n g and t o w h a t s t a g e t h i s i n v e s t i g a t i o n p r o c e e d s , r e m a i n s t o be s e e n . The l a s t s u c h i n v e s t i g a t i o n r e s u l t e d i n an a c q u i t t a l o f a l l C o - a c c u s e d i n t h e O n t a r i o C o u r t o f A p p e a l . P u r s u a n t t o a v o l u n t a r y q u o t a b e t w e e n Famous P l a y e r s a n d Odeon and t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n , C a n a d i a n f i l m s a r e now b e i n g shown t h r o u g h o u t C a n a d a b u t o n l y , i t w o u l d a p p e a r , i n an a p p a r e n t a t t e m p t t o a v o i d a l e g i s l a t e d q u o t a and t h u s e a r l y i n d i c a t i o n s a r e t h a t t h e b a r e minimum o f t h e a g r e e m e n t i s b e i n g a d h e r e d t o . - 123 - \ B o t h t h e C a n a d i a n B u s i n e s s C o r p o r a t i o n s a n d t h e F o r e i g n I n v e s t m e n t R e v i e w A c t s h a v e b e e n e q u a l l y d i s a p p o i n t i n g i n t h e i r f a i l u r e t o r e s o l v e t h e f o r e i g n o w n e r s h i p i s s u e i n t h e i n d u s t r y . I n f a c t , f e w o f t h e g o v e r n m e n t ' s p o l i c i e s h a v e h a d much o f an e f f e c t i n p r o m o t i n g a C a n a d i a n f e a t u r e f i l m i n d u s t r y . I f s u c h i s t r u l y t h e i r a i m , some o f t h e f o l l o w i n g r e c o m m e n d a t i o n s m i g h t be c o n s i d e r e d . RECOMMENDATIONS U s i n g as a c r i t e r i a t h e f a c t t h a t t h e f i l m i n d u s t r y i s a b u s i n e s s , t h e f i r s t r e c o m m e n d a t i o n i s t h a t t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n be e x p e c t e d t o r e t u r n a p r o f i t . The C o r p o r a t i o n b o a s t s a 32% r e t u r n on i t s i n v e s t m e n t s f o r t h e l a s t two y e a r s . Y e t t h e p r o b l e m r e m a i n s t h a t a f t e r two y e a r s , 90% o f a f i l m ' s t o t a l r e n t a l r e v e n u e h a s b e e n r e t u r n e d . I n e f f e c t t h e n , t h e 32% r e t u r n h a s b e e n e a r n e d b u t t h e r e i s l i t t l e l i k e l i h o o d o f e v e r r e c o u p i n g t h e a p p r o x i m a t e l y $17 m i l l i o n t h a t was o r i g i n a l l y i n v e s t e d . I n t h i s r e g a r d , c o n -s i d e r a t i o n m i g h t be g i v e n t o t u r n i n g t h e CFDC i n t o a bank as o p p o s e d t o a p a r t i c i p a n t i n t h e p r o d u c t i o n o f f i l m s . I t i s a l s o s t r o n g l y recommended t h a t a l e v y , p r e f -e r a b l y a l o n g t h e l i n e s o f t h e Ead y P l a n i n t h e U n i t e d K i n g d o m , be i m p l e m e n t e d . T h i s w o u l d h a v e t h e a d v a n t a g e o f n o t o n l y h a l t i n g t h e f l o w o f C a n a d i a n s o u r c e f u n d s t o f o r e i g n c o n t r o l l e d c o r p o r a t i o n s , i t w o u l d a l s o make a v a i l a b l e f o r C a n a d i a n - 124 -p r o d u c e r s a s o u r c e o f f u n d s w h i c h i s p r e s e n t l y b e i n g s u p p l i e d b y t h e C a n a d i a n t a x p a y e r t h r o u g h t h e CFDC. The i m p o s i t i o n o f a l e v y w o u l d a l s o e n c o u r a g e p r i v a t e s e c t o r i n v e s t m e n t i n C a n a d i a n f i l m s as t h e p r o d u c e r s ' p o t e n t i a l r e t u r n w o u l d be e n h a n c e d . I t i s a l s o f o r e s e e n a s a f u r t h e r c o n s e q u e n c e t h a t t h e f u n d s p r e s e n t l y f l o w i n g t o f o r e i g n p r o d u c t i o n s , l e s s e r t a x a d v a n t a g e s n o t w i t h s t a n d i n g , w o u l d now r e m a i n i n C a n a d a i n o r d e r t o t a k e a d v a n t a g e o f t h e g r e a t e r c a p i t a l c o s t a l l o w -a n c e p e r m i t t e d " C a n a d i a n " f i l m s . F o r t h e c r i t i c s who w o u l d a r g u e t h a t we m u s t c o n t a i n , i n o u r f i l m s , t h e C a n a d i a n c u l t u r e , e v e n t h o u g h t h e s e f i l m s may n o t be as p o t e n t i a l l y p r o f i t a b l e a s t h e mass a p p e a l p i c -t u r e , c r i t e r i a f o r p a r t i c i p a t i o n i n t h e l e v y p l a n c o u l d ^ b e b a s e d o n t h a t o f Sweden, w h e r e b y a c e r t a i n p e r c e n t a g e o f t h e l e v y c o u l d be u s e d f o r p r i z e s f o r " q u a l i t y " f i l m s a n d a f u r t h e r p e r c e n t a g e u s e d t o o f f s e t any l o s s e s w h i c h m i g h t be i n c u r r e d b y t h e s e f i l m s . The d a y i s e n v i s a g e d when t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n w o u l d be e n g a g e d p r i m a r i l y i n s u c h p r o d u c t i o n s and t h e . p r i v a t e s e c t o r be e n g a g e d p r i m a r i l y i n t h e p r o d u c t i o n o f mass a p p e a l f e a t u r e s . To f u r t h e r p r o m o t e p r o d u c t i o n i n C a n a d a , t h e f e d e r a l g o v e r n m e n t i s e n c o u r a g e d t o n e g o t i a t e f u r t h e r c o - p r o d u c t i o n a g r e e m e n t s . N o t o n l y do t h e y i n c r e a s e t h e p o t e n t i a l s o u r c e s o f f i n a n a c i n g , t h e y a l s o make a v a i l a b l e t h e a d v a n t a g e s o f w h a t e v e r s u b s i d i e s t h e cO-p r o d u c i n g n a t i o n h a s i m p o s e d , be t h e y q u o t a s , d i s t r i b u t i o n - 125 -g u a r a n t e e s o r a l e v y w h e r e b y t h e f i l m p a r t i c i p a t e s i n t h e c o u n t r y ' s t o t a l b o x o f f i c e g r o s s . I t m u s t a l s o be r e c o g n i z e d t h a t C a n a d a h a s o n l y r e c e n t l y e n t e r e d i n t o f i l m p r o d u c t i o n , a n d i t i s t h e r e f o r e recommended t h a t s t e p s be t a k e n t o a t t r a c t f o r e i g n p r o d u c t i o n s t o t h i s c o u n t r y . They n o t o n l y p r o v i d e a d d i t i o n a l s o u r c e s o f e m p l o y m e n t f o r t h o s e now w o r k i n g i n t h e C a n a d i a n f i l m i n d u s t r y a n d , a t t h e same t i m e , p r o v i d e t h o s e new t o t h e i n d u s t r y w i t h t h e p r a c t i c a l means o f l e a r n i n g t h e i r t r a d e , t h e y a l s o h a v e t h e a d d e d a d v a n t a g e o f i n j e c t i n g l a r g e amounts o f c a p i t a l i n t o t h e C a n a d i a n economy g e n e r a l l y . A l e g i s l a t e d q u o t a w h e r e b y a c e r t a i n number o f d a y s o r weeks a r e s e t a s i d e f o r t h e s h o w i n g o f C a n a d i a n f i l m s i s n o t recommended, h o w e v e r , t h e s u g g e s t i o n b e i n g t h a t t h e CFDC r e m a i n w i t h t h e p r e s e n t a g r e e m e n t b e t w e e n Famous P l a y e r s a n d Odeon a n d i n s t e a d d i r e c t t h e i r e f f o r t s t o w a r d t h e p r o p e r p r o m o t i o n and d i s t r i b u t i o n o f C a n a d i a n f i l m s . S h o u l d c i r c u m -s t a n c e s w a r r a n t a n i n c r e a s e i n t h e number o f d a y s r e q u i r e d f o r s h o w i n g C a n a d i a n f i l m s , t h e n r e n e g o t i a t i o n o f t h e p r e s e n t a g r e e m e n t i s t h e recommended c o u r s e o f a c t i o n . W i t h a l i m i t e d o u t p u t o f f e a t u r e f i l m s p e r y e a r , i t i s recommended t h a t n o t o n l y Famous P l a y e r s a n d Odeon and t h e m a j o r d i s t r i b u t o r s be r e q u i r e d t o a c t i v e l y p r o m o t e C a n a d i a n f i l m s b u t t h a t t h e CFDC a l s o become i n v o l v e d f o r t h o s e t h a t i t a s s i s t s i n p r o d u c i n g . - 126 -W h i l e t h e s e r e c o m m e n d a t i o n s may n o t b e f a r r e a c h i n g , t h e y a r e b a s e d i n two r e a l i t i e s : 1. t h a t C a n a d a ' s f i l m i n -d u s t r y i s s t i l l i n i t s i n f a n c y a n d t h a t any s t e p s t a k e n t o d e v e l o p i t m u s t be c a u t i o u s a n d , a t f i r s t , f e w a n d ; 2. t h a t a t t h i s s t a g e i n t h e d e v e l o p m e n t a n d s t u d y o f t h e C a n a d i a n f e a t u r e f i l m i n d u s t r y , we s i m p l y do n o t h a v e e n o u g h i n f o r m a -t i o n o r f a c t s o n w h i c h t o make f u r t h e r r e c o m m e n d a t i o n s . T h r o u g h o u t t h i s s t u d y , i n f e r e n c e s h a v e h a d t o be drawn and c o n c l u s i o n s b a s e d on s e c o n d a r y s o u r c e s o f d a t a s i m p l y b e c a u s e p r i m a r y d a t a was n o t o b t a i n a b l e , e i t h e r t h r o u g h t h e g o v e r n m e n t a g e n c i e s o r t h e i n d u s t r y . T h e r e f o r e , i t i s recommended t h a t S t a t i s t i c s C a n a d a i n i t s a n n u a l q u e s t i o n n a i r e , o b t a i n a n d p r e s e n t d a t a on t h e i n d u s t r y a c c o r d i n g t o t h e p r i n c i p a l c o m p a n i e s i n v o l v e d i n c l u d i n g , b u t n o t n e c e s s a r i l y l i m i t e d t o , Famous P l a y e r s a n d Odeon a n d t h e m a j o r d i s t r i b u t o r s . A. A r e a s o f F u r t h e r S t u d y As a n i n t r o d u c t o r y s t u d y , one o f t h e m a i n p u r p o s e s o f t h e s t u d y was t o p o i n t o u t a r e a s o f f u r t h e r r e s e a r c h , t h e f i r s t o f w h i c h w o u l d be a d e t a i l e d s t u d y o f t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n . The C a n a d i a n t a x p a y e r s t h r o u g h t h e f e d e r a l g o v e r n m e n t h a v e now c o m m i t t e d $25 m i l l i o n t o t h e p r o m o t i o n o f a f e a t u r e f i l m i n d u s t r y a n d i n d i c a t i o n s a r e t h a t w i t h t h e CFDC's p r e o c c u p a t i o n w i t h p r o d u c t i o n , u n t i l e f f o r t s a r e made t o l o o k a t t h e m a r k e t i n g o f f e a t u r e f i l m s , we w i l l •not h a v e a C a n a d i a n f e a t u r e f i l m i n d u s t r y . I t i s s u g g e s t e d - 127 -t h a t i t i s t i m e t o r e e v a l u a t e t h e p u r p o s e a nd o b j e c t i v e s o f t h e C o r p o r a t i o n . The s e c o n d a n d e q u a l l y i m p o r t a n t r e c o m m e n d a t i o n i s t h a t a d e t a i l e d s t u d y be u n d e r t a k e n o f t h e r o l e p l a y e d by Famous P l a y e r s a n d Odeon i n t h e f i l m i n d u s t r y i n C a n a d a . W h i l e t h i s w o u l d n e c e s s i t a t e , ' i n s i d e ' i n f o r m a t i o n a n d , i n t u r n , a p o s s i b l e C o u r t O r d e r , i t i s a r g u e d t h a t b y t y i n g up t h e f i n a l m a r k e t o u t l e t f o r f i l m s t h a t t h e y h a v e g a i n e d de f a c t o c o n t r o l o f t h e C a n a d i a n f i l m i n d u s t r y . I n t h i s r e g a r d , i t i s h o p e d t h a t t h e p r e s e n t i n v e s t i g a t i o n by t h e D i r e c t o r o f I n v e s t i g a t i o n a n d R e s e a r c h u n d e r t h e C o m b i n e s I n v e s t i g a t i o n  A c t a c h i e v e s t h i s e n d , a n d t h a t a t a minimum, t h e p r a c t i c e s o f c e n t r a l i z e d a n d b l o c k b o o k i n g as now p r a c t i c e d i n t h e i n d u s t r y by t h e m a j o r s w i l l c e a s e p u r s u a n t t o a n O r d e r p r o h i b i t i n g same. W h i l e i t i s d i f f i c u l t t o e n v i s i o n t h e m e t h o d o l o g y i n v o l v e d , i t i s a l s o s u g g e s t e d t h a t a s t u d y be u n d e r t a k e n t o d e t e r m i n e t h e i m p a c t o f t a x i n c e n t i v e s as an i n d u c e m e n t t o i n v e s t m e n t i n m o t i o n p i c t u r e p r o d u c t i o n i n C a n a d a . T h i s w o u l d b e p r i m a r i l y a s t u d y o f t h o s e i n t h e p r o f e s s i o n s a n d h i g h e r i n c o m e t a x b r a c k e t s . B e f o r e i n t r o d u c i n g a l e v y , i t i s s u g g e s t e d t h a t a f e a s i b i l i t y s t u d y be u n d e r t a k e n t o d e t e r m i n e t h e amount t o be r e t a i n e d b y t h e e x h i b i t o r s a n d t h e m e t h o d s a n d c r i t e r i a by w h i c h t h e f u n d s w o u l d b o t h be c o l l e c t e d a n d d i s t r i b u t e d t o t h e p r o d u c e r s o f C a n a d i a n f i l m s . A s p a r t o f t h i s same - 128 -s t u d y , i t i s a n t i c i p a t e d t h a t r e s e a r c h be u n d e r t a k e n i n t o d e t e r m i n i n g w h e t h e r o r n o t a c o r p o r a t i o n s u c h as C e n f i l c o o f I s r a e l be e s t a b l i s h e d i n C a n a d a f o r t h e p u r p o s e o f a t t r a c t i n g f o r e i g n p r o d u c t i o n s a n d f u r t h e r , a t w h a t l e v e l : f e d e r a l o r p r o v i n c i a l . The p o i n t b e i n g t h a t c o m p e t i t i o n b e t w e e n t h e P r o v i n c e s may i n c r e a s e t h e number o f f o r e i g n p r o d u c t i o n s c a r r i e d on i n t h i s c o u n t r y , e a c h P r o v i n c e o f f e r i n g g r e a t e r i n d u c e m e n t s t o f o r e i g n p r o d u c e r s . T h e s e a r e b u t t h e m a j o r a r e a s o f f u r t h e r r e s e a r c h i n t o t h e m o t i o n p i c t u r e i n d u s t r y i n C a n a d a . S h o u l d a s u b s e -q u e n t s t u d y be done on any one o f t h e s e a r e a s o r any o f t h e o t h e r p r o b l e m a r e a s p o i n t e d o u t i n t h i s s t u d y o r f u r t h e r , i f a f u t u r e a u t h o r s h o u l d a v a i l h i m s e l f o f t h e i n f o r m a t i o n o r c o n c e p t s c o l l e c t e d i n t h i s s t u d y , t h e n i t w i l l h a v e s e r v e d i t s p u r p o s e . - 129 -BIBLIOGRAPHY BOOKS Adams, W a l t e r (ed.) The S t r u c t u r e o f A m e r i c a n I n d u s t r y . 3 r d e d . Hew Y o r k : M a c m i l l a n Co., 1 9 6 1 . B a u m g a r t e n , P a u l A., and D o n a l d C. F a r b e r . P r o d u c i n g , F i n a n c i n g  a n d D i s t r i b u t i n g F i l m . New Y o r k : Drama Book S p e c i a l -i s t s / P u b l i s h e r s , 1 9 7 3 . B e a t t i e , E l e a n o r . A Handbook o f C a n a d i a n F i l m . T o r o n t o : P e t e r M a r t i n A s s o c i a t e s L i m i t e d , 1 9 7 3 . B e t t s , E r n e s t . The F i l m B u s i n e s s : A H i s t o r y o f B r i t i s h C i n e m a  1 8 9 6 - 1 9 7 2 . L o n d o n : G e o r g e A l l e n & U n w i n L t d . , 1 9 7 3 . B l u e m , W i l l i a m A. a n d J a s o n E. S q u i r e ( e d s ) . The M o v i e B u s i n e s s : A m e r i c a n F i l m I n d u s t r y P r a c t i c e . New Y o r k : H a s t i n g s H o u s e , P u b l i s h e r s , I n c . , 1972. B u t l e r , I v a n . The M a k i n g o f F e a t u r e F i l m s — A G u i d e . U n i t e d K i n g d o m : P e n g u i n B o o k s L t d . , 1 9 7 3 . C a n a d a , Consumer and C o r p o r a t e A f f a i r s , P r o p o s a l s f o r a New  C o m p e t i t i o n P o l i c y f o r C a n a d a : F i r s t S t a g e . O t t a w a : Queen's P r i n t e r , 1973 C a n a d i a n F e d e r a t i o n o f F i l m S o c i e t i e s . I n d e x o f 16mm & 35mm  F e a t u r e L e n g t h F i l m A v a i l a b l e I n C a nada 1976. T o r o n t o : Go G r a p h i c L t d . 1976. C a v e s , R i c h a r d . A m e r i c a n I n d u s t r y : S t r u c t u r e , C o n d u c t , P e r - f o r m a n c e . E n g l e w o o d C l i f f s , New J e r s e y , 1972. C h e s l e y , S t e p h e n . The B u s i n e s s o f F i l m . T o r o n t o : C i n e m a C a n a d a M a g a z i n e F o u n d a t i o n , 1975. C o n a n t , M i c h a e l . A n t i t r u s t i n t h e M o t i o n P i c t u r e I n d u s t r y . B e r k e l e y : U n i v e r s i t y o f C a l i f o r n i a P r e s s , - 1960. D r a b i n s k y , G a r t h H. M o t i o n P i c t u r e s and t h e A r t s i n C a n a d a . T o r o n t o : M c G r a w - H i l l R y e r s o n L i m i t e d , 1976. F a d i m a n , W i l l i a m . H o l l y w o o d Now. New Y o r k : L i v e r i g h t , 1972. G o s s e , R i c h a r d . The Law on C o m p e t i t i o n I n C a n a d a . T o r o n t o : The C a r s w e l l Company L i m i t e d , 1962. G r o v e r , W a r r e n . C a s e b o o k on t h e R e g u l a t i o n o f C o m p e t i t i o n . V a n c o u v e r , 1970. - 130 -H u e t t i g , Mae D. E c o n o m i c C o n t r o l o f t h e M o t i o n P i c t u r e I n d u s t r y . P h i l a d e l p h i a : U n i v e r s i t y o f P e n n s y l v a n i a P r e s s , 1944. J a r v i e , I . C. M o v i e s a n d S o c i e t y . New Y o r k : B a s i c B o o k s , I n c . 1 9 7 0 . K e l l y , T e r e n c e . A C o m p e t i t i v e C i n e m a . L o n d o n : The I n s t i t u t e o f E c o n o m i c A f f a i r s , 1 966. L a n g f o r d , J . A. C a n a d i a n F o r e i g n I n v e s t m e n t C o n t r o l s . Don M i l l s , O n t . : CCH C a n a d i a n L i m i t e d , 1 974. Law S o c i e t y o f U p p e r C a n a d a . T r a d e C o m p e t i t i o n . S p e c i a l L e c t u r e s , 1 9 6 3 . T o r o n t o : R i c h a r d De Boo L i m i t e d , 1 963. M a y e r , M i c h a e l F. The F i l m I n d u s t r i e s . New Y o r k : H a s t i n g s House P u b l i s h e r s , I n c . , 1973. M i n u s , J o h n n y and W i l l i a m S t o r m H a l e . Y o u r I n t r o d u c t i o n t o F i l m , T.V., C o p y r i g h t , C o n t r a c t s a n d O t h e r Law. H o l l y w o o d : S e v e n A r t s P r e s s , I n c . 1973. -S h e p h e r d , W i l l i a m G. M a r k e t P o w e r a n d E c o n o m i c W e l f a r e : A n  I n t r o d u c t i o n . New Y o r k : Random H o u s e , 1970. S i l v e r , B a r r y (ed.) The C a n a d i a n F i l m D i g e s t 1975 Y e a r b o o k . T o r o n t o : G a r t h D r a b i n s k y , 1975. S p r a s s , J o h n . The D e c l i n e o f The C i n e m a : An E c o n o m i s t ' s  R e p o r t . L o n d o n : G e o r g e A l l e n & U n w i n L t d . , 1962. S t e r n , L o u i s W. a n d J o h n R. G r a b n e r , J r . C o m p e t i t i o n i n t h e M a r k e t p l a c e . G l e n v i e w : S c o t t , F o r e s m a n a n d Company, 1 9 7 0 . W a i n b e r , J . M. and Mark I . W a i n b e r g . G u i d e b o o k t o C a n a d a  B u s i n e s s C o r p o r a t i o n s A c t . Don M i l l s O n t a r i o : CCH C a n a d i a n L i m i t e d , 1975. W h i t e , P e t e r . M o t i o n P i c t u r e I n d u s t r y I n C a n a d a . O t t a w a : Queen's P r i n t e r , 1 9 3 1 . PERIODICALS AND ARTICLES C h e s l e y , S t e p h e n , " F i l m News: Random N o t e s " , C i n e m a C a n a d a , 3 r d e d . , No. 29 ( J u n e / J u l y 1 9 7 6 ) , 6-7. C o h e n , E. Addy. "The C a r e a nd F i n a n c i n g o f I s r a e l ' s . F i l m I n d u s t r y " , The J o u r n a l o f t h e P r o d u c e r s G u i l d o f A m e r i c a (December, 1 9 7 0 ) , 7-8. - 131 -Cox, K i r w i n . "The M a j o r s and t h e M a n d a r i n s : T h r o u g h t h e Y e a r s " , C i n e m a C a n a d a , 3 r d e d . , No. 22 ( O c t o b e r , 1 9 7 5 ) , \ 1 8 - 2 2 . Cox, K i r w i n . " R o c c a ' s B i g F i g h t " , C i n e m a C a n a d a , 3 r d e d . , No. 25 ( F e b r u a r y 1966), 22-26. D e l a n e y , M a r s h a l l , " M o v i e s : Y o u S h o u l d Know How Bad T h i s F i l m I s . A f t e r A l l You P a i d F o r I t " , S a t u r d a y N i g h t , ( S e p t e m b e r 1 9 7 5 ) , 8 3 - 8 5 . F a d i m a n , W i l l i a m . " S h o u l d A m e r i c a n F i l m s Be S u b s i d i z e d ? " S a t u r d a y R e v i e w ( A u g u s t 5, 1 9 6 7 ) , 1 4 - 1 7 . F o r r e s t e r , James. " C o u n c i l o f C a n a d i a n F i l m m a k e r s P r e s e n t s P e t i t i o n t o P a r l i a m e n t " , M o t i o n V o l . 5 No. 3 ( 1 9 7 6 ) , 6-7. G a t h e r c o l e , S a n d r a , "Combines I n v e s t i g a t i o n " , C i n e m a C a n a d a , 3 r d e d . , No. 26 ( M a r c h 1 9 7 6 ) , 10. R o l l e r , G e o r g e C s a b a . "Sydney Newman", C i n e m a C a n a d a , 2nd e d . , No. 15 ( A u g u s t / S e p t e m b e r , 1 9 7 4 ) , 42-46. M a y e r , M i c h a e l , " P r o b l e m s I n F i n a n c i n g F e a t u r e F i l m s " , The J o u r n a l o f t h e P r o d u c e r s G u i l d o f A m e r i c a ( J u n e 1 9 7 4 ) , 1-8. S c h n e e r , C h a r l e s H. " W i l l S u c c e s s S p o i l The Ead y P l a n ? " The J o u r n a l o f t h e P r o d u c e r s G u i l d o f A m e r i c a ( J u n e , 1967), 1 7 - 1 9 . S p e n c e r , M i c h a e l D. "Re: Q u o t a s f o r C a n a d i a n F i l m s i n C a n a d i a n M o t i o n P i c t u r e T h e a t r e s " , C i n e m a C a n a d a , 2nd e d . , No. 18 ( M a r c h / A p r i l , 1 9 7 5 ) , 8-12. S r y c k , J o s e f . "Where T h e r e I s L i f e T h e r e I s Hope--And I s r a e l F i l m s " The J o u r n a l o f t h e P r o d u c e r s G u i l d o f A m e r i c a (December, 1 9 7 0 ) , 9-11. T u r n e r , D. J o h n . " F i n a n c i a l T r e n d s I n T h e a t r i c a l P r o d u c t i o n 1 9 7 5 " , C i n e m a C a n a d a , 3 r d e d . , No. 26 (Ma r c h 1 9 7 6 ) , 41-43. " C a n a d i a n F i l m n e w s " , C i n e m a C a n a d a , 2nd e d . , No. 9 ( A u g u s t / S e p t e m b e r 1 9 7 3 ) , 6. " C o u n c i l o f C a n a d i a n F i l m m a k e r s " , C i n e m a C a n a d a , 2nd e d . , No. 14 ( J u n e / J u l y 1973) 64-6 5 . " D i r e c t i o n O n t a r i o ' s F i l m B r i e f " , C i n e m a C a n a d a , 2nd e d . , No. 7 ( A p r i l / M a y , 1 9 7 3 ) , 7 0 - 7 1 . - 132 -"The Journal Looks at Foreign Film Subsidies" The Journal of  the Producers Guild of America (June 1967), 1-11. "Policy Statement on Feature Films", Cinema Canada, 2nd ed.. No. 12 (February/March, 1974), 48-53. STATUTES CITED Canada Business Corporations Act S.C. 1974-75, Chap. 33. Canadian Film Development Corporation Act. 1966-67. c. 78. Combines Investigation Act. R.S., c. 314 as amended. Foreign Investment Reveiw Act S.C. 1973-74, c. 46. Income Tax Act S.C. 1970-71-72, c. 63 as amended. • CASES CITED Currie v. Minister of National Revenue (1975) 29 D.T.C. 57. Rex v. Famous Players (1932) O.R. 307 FU_ v. Howard Smith Paper M i l l s Ltd. (1957) S.C.R. 403. United States v. Paramount Pictures, 334 U.S. 131. OTHER SOURCES Canada, Department of Consumer and Corporate A f f a i r s . Report  of The Director of Investigation and Research: Combines  Investigation Act for the Year Ended March 31, 1975. Ottawa: Queen's Printer, 1975. Canada, Department of National Revenue. Interpretation B u l l e t i n  IT-164 (June 5, 1974). Ottawa: Queen's Pri n t e r , 1974. Canada, House of Commons, Committee on Broadcasting, Films and Assistance to the Arts, National Film Board, Hearing,  29th P a r l i a . , 2nd Session. Ottawa: Queen's Pr i n t e r , 1974. Canadian Cablesystems Limited The Fi n a n c i a l Post Corporation Service. Toronto: Maclean-Hunter Limited, 1973. - 133 -C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n , A n n u a l R e p o r t s : 1 9 68-69; 1969-70; 1 9 7 0 - 7 1 ; 1971-72; 1 9 7 2 - 7 3 ; 1 9 7 3 - 7 4 ; 1 9 7 4 - 7 5 . C a n a d i a n News ( O t t a w a ) , J a n u a r y 16, 1 975. F i n a n c i a l P o s t , J u n e 19, 1 9 7 1 . " M o t i o n P i c t u r e P r o d u c t i o n " S t a t i s t i c s C a n a d a A n n u a l C a t a l o g u e  6 3 - 2 0 6 : 1970; 1972; 1 9 7 3 ; 1974. " M o t i o n P i c t u r e T h e a t r e s a n d F i l m D i s t r i b u t o r s " S t a t i s t i c s C a n a d a A n n u a l C a t a l o g u e 6 3 - 2 0 7 : 1970; 1972; 1973; 1974. The P r o v i n c e ( V a n c o u v e r ) , F e b r u a r y 1 2 , 1974. The Sun ( V a n c o u v e r ) , December 4, 1975. The Sun ( V a n c o u v e r ) , December 6, 1974. The S u n ( V a n c o u v e r ) , November 2 0 , 1974. The Sun ( V a n c o u v e r ) , November 18, 1974. The S u n ( V a n c o u v e r ) , A p r i l 2 5 , 1974. The Sun ( V a n c o u v e r ) , May 7, 1 9 7 1 . The Sun ( V a n c o u v e r ) , F e b r u a r y 1 3 , 1 9 7 5 . - 134 -APPENDIX I GLOSSARY Over the years the f i l m industry has developed a vocabulary unique unto i t s e l f . Since i t has been impossible to discuss the industry without using many of these terms, abbreviations, and i n i t i a l s which w i l l occasionally be b a f f l i n g to the reader, the following glossary has been provided. While the d e f i n i -tions make no claims to exactitude, they are based and often quoted from p r i o r studies, the aim being to a s s i s t i n comparing the present report with others. Other than t h i s , the terms as defined are intended to convey the meanings i n which the terms are used i n this study. ANSWER PRINT - The f i r s t projection p r i n t of a newly completed f i l m . I t i s submitted by the laboratory for the approval or comments of the producer. As a r e s u l t of the examination of the answer p r i n t the grading of various scenes may be changed or the color balance may be altered in subsequent prints or other corrections may be made. BLOCK BOOKINGS - Block booking i s the li c e n s i n g of films only i n groups and not sing l y . Exhibitors are forced to rent the lesser quality films i f they want those with popular stars. The number of films i n a block or group i s not uniform. BOOKING - The act of writing into the contract the dates upon which a picture i s to be "played" at an in d i v i d u a l theatre. The term "Booking" i s also applied so as to include both booking and commitment. The context w i l l determine the sense i n which the term i s used. BOOKING AGENTS - Exhibitors combined by employing booking agents to bargain for films for a group. CCFM - Council of Canadian Film Makers - 135 -CFDC - Canadian Film Development Corporation CFEG - Canadian Film Editors Guild CRTC - Canadian Radio and Television Commission CSC - Canadian Society of Cinematographers CIRCUIT - A group of cinemas with a common owner for which films are gooked through a central o f f i c e . CLEARANCE - A clearance i s the period of time, usually st i p u l a t e d i n license contracts, which must elapse between runs of the same feature within a p a r t i c u l a r area or i n speci-f i e d theatres. COMMITMENT - A pre-season contract beween the Exhibitor and the Di s t r i b u t o r for the r i g h t to one or more pictures to be played during the next "season" at one or more theatres on dates to be determined. DIRECTOR - The Director i s d i r e c t l y responsible to the producer and s h a l l be responsible for d i r e c t i n g the production a c t i v i t e s of the cast and crew as cr e a t i v e l y and e f f i c i e n t l y as possible i n order to get the necessary photographic coverage of the best dramatic results obtainable. DIVORCEMENT - Complete separation of ownership and control of cinemas from that of f i l m production companies. EXCHANGES - Exchanges are the wholesale o f f i c e s i n major c i t i e s that negotiate licenses with, and d e l i v e r films to, the theatres i n that area of the country. FIRST RUN - The f i r s t showing of a picture i n any c i t y , town or zone. FLOP - A picture which f a i l s to at t r a c t patronage and consequently f a i l s to produce expected box o f f i c e r e ceipts. FOREIGN FILM SUBSIDIES - Various subsidies are given by countries, government agencies, banks. Some subsidies are based on money spent i n the country. Other subsidies are available only to c i t i z e n s of, and corporations incorporated i n , the country giving the subsidy. IATSE - International A l l i a n c e of Theatrical Stage Employees - 136 -LEVY - A sum s t a t u t o r i l y deducted from the box-office receipts of a l l films before these are divided between d i s t r i b u t o r and exhibitor. The B r i t i s h Film Fund Agency shares out the Levy Fund between B r i t i s h films according to the r e l a t i v e amount of t h e i r earnings from f i l m h i r e . The rate of Levy i s one-ninth of the amount by which the payment for admission exceeds l i d . MPAA - Motion Picture Association of America, Inc. Formerly c a l l e d The Motion Picture Producers and Distributors of America, Inc. Created a censorship branch - Production Code Administration (PCA), created an advertising (dis)approval branch - Advertising Code Administration (ACA). MOTION PICTURE EXPORT ASSOCIATION - Source of information concerning foreign countries' production (subsidies), d i s t r i -bution, e x h i b i t i o n . MOVEOVER - A moveover i s the p r i v i l e g e given a licensee to move a picture from one theatre to another as a continuation of the run at the licensee's f i r s t theatre. NABET - National Association of Broadcasting Employees and Technicians, AFL-CIO. NEGATIVE - The f i l m before or a f t e r i t has been exposed i n a camera before or after i t i s processed so that i t c a r r i e s an image with the o r i g i n a l tone inverted. "Positive" p r i n t s are made from negative p r i n t s . OVERAGE AND UNDERAGE - Refer to the practice of using excess f i l m rental earned i n one c i r c u i t theatre to f u l f i l l a r e n t a l commitment defaulted by another. POOLING AGREEMENT - An agreement by which the receipts and expenses of two or more theatres are pooled and p r o f i t s or losses divided between the parties to the agreement. POSITIVE PRINT - P r i n t from a negative. Normal p r i n t for projection. RELEASE - When a picture i s ready to be exhibited and the p o l i t i v e prints are ready for screening and d i s t r i b u t i o n , the picture i s said to be released. RELEASE-PRINT - Projection p r i n t of a f i n i s h e d f i l m . ROAD SHOW - A road show i s a public exhibition of a feature •in a limited number of theatres, i n advance of i t s general release, at admission prices higher than those customarily charged i n f i r s t - r u n theatres i n those areas. - 137 -ROUGH CUT - F i r s t assembly of a f i l m i n which the selected takes are joined i n sequence, but the f i n e r points of e d i t i n g have not yet been carried out. RUN - The period for which a picture i s hown i n a theatre --sometimes spoken of as a contract. RUSHES - Film that has just been exposed by a f i l m camera; prints of scenes exactly as they were shot i n the camera before any cutting or e d i t i n g . SECOND RUN - The next showing of a picture a f t e r the f i r s t run. 70 mm. FILM - One shot on larger than normal ( i . e . 35 mm.) stock and shown by special projectors on a larger than normal screen. SNEAK PREVIEW - The only method of market testing that approaches a s c i e n t i f i c survey i s the sneak preview of an ind i v i d u a l f i l m . At the preview the audience i s questioned about i t s reactions. The producers then may delete parts of the f i l m or make small additions to i t . SUBSEQUENT RUN - A l l showings a f t e r a f i r s t run—which may be a second, t h i r d , fourth, f i f t h or s i x t h run. ZONES - Zones are the areas into which a c i t y i s divided for purposes of granting exclusive rights to runs. - 138 -APPENDIX II DISTRIBUTORS OF FEATURE LENGTH FILMS IN CANADA It i s d i f f i c u l t , i f not impossible, to d e f i n i t i v e l y compile a l i s t of a l l d i s t r i b u t o r s of feature length motion pictures i n Canada. Each year some w i l l go out of business, some w i l l change t h e i r location, others w i l l enter the industry for the f i r s t time and s t i l l others w i l l combine operations. Yet each year the Canadian Federation of Film Societies compiles a most exhaustive index of 16 and 35 mm. feature films available in Canada together with an alphabetical l i s t i n g of a l l d i s t r i -butors i n the industry and t h e i r addresses. The following i s from that Index. ALLIED ARTISTS A l l i e d A r t i s t s 85 Eglinton Avenue East, Suite 204 Toronto, Ontario, M4P 1H5 AMBASSADOR Ambassador Film Distributors 88 Eglinton Avenue East, Suite 400 Toronto, Ontario, M4P 1B8 ASTRAL A s t r a l Communications Ltd. ASTRAL/COLUMBIA 224 Davenport Road Toronto, Ontario, M5R 1J7 ASSOC. CO-OP Association Co-operatives des Productions Audio-Visuelles 9 6 Quest Sherbrooke Montreal, P.Q., H2X 1X3 BELLEVUE BELLEVUE/FOX BELLEVUE/MGM Bellevue Film Distributors Ltd, 35mm Divis i o n 277 V i c t o r i a Street Toronto, Ontario, M5B 1W2 - 139 -- AND: -B e l l e v u e F i l m D i s t r i b u t o r s L t d , 16mm D i v i s i o n 40 L e s m i l l s Road Don M i l l s , . O n t a r i o , M3B 2T5 - BRANCH OFFICES -8 20 - 1 6 t h A v e n u e S.W. C a l g a r y , A l b e r t a - AND -250 Rose De L i m a S t r e e t M o n t r e a l , P.Q. - AND -B e n t l e y S t r e e t S t . J o h n , N.B. - AND -1644 West 7 5 t h A v e n u e V a n c o u v e r , B.C. - AND -BRANDON CANSOV CFDC C F I 20 S t e v e n s o n Road W i n n i p e g , M a n i t o b a B r a n d o n F i l m S e r v i c e B r a n d o n U n i v e r s i t y B r a n d o n , M a n i t o b a C a n s o v F i l m s S u i t e 404, 55 B l o o r S t r e e t T o r o n t o , O n t a r i o , M4W 1A9 C a n a d i a n F i l m - M a k e r s ' D i s t r i b u t i o n C e n t r e 406 J a r v i s S t r e e t T o r o n t o , O n t a r i o , M4Y 2G6 C a n a d i a n F i l m I n s t i t u t e F i l m L i b r a r y 30 3 R i c h m o n d Road O t t a w a , O n t a r i o , K1Z 6X3 - 140 -C F I / C F F S CINE/ART CINE/FRANCE C a n a d i a n F e d e r a t i o n o f F i l m S o c i e t i e s C a n a d i a n F i l m I n s t i t u t e F i l m L i b r a r y 303 R i c h m o n d R oad O t t a w a , O n t a r i o , K l Z 6X3 C i n e - A r t F i l m D i s t r i b u t i n g Co. L t d . 800 De M a i s o n n e u v e E a s t , S u i t e 600 M o n t r e a l , P.Q., H2L 4L8 C i n e - F r a n c e D i s t r i b u t i o n L t e e . 690 O u e s t , Rue l a G a u c h e t i e r e M o n t r e a l , P.Q. CINEMA I I I C i n e m a I I I 5 800 M o n k l a n d A v e n u e M o n t r e a l , P.Q., H4A 1G2 C I N E P I X C i n e p i x I n c . 8275 M a y r a n d M o n t r e a l , P.Q. - AND -C i n e p i x I n c . 696 Yonge S t r e e t T o r o n t o , O n t a r i o M4Y 2A7 COOKE CO-OP CINEASTES W i l l i a m F. Cooke T e l e v i s i o n P r o g r a m s S u i t e 506, 696 Yonge S t r e e t T o r o n t o , O n t a r i o , M4Y 2A7 C o - o p e r a t i v e C i n e a s t e s I n d e p e n d a n t s ( I n d e p e n d e n t F i l m m a k e r s ' C o - o p e r a t i v e ) 2026 O n t a r i o E a s t M o n t r e a l , P.Q. CRAWLEY CRITERION C r a w l e y F i l m s F o r d i s t r i b u t i o n c o n t a c t : NEW CINEMA ENTERPRISES 35 B r i t a i n S t r e e t T o r o n t o , O n t a r i o , M5A 3V8 C r i t e r i o n P i c t u r e s C o r p o r a t i o n L t d , 5800 M o n k l a n d A v e n u e M o n t r e a l , P.Q., H4A 1G2 - AND -- 141 -CZECH EMBASSY DABARA DANTON DEC DELMAR DERMA E L L I S FAROUN C r i t e r i o n P i c t u r e s C o r p o r a t i o n L t d . 1541 B a r r i n g t o n S t r e e t , S u i t e 216 H a l i f a x , N.S., B 3 J 1Z6 C z e c h o s l o v a k C o n s u l a t e - G e n e r a l 1305 P i n e A v enue W e s t M o n t r e a l , P.Q., H3G 1B3 D a b a r a F i l m s 367 Queen S t r e e t W e s t T o r o n t o , O n t a r i o , M5V 2A4 D a n t o n F i l m s L t d . 250 M e r t o n S t r e e t T o r o n t o , O n t a r i o , M4S 1B1 Dec F i l m s 121 Avenue Road T o r o n t o , O n t a r i o , M5R 2G3 D e l m a r A u d i o - V i s u a l S o c i e t y o f C a n a d a 1664 B a s e l i n e Road O t t a w a , O n t a r i o , K2C 0B7 Derma C o m m u n i c a t i o n s 892 S h e r b r o o k e W e s t M o n t r e a l , P.Q., H3A 1G3 R a l p h C. E l l i s E n t e r p r i s e s 556 C h u r c h S t r e e t T o r o n t o , O n t a r i o , M4Y 2E2 F a r o u n F i l m s D i s t r i b u t i o n L t d . 136 S t - P a u l S t r e e t E a s t M o n t r e a l , P.Q., H2Y 1G6 FRANCE F I L M FRENCH EMB. FRONTIER F r a n c e F i l m 1405 Rue A l e x a n d r e - D e s e v e M o n t r e a l , P.Q., H2L 2V5 Le S e r v i c e C u l t u r e l de l ' A m b a s s a d e de F r a n c e ( F i l m L i b r a r y o f t h e F r e n c h Embassy) 464 W i l b r o d S t r e e t O t t a w a , O n t a r i o , K I N 6M8 F r o n t i e r Amusements S u i t e 7 0 1 , 4 4 E g l i n t o n A v e n u e West T o r o n t o , O n t a r i o , M4R 1A1 - 142 -HIMBF I F D H u n g a r i a n S e c t i o n o f I n d e p e n d e n t M u t u a l B e n e f i t F e d e r a t i o n 214 B e v e r l e y S t r e e t T o r o n t o , O n t a r i o , M5T 1Z3 I n t e r n a t i o n a l F i l m D i s t r i b u t o r s L t d . 20 B l o o r S t r e e t W est T o r o n t o , O n t a r i o , M4W 1A1 - AND -I n t e r n a t i o n a l F i l m D i s t r i b u t o r s L t d . 5 801 M o n k l a n d S t r e e t M o n t r e a l , P.Q., H4A 1G4 - AND -IT E LAPOINTE LIGHTHOUSE MARLIN MUTUAL NEW CINEMA NC/CRAWLEY NFB I n t e r n a t i o n a l F i l m D i s t r i b u t o r s L t d , 820 - 1 6 t h A v e n u e S.W. C a l g a r y , A l b e r t a , T2R 0S9 I n t e r n a t i o n a l T e l e - F i l m E n t e r p r i s e s 47 D e n s l e y A v e n u e T o r o n t o , O n t a r i o , M6M 5A8 J.A. L a p o i n t e F i l m s I n c . 1575 D u t r i s a V i l l e S t . L a u r e n t M o n t r e a l , P.Q., H4L 4J7 L i g h t h o u s e F i l m s L t d . c/o B r i g h t o n T h e a t r e 127 R o n c e s v a l l e s A v enue T o r o n t o , O n t a r i o , M6R 2L2 M a r l i n M o t i o n P i c t u r e s L t d . 47 L a k e s h o r e Road E a s t P o r t C r e d i t , O n t a r i o , L5G 1C9 M u t u a l F i l m s / L e F i l m s M u t u e l s 225 Roy S t r e e t E a s t M o n t r e a l , P.Q., H2W 1M5 New C i n e m a E n t e r p r i s e s 35 B r i t a i n S t r e e t T o r o n t o , O n t a r i o , M5A 3V8 N a t i o n a l F i l m B o a r d o f C a n a d a 1 L o m b a r d S t r e e t E a s t T o r o n t o , O n t a r i o , M5C 1L9 - 143 -NFB/GBC PALLAS PARAMOUNT PEERLESS CBC T e l e v i s i o n P r o d u c t i o n s N a t i o n a l F i l m B o a r d o f C a n a d a 1 L ombard S t r e e t E a s t T o r o n t o , O n t a r i o , M5C 1L9 P a l l a s F i l m s S u i t e 506, 696 Yonge S t r e e t T o r o n t o , O n t a r i o , M4Y 2A7 P a r a m o u n t P i c t u r e s C o r p o r a t i o n 1 Yonge S t r e e t T o r o n t o , O n t a r i o , M5E 1E5 P e e r l e s s F i l m s L t d . 10 70 De B l e u r y Rue M o n t r e a l , P.Q., H2Z 1N3 PRIMA Prima Film Inc. Suite 205 135 Est, Rue Sherbrooke Montreal, P.Q., H2X 1C6 - AND -P r i m a F i l m I n c . . 6 7 Yonge S t r e e t T o r o n t o , O n t a r i o , M5E 1 J8 PROSPEC RITTER L e s F i l m s P r o s p e c I n c . 7017 C o t e S t - L u c B l v d . M o n t r e a l , P.Q., H5A 1A9 G e o r g e R i t t e r F i l m s L t d . 82 E d i t h D r i v e T o r o n t o , O n t a r i o , M4R 1Z2 SAGUENAY TELEGENIC TFS S a g u e n a y F i l m s S u i t e 570 102 B l o o r S t r e e t West T o r o n t o , O n t a r i o , M5S 1N1 T e l e g e n i c P r o g r a m s , I n c . 250 M e r t o n S t r e e t T o r o n t o , O n t a r i o , M4S 1B1 T o r o n t o F i l m S o c i e t y 184 C r e s c e n t Road T o r o n t o , O n t a r i o , M4W 1V3 - 144 -UNITED ARTISTS UA/MGM UNIVERSAL UNIV/CAL UNIV/MO U N I V / S T J UNIV/VAN . UNIV/WIN WARNER BROS ZODIAK U n i t e d A r t i s t s F i l m E x c h a n g e S u i t e 800 2180 Yonge S t r e e t T o r o n t o , O n t a r i o , M4S 2B9 U n i v e r s a l F i l m s 2450 V i c t o r i a P a r k A v e n u e W i l l o w d a l e , O n t a r i o , M2J 4A1 - BRANCH OFFICES -C a l g a r y , A l b e r t a - AND -M o n t r e a l , P.Q. - AND -S t . J o h n , N.B. - AND -V a n c o u v e r , B.C. - AND -W i n n i p e g , M a n i t o b a W a r n e r B r o s . D i s t r i b u t i n g L t d . 70 C a r l t o n S t r e e t T o r o n t o , O n t a r i o , M5B 1L7 Z o d i a k I n t e r n a t i o n a l P r o d u c t i o n s I n c , 16 W e s t m i n s t e r A v e n u e N o r t h S u i t e 206 M o n t r e a l , P.Q., H4X 1Z1 - 145 -APPENDIX III THE UTILIZATION OF TAX DEDUCTIONS IN THE FINANCING OF CANADIAN FEATURE FILMS: AN INDUSTRY EXAMPLE " T h e T w i s t e r " i s a f e a t u r e l e n g t h w e s t e r n , a s t o r y a b o u t men who p l a y w i t h g u n s . A b l e W i l l i n g i s a d r i f t e r , a f a s t g u n , a n d a man who d o e s n ' t l i k e t o b e p u s h e d a r o u n d . He d o e s n ' t k n o w w h e r e h e ' s g o i n g , b u t w h e n h e g o e s , p e o p l e g e t o u t o f t h e w a y . w h e n , h e ' s p u s h e d , a l l h e l l b r e a k s l o o s e . P r o p o s a l f o r F i n a n c i n g " T h e T w i s t e r " - 146 -THE OBJECT We propose to make a Western feature film,"The Twister",for television and theatrical release. The cost of the production i s $500,000. The minimum expected returns w i l l be $1.5 million. DISTRIBUTION OF PROCEEDS 100$ of the proceeds from distribution of the film w i l l go to the investors, u n t i l the film has returned the cash investment. After the cash investment has been returned, the proceeds w i l l be s p l i t , with 50% going to the investors, and 50% going to Highlight Productions Ltd.,for writer,actors,fees and residuals. (see diagram 1 "Schematic Breakdown of Investment") TAX SAVINGS ON INVESTMENT With the new Capital Cost Allowance for motion picture investment, the investor i s allowed to deduct 100% of his investment from his taxable income. For an investor in the 60% tax bracket, this means that an investment of $100,000. w i l l give tax savings of $60,000. or an actual cost of investment of $40,000. An investment of $100,000. costs the investor only $40,000. (see diagram! "Actual Cost of Investment") INVESTMENT AND OWNERSHIP The total cost of the film production i s $500,000. Investment w i l l be i n blocks of $100,000., each block purchasing 10% ownership of the film. The net result i s that the film w i l l be owned as follows 1 10% by each of three investors for a tot a l of 30% 20% by the Canadian Film Development Corporation 50% by Highlight Productions Ltd.,with the benefits of this ownership going to the cash investors u n t i l the investment i s repaid. (see diagramt "Schematic Breakdown of Investment") 'i - 147 -SCHEMATIC BREAKDOWN OF INVESTMENT C.F.D.C. $200,000. Investors $300,000. make 8 1 The Film Sales Theater & T.V. Less Distribution Costs Production Company Fori writers,actorsj pre -pr oduc t i on] A various fees C.F.D.C. 20% I Investors I 30% NOTE i A l l monies from sales,100% go to the Money people u n t i l i n i t i a l investment returned. That is ,60% of i n i t i a l returns to investors and 40% of i n i t i a l returns to C.F.D.C. u n t i l $500,000. repaid. After which the returns are s p l i t as in above diagram. - 148 -ACTUAL COST OF INVESTMENT Assumingi Individual Taxpayers Investment Individuals Taxable Income Capital Cost Allowance (CCA.) Taxable Income $200,000. less $100,000. Invested 100% C C A . ACTUAL COST OF $100,000. INVESTMENT IN THIS TAX BRACKET IS $40,000. equals Net Cash Investment $40,000. $100,000, $200,000. 100% equals Net Taxable Income $100,000. > le -88 Tax On Net Income ffe^n.nno. si/ Tax Saving $60,000. * NOTEi Tax payable without investment, $120,000. - 149 -Profits Of the profits that occur after recoupment of cost, money gets 50% of the profits and the creative, (producer,director,writer,actors and pre-production investor) receive 50%, Thus i f the film earns $1,000,000. in profit, each investor would receive $100,000. i n profit per 10% participation. NET RESULT The net result for an investment of $100,000. i s that an investor (in 60% tax bracket) receives $60,000, i n tax savings this year. That i s , for a cost of $40,000, the investor has further tax savings of $60,000. and 10% ownership of what w i l l be a profitable film. It i s expected that a good film w i l l result and that a return of investment and a profit ensue. Any income derived from this investment would be classed as taxable income. - 1 5 0 -PROMISES AND GUARANTEES In this venture the participation of the investors w i l l be protected by Highlight Productions Ltd. Investors w i l l not be subject to any l i a b i l i t i e s or rights of action against them, beyond the limits of their investment. Investors i n this venture, by avoiding legal forms, such as incorporating a separate limited company for this, production, or by f i l i n g partnership papers are at an advantagei 1) high legal costs are avoided 2) assets of Highlight Productions Ltd. are available to guarantee protection against additional costs without impingeing upon the ownership position of the-investor. 3) the tax issue which seems to be in some doubt, that i s , whether in a partnership,or corporation investors can apply the tax credit against other sources of income outside of this partnership or corporation, - i s avoided. - 151 -HIGHLIGHT PRODUCTIONS LTD. FURTHER GUARANTEES I 1) The investor w i l l be able to claim the tax credit on this investment,-regardlesB. 2") that the film w i l l be completed on budget,on time. 3) that a bond w i l l be purchased to insure the completion. k) that the investor's ownership w i l l not be 'Watered-Down'' by requests for additional funds. 5) that the investors, at a l l times, w i l l be kept informed on the production, that upon request they w i l l be permitted to v i s i t the sets and locations. 6) that investors,if they so desire, w i l l be advised regarding any major developments which would alter Highlight Productions Ltd. position i n this venture. 7) a l l books,agreements,contracts etc. w i l l be available for inspection at a l l times by the investor, and that advise or questions from the investors w i l l be given serious attention. Size of budget,or cast of stars does not guarantee a high grossing picture. What makes a motion picture film successful i s mysterious and intangible - a quality that attracts the public particularly young people - i n mass proportions and lures i t to the box office. If a film possesses this intangible, i t becomes an investment that makes ordinary investments pale by comparison. The preceeding i s but a rough outline of a situation that we have investigated in detail. We expect questions and would like to be given the opportunity to answer them. - 152 -The investment i s $100,000, for each 10% ownership of the film,"The Twister". Cheques are to be given to Mr.Graham Chambers for safekeeping. For each 10% ownership position -- One cheque i s for $100,000. payable to "Highlight Productions Ltd.,Special Account 'out* " at the Royal Bank of Canada, Main Branch, Hastings & Granville. Mr. Chambers is to release these cheques to Highlight Productions Ltd. afteri A) Satisfying himself with the documentation and that i t records each investor as owning 10% (or i t s multiples) of the film. B) Satisfying himself that "Highlight Productions Ltd#,Special Account, 'out' " has the restriction that cheques written must be for valid production expenses and further must be co-signed by him-self or Mr.Jim Westwell or made payable to the original investor. A further restriction i s that any balance in the account and any interest must be cleared on or before the year end,1975• In conformity with the above I hereby tender Mr.Graham Chambers a cheque tot a l l i n g $100,000.(or i t s multiple) to purchase a 10^ interest (or i t s multiple) of the film,"The Twister". - 153 -PRE-PRODUCTION INVESTMENT COST OF PRE-PRODUCTION Total pre-production expenses are $22,304.92 . Fifteen thousand dollars of this w i l l come from a private investor, with the balance of $7t304.92 comming from the C.F.D.C. RETURN OF PRE-PRODUCTION INVESTMENT Pre-production investment w i l l be considered a f i r s t expense against the budget, and w i l l be returned on or before the beginning of shooting. It i s important to note that the pre-production investor i s taking no risk on the success of the finished film. BENEFIT OF PRE-PRODUCTION INVESTMENT The pre-production investor w i l l be entitled to 5# of the proceeds from distribution of the film, after the film has returned i t s production cost, (this compares with 10% of proceeds for each $100,000. of production investment.) In other words, the pre-production investor gets 5% of the profits for $15,000., with his investment returned on the completion of financing. He i s i n a f i r s t - i n , first-out position. TAX SAVINGS FOR PRE-PRODUCTION INVESTMENT Because of the 100% C.C.A..for an investor in the 60% tax bracket, an investment of $15,000. gives a tax saving of $9,000., or an actual cost of investment of only $6,000. (see diagrami "Actual Cost of Pre-Production Investment" - 154 -ACTUAL COST OF PRE-PRODUCTION INVESTMENT Assumingi Individual Taxpayers Investment Individuals Taxable Income Capital Cost Allowance (CCA.) $ 15,000. $200,000. 100% ACTUAL COST OF $15,000. INVESTMENT IN THIS TAX BRACKET IS $6,000. Taxable Income $200,000. 1 • ess $15,000. Invested 100% C C A . eq uals Net Taxable Income $185,000. 1< r »S8 Tax On Net Income $111,000. eqi ials Net Cash Investment $6,000. ± Tax Saving $9,000. * NOTE 1 Tax payable without investment,$120,000. - 155 -PRE-PRODUCTION INVESTMENT AMOUNT INVESTED! OWNERSHIP OF FILMi REPAYMENT t $15,000. 5% $15,000. when film i s financed and production begins PROFITi 5% of film returns once i n i t i a l investors have been repaid NOTEi The pre-production investor i s taking no risk in terms of the quality or sales of the film. The total cost of the film i s $500,000. and the minimum expected returns w i l l be $1,500,000. In conformity with the above I hereby tender Highlight Productions Ltd. one cheque for $15,000. which i s a loan against the production cost of the film, and a purchase of a 5% interest in the profit of the film,"The Twister". - 156 -APPENDIX I V THE USE OF LEVERAGE I N FEATURE F I L M INVESTMENT The f o l l o w i n g e x a m p l e f r o m I n t e r p r e t a t i o n B u l l e t i n I T - 1 6 4 i l l u s t r a t e s t h e g e n e r a l f e a t u r e s o f a l e v e r a g e d i n v e s t m e n t made p r i o r t o t h e c o m p l e t i o n o f t h e f i l m : (a) The f i l m h a s a b u d g e t e d c o s t o f $ 5 0 0 , 0 0 0 . (b) F i n a n c i n g o f t h e f i l m i s a s f o l l o w s : ( i ) $180,000 o b t a i n e d t h r o u g h l o a n s and a d v a n c e s by o t h e r p a r t i e s i n v o l v e d i n p r o d u c i n g , e x h i b i t i n g a n d d i s t r i b u t i n g t h e f i l m ; ( i i ) an i n v e s t m e n t o f $200,000 by t h e C a n a d i a n F i l m D e v e l o p m e n t C o r p o r a t i o n (CFDC) p u r s u a n t t o p a r a g r a p h 1 0 ( 1 ) ( a ) o f t h e CFDC A c t ; ( i i i ) a c a s h i n v e s t m e n t o f $120,000 b y t h e i n v e s t o r . (c) A l l m o n i e s a d v a n c e d w i l l o n l y be r e c o u p e d f r o m e a r n i n g s f r o m t h e d i s t r i b u t i o n o f t h e f i l m . I n a d d i t i o n , a l l p a r t i e s s h a r e , i n a s p e c i f i e d manner, i n t h e e a r n i n g s i n e x c e s s o f t h o s e u s e d t o r e p a y t h e a d v a n c e s . (d) F o r h i s i n v e s t m e n t t h e i n v e s t o r p u r p o r t s t o o b t a i n t i t l e t o t h e f i l m upon i t s c o m p l e t i o n . None o f t h e o t h e r p a r t i e s h a v e any e f f e c t i v e r e c o u r s e a g a i n s t t h e i n v e s t o r f o r m o n i e s a d v a n c e d s i n c e t h e i r r i g h t s t o r e p a y m e n t aire l i m i t e d t o t h e i r p a r t i c i p a t i o n i n t h e e a r n i n g s o f t h e f i l m . (e) The f i l m i s p r o p e r t y o f t h e i n v e s t o r d e s c r i b e d i n C l a s s 18 o f S c h e d u l e B o f t h e Income T a x R e g u l a t i o n s a n d as s u c h i s s u b j e c t t o a c a p i t a l c o s t a l l o w a n c e r a t e o f 60 p e r c e n t . APPENDIX V CANAQfAN FILM D E V E L O P M E N T CORPORATION SOCJETE D E DEVELOPPEMENT D E L 1 I N D U S T R I E CINEMATOGRAPHiOUE C A N A D 1 E N N E February 2U, 1976. ¥z-r Gear^- P. Destoyni& YsztxtuLP Layers L i m i t e d Re: Quota and iuycsirtytr.t programme Gaxr Mr. Destounis: A s you. are aware, the C a j ^ J i a n F i i a DtvelapriEnt C^flxsTatiW' ("CFDC**-) I?, tSva lateral agency iv-sporisii>Lc far* tha develop ri^nt o f a future filrt industry i n Canada. As such, tha Secretary °t'State l&s requested the CFDC'. To formalize and to mon-itor the quota and investment progra^ae ufdeh he prcjosed to you arrf *fcd.eh. you have accepit-d. This letter, Thcmfore, whsn countcr-sigrsed by yaij -will coi&titute thfc -undertcking of Fwacus Players Lusitfed < "Fonrsj-1.") ccnsarpJrisr investment in ami the exhibition of C^adiart filature f i l r o <?.:<er>aiivji."t<.*.r rtferro] to as *the i/rcgrvOTjjfc;'1) for the. juried of August 1st, 1975 to J u l y 3jst, 1575 (liereinafter-r e f e r r a l to as "the prograrnsc period"). 1 - For the purfsosea »3f th* progrctnrria, a Can*3lan feature i'iltt is a film cf ?»t less than ninety (303 jsdnvites running ti#e and which: <a) hs& tfesv certified by tha Secrctarv of State Ai; »eet±riH tbt*. criteria for rv-oiupt of the IOCS G*oita± cost «Uowanec set forth i n fiuh-sectiais 2104 (2) <h) and. 1104 (10) of the Incase Tax Epilations, or, (b) hd& beer, certified as a co-produrtticn under an afifee&ent' between Canada and aT&tr>sr> oewfttry* or, (c> has been product with tha financial assist-ance of the- CFDC, cr, (d) Ms bean produced by the Uaticr^l Fi2ia -Board Of Canada, /2 13.0 2 - T h e CFDC v d i i make a v a i l a b l e - t c r«Rnv-i3 a c o n s o l -i d a t e d l i s t o f t h e C<iffc**ian i t e . U c x : f i l m s c u r r e n t l y a v a i l a b l e v r i t h -i i c the- s a r S i i K j o f c l a u s e 1 t I n s l u d i n p , d u b b e d f i l i u s a n i I T J W b u d g e t f i l n s s ) m a q u a r t e r l y b a s i s t i d i n g Ihft prograRT&e p e r i o d . 3 - E * j r i i ? f . t h e pr*?i«EE*i p e r i o d , Famous v i l l i n v e s t d l l i o n d o l l a r s ($i,{K&,S8&> i n t h * p r o d u c - t i c n o f - S s n a & a n E u r d n g the- progwmme. p e r i o d , ( a ) ramcus- rayAartakes t o 42xhib.it f o u r W E C & S <if C a n a d i i s n f e a t u r e f i Iras i n each, t h e a t r e w h i c h i t o m s -and/or c o n t r o l s e x c e p t i n t h e c a s e o f d r i v e - i n t h o a t r t s . <b) I n t h e c a s e o f d r i v e n i n t h e a t r e , d ue tt» t h a i r * ore cd f e a t u r e f i l i n g . U -i n crtdv d r i v ^ i n . t h o a t r e i t o u r s w a i / o r c o n t r o l s . 5 - CFDC w i l l j r o r d t c r a i x i s u p e r v i s e t h e progr«2nK u n d e r -t a k e n b y facExis. I n order:- t o - a s s i s t t h e CFDC i n t h i s o p e r a t i o n s F & E C M S h a s f o i v a r d e d t o t h e CFDC a l i s t o f t h e t h e a t r e s i t c v n s a n d / C E ~ c c ? i t r o l s w h i c h l i s t i s . annexed h e r e t o a s S c l s e d u l c "A", f a a c u s u r d c r t a V r e s t o i n f o r m tl»e CFDC' o f a n y c h a n g e s i n s a i d S c h e d u l e nA M a t th^- c vAsrteriy m e e t i n g s r e f e r r e d t o i n c l a u s e 8. 6 - Famous w i l l f o r w a r d t o t h e CFDC o n * q u a r t e r l y b a s i s , d e t a i l * * * r e p o r t s showing,*-( a ) i t s prxypased a c t u a l i n v e s t n e r f t s , , ( b ) t i t l e s o f t?je C a n a d i a n f e a t u r e f i l m s i&Ach have- been s b c u i , ( c ) t h e narres o f t h e t h e a t r e s i n * h i c h t h e f i l m s h a v e b a s s shewn, a n d , (d> I t e "bsngfe o f t i a r e d u r i n g w h i c h t h e f i l s s h a v * been s h o w , 7 - T h e q u a r t e r l y s p o r t y r e f e r r e d t o i n c l a u s e 6 w i l l be cs2<3e a v a i l a b l e Hy t h e CFDC t o t h e C a n a d i a n f i l i s z n t f i s t r y a n d t o p w i r c x i a l govctt'rcants u) 1h t h e c ^ . f e p t i o A o f FairtDus* p r o p o s e d o r a c t u a l i n v e s t m e n t s i n Cajjftdian f e a t u r e f i l m s w h e r e t h e t o t a l Amount o n l y wD.t p a c a d e a v a i l a b l e , , . . . /3 APPENDIX V I C A N A D I A N F I L M D E V E L O P M E N T C O R P O R A T I O N 160 S O C I E T E D E D E V E L O P P E M E N T D E L I N D U S T R I E C I N E M A T O G R A P H i Q U E C A N A D ^ E N N E Mr* H.T. Blumsom f r e s i d s n t , Odeon Theatres (Canada) Limited p.e: P^p"*^ a| nd investment prcgranrrg Dear Mr, BLumsauu As you ar<e aware, the Canadian Filza DevelopiKAtL Corporation ( T F D C ) i s the Federal agency responsible f o r the der.ielcpnent o f a feature f i l m industry i n Canisks. As eudi, the- Secretary #f 3 bate has requested the CFpC fov-t a l i w and to irrrdttti' '.jwta and investment prcgrasiae uhich he proposed ta you and which you have accepted. T h i s Letter, therefore, when countersigncd by you, v i l l c o n s t i t u t e undertaking of Ddetrt Theatres (Canada) Limited ("Odk^on") osrKssarning investment i n , and the e x h i b i t i o n o f Canadian foitTjr\3 f i l m s (hereiHsf t c r referred to as "tfsc prcgraj-nw'') f a r the period of Dec^rLer 1st 1975 t o November 30th 19?6 (.heroimfter re-f erred to <as *the pro£fan»e period"), 1 - For -the purposes o f the prcgranroaj a Canadian feature f i l m i s a. f i l m of not l e s s than seventy-five. mi4>utes rwc«in& ticis and vtfdch: (a) has been c e r t i f i e d by the Secretary of State as jseetinf; the- c r i t e r i a iac r e c e i p t of the 20C& c a p i t a l cost allowance set f c r t h i n sub-sections 1L0H (2) (h) and HO** (LO) of the Incojfi Tax RegsilaticnS:, or, (h) has been c e r t i f i e d as a co-praiurticrv under ;.•:- - • • an-agreszsent between Canada and another (c> has been produced with the f i n a n c i a l a s s i s t -enca c f the CFDC, c r , (d) ftas been produced by the National F i l m Board of CajjaAs. /2 H . T . Blumscia - 2 - r e b r u a r y 13» 2 - The CnX; w i l l make a v a i l a b l e t o Odeon, a. con-solidated L i s t o f the Canadian feature f i l m s c u r r e n t l y a v a i l a b l e within the cj^aning of elaus&'X < i n c l u d i n g dubbed film and low budget filins) on a quarterly basis during the progressae period-3 - During tha prcgramrje period > Gdeon w i l l i n v e s t f i v * )-«ndrei thousand d o l l a r s C$5!>0»000) i n the pr^odoctior. o f Ccfiddian f&ahzre £ilns. H - During tha pix^rftrtwc period, (a) "*#*3ertakes t o e x h i b i t fair- veeXs o f Canadian feature f i l e s i n each tbeaty* 'which i t ewre and/or o c t r o i s except i n the case o f dnjve-in theatras. (b) In the case of d ^ i v e - i n theatres, due to t h e i r " sefla«t»l c f ^ a t i n g periods, Odeon untks^takes t o to^dhit ens week of Gamdjiin fea.t?jr>£ f i l s s is* each d r i v e - i n theatre i t owns and/or c e n t r a l s , 5 - CFDC w i l l stffiitOP and supervise the prograsisa under-taken by Odecxi. I n order to a s s i s t "the CFDC i n t h i s operation, Odeon has &3ivarded t o the CFDC a l i s t of the th&stres i t awns and/or cont r o l s which l i s t i s annexed hereto as S c h a i i l e "A". Odeon undertakes- to i n -fare the CFDC of any Ohanges i n said Schedule "A" a t the. q u a r t e r l y meet-ings referred t o i n claiasa S, 6 - Odecn. w i l l forward t o the CFDC cn a qua r t e r l y b a s i s , •iatailcd reports stewing; <a) i t s proposed or actual investroe-ntSy (b) t i t l e s of 1±e CaniKiian feature f H a s vjhicb have bean eh^n , (c) the naaas of the u«eatres i n which the fil*<» have been shown* stnd <d) the length of tims during which the flbus have been shra)« . ? - The quarterly reports r e f e r r e d t o i n ci^yse $ w i l l ba s i d e a v a i l a b l e by the CF&2 to the Canadian f i l m industry' and t o prcv i n c i a l g t ^ m r i e n t s with the eTEe^tkyts of Odeon's f t i ^ c w d or a c t u a l investments in Canadian faitjjzvr fxlne where the t o t a l ZitiMXCt axLy w i l l ix maie a v a i l a b l e . APPENDIX V I I TOWN OR CITY CJTEOLi V1LU" THEATRE British'Co.«irabjj Vancouver P o r t A l b e r n i Vernon A l b e r t s Red Beer Daic^aa Placfc Barniby Cineaa. Coronet: North H i l l Cepito .1 Towue Place Plata T I J t E OF THE FI1K It seemed l i k e a Rood idaji Sunday In the c o u n t r y i t seccod l i k e a. good Idea 3r sr-res^ I j k e a good idea Jan i s J a m * tu<5dY Kr^vitr It seemed If.kn a good Idea SEEKS 1 i ? 2 UAYS JOURS 4 3 6 Sask^rchewaa n • i M Saskatoon Brandon Broadway C a p i t o l K e L r o ^ o l i t a n . S t a r l i t ? D r i v e - I n C a p i t o l Midtowa C a ^ t t o l Green A c r e s Ti.In Jam * J t seeaed l i k e a good idea Sunday i n the country Hy ple&ture i s Tt seened l i k e a good idea Jan i s My pleasure i s ' Sunday l a the c o u n t r y 1 1 3 1 2 1 2 3 M e t r o p o l i t a n <Iapirol raresouht Secomncndation £ox fiiercy Sfic^s^^nd.atian f o r mercy I t saeaed l i f c * a good i d e a 1 1 1 H M ff K 11 fi-l l « T„i}_ Clrtesa Egl i t i t cm KallywruOd Imperial tin1versify C&d&xbrao Gulden N i l e Town* 4 Country Westwood u 'Hortht-'cxt Drive-In St&cborou-ih U -ln I t Mir-med li>.e a good fdea 1 For br.rttvr £ f o r worst 1 I t sccsErai l i k e a good idej A T^c.cKEatndcition f o r n-rcy 7 Li t i s ny l a t h e r told me 4 TVie can who sV.ird down Everest 3 I t sfceceu like- a good idea. 4-^r.r-oCT.v^dation f o r mercy 1 Tt xewaed l i k e a good'idea 2 Rr.coraneadatiC'Q f o r laercy 2 Pvecoasafftdatlon f o r ncrcj' J Recoataindat Jon for mercy 2 I t seeaed l i k o a p.ood Ldao. 4 fieeOKiefld*tioo f o r mercy 1 RCTDrroendaliOrt f o r B.crcy 1 I t i ^ e a t d l i k e a good idea 1 - 1 6 4 -TOVM on cm CITE on viu.p. Ontario London Ottava M Sudbury Windsor B a r t i t EelLvvilJf: Corn v» J J Kings tea Of i l l 14 5t-Catbr.ri.nn5 W:.\TRF. C7 TITLF. OF T«F. FTLM TTTRF. fin FILM 3/ VEEKS DAYS •JOUKS £-»sr1 in&ton Cincssa J s c J i G n n Squar**. K i l l Park Kefcont P l a n e <Je V i i 3 c BritJitmia D r i v e - I n Capitol City Centre Centre Devonshire Fa.Lice i v l n E a s t H. i n &ar.y K o x y BcIJ«*viIl« I», I n Seaway D r i v e — I n C a p i t o l Geaeva ( f t r i l l i a D r i v e - I n Jytn Ct-intrp if 3 r ?c«v?rd 5 J k e .-i £ooij i d e a 3 I t S C O T ^ l i k e a £oo»? fd?-3 1 JJrrcrpTSPndw'ion F o r mercy 3 I f ^ofss-r.tl l i V . o . a g o o d i d e a 3 R E C G s r r a n d a t i ' - m f o r mercy 3 T h e n a n v h o t s k l e d d u w i E v e r e s t . 1 J t e e o t i a e m i ^ t l o n f o r mercy 1 I t -wwifcri l - i k n a C O P O " -}(Jp--a 2 I t s c e s e d l i k e n Rood I t s c a n e d l i k e a 2 0 0 < J fc fea 1 R e c D s s r a e n d a t i i m f o r n e r c y 1 I t o c c s a e d 1 i k e a good i d t a 1 T h e nan *>ho s k i e d dovn E v e r e a t 1 I t BtzskA l i k e a good 3d&a 3 Ret o a a e u d a t i c y u f o r e e c t s 2 R e c n r n e a d a r t o n f o r ©ercy I I t j u m o a "I iV.- A good i d e a 1 JU-co&^cnrfsrion f o r Ts.crcy Ssspctey i n t h r c o u n t r y I t secmtA l i V . e a Rood i d e a Sunday i n . rb>-- c o u n t r y I t s-tt-aed l i V e . f l good id<w J Ec-c'oaiaendation, f o r Me r c y 1 Lo.vlwi * L a u g h i n g I t FrsTT!»N3 U l c f ! a p.ond 1 "' '1fcc-\*«r<r?t'.ndat i o n f o r AW-rcy 1 I t seeffif4 l i k e a good i & r * 2 3 3 3 3 3 {Juebec lloutre-al it M H Clite-Centre Tatiaieu F l * e o - y i . U e Kari<? 'Sftovdon •V<??t»oimt R i v a l i Crcw»f ielri P.irfc, I t s e eded l i k e a good i d e a 1 P Q * I * l e t i e i l i e u t e t pout l e n i r e 3 Ku&t&Dg 2 l i e s s y f a r t h e r t o l d a t 5 L i e a By f a t h e r t o l d ae 1 I t SCeimt*?. l i f c v a f.OOij i d t a . 4 Kustanr. 2 iHi.ddy K r ^ v i t r . ( f r . ) 1 IhiAdy Xravits <fr.) 1 T*-rt«san5 3 HaRtanj; 1 I L r.eeraed l i k e a good lAe& 4 Frip$;an!V 3 JtentJinfl 2 - 165 - 3/ K i r t N OR CITY TtioATHE C1?F. 01' VTLLE ClHEtfA Huntteal Q i j c h c c Chicduticti Grauhy Versailles Dollard D r i v e l o Canadfea £1 Tirana •n Cinema St-Hyacinthc Ma::k£ lroi'K-?.iv Letaa Cap 1 Co 1 f t » I ITIE OF THF. FILH DAYS JOIiRS & > d d ? F . r s i v i t f c ( f t . ) Pour 3e meilieur et powr lo. p*rc". Jm.ddy K r u v i t z (Ir.) Frin'sotis Mm; tana I t seemed l i k e * p.ood idea Four le rae^llfAiT e t puur l e plre La poE£?r, 1J queue» lee $«ej/in8 Jiuddy X r a v l t a ( f r O Cin* S?»\>t fe^i tout fen»e Uuddy Kravius ( f r . ) Gina Toyt feu tout feaae Duddy Kravit* <fr.) Jfejetonf. 2 3 1 3 3 1 3 3 1 1 1 1 1 1 1 1 B a l i l a x Sydney Truro Covo r'ar^Stotmt F'onhorn Midway Driver-IB C e n t e n n i a l Royal Jauis Jan i s R e c ^ i ^ n d a r i o n f o r nurey It Set ' C P d 1 i k e a g o o d ±6bB Sunday i n the couatry Jan} 5 Itifc -n\-pt\me tfictOx 1 3 2 1 4 4 Nov rlfuag'rfick W o a c t o n St-John Frederictun Hrr,hfi'?ld Square Pirarac»<.in.t Ffif aaoitnr. Pfil'fiisount Plnr-a Crand .Bay Drive-?** Plaza It seeaed l i t e a pood id#a 3»nia Ser.onsn.p.ndation f o r netcy Jartic I t fieeaaed l i t e r a £OOd idea Slatk Chricrrans Jaiila 1 1 2 1 I 4 5 TiTJU OK Oil? THEA.TEE CITE Du VLLLE CIXZOA - 166 -ttTl.E OF TttE FILH TITfcfc OU fLLM W .OS. DAIS JOURS Tetre -Neuv r St-John Comcrhrook Ganeier C s p i r o l Trzv.nr K a l i Stfephenville Harcrjn Suecd&y lit the country Hy P-Ie-a&ure is-My pleasure i s •Suadfiy i n the country My j->3?35^ re i s Sandfly i n thfc couatry 3 4 4 3 4 3 Tcir.il . hy province Tofcnl par- prov inv-ito. Th^aLfis Ko. CIti£&SS Kn. of f i l m ? f.'r>. tfcefce NO. • tt=»TB So. i i l a i s Na. Sea. Ko. Jour: C o l o s b i c ficLtannique Alberta Saskatchewan. Manitoba O n t a r i o Qa§bec KO i l V * 11 ti-t>i<>-3 8 4, 6 2 8 3 13 7 4 6 2 4 2 8 9 5-4 2 JO 1 7 3 77 63 6 6 3 3 4 9 J.7 & 9 21 CFIAKD T&TXL 93 3?3 81 (11 weeks ft 4 da XtfMKKR FJ.LM5 * (12 sea.. 4 4 Jou * v o i r page i,-uivanco see noi;t page TI IRES TrW? FIOIS TITLES flr THE rims Annate TT SEEMED LIKE A COOD Iu£A AT THE TIME* THE MAS SKIES EVEREST* FOK i'KlibR AND yOft WXR&E*(version) THE ^ r a s m c E S s r r OF OUDOT EEAVITZ* JAKI'S MACK CHR7STKAS* LIES MY LATHEE TOLD ME* LOVING AKD LMJCaiSE*(vetsion) KT P7.EASHRS IS fci BUSINESS THE N£F'(tlKE FAClt/S* POtfll F.r._METU.ElW EI POOR 7,E PIRK* FRISS0JJ5* (v«tti<Kt) )A TOMME, TA tfUFW ET 7.2? FF-P2SS C1KA* TOUT F f ! ! M T FFJ'frfS* L'AFPRRtfTTSSACH 2>E 7Xmi7V KRAVTTZ* (version) French ft Filra p T u d u i t avi.-c l e conuuars financier de l a SUTCC Film produced wiLli Lhe LluxucLul assiaLauce ol the CFDC 

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