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Prospects for a feature film industry in British Columbia Christy, June Beverley 1991

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PROSPECTS FOR A FEATURE FILM INDUSTRY IN BRITISH COLUMBIA By JUNE BEVERLEY CHRISTY B.a., The University of Calgary, 1980 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in THE FACULTY OF GRADUATE STUDIES SCHOOL OF COMMUNITY AND REGIONAL PLANNING We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF A p r i l © June Beverley BRITISH COLUMBIA 1991 Christy, 1991 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely 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 department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. DE-6 (2/88) ABSTRACT The purpose of t h i s thesis i s to assess the potential of establishing a viable indigenous feature f i l m industry in B r i t i s h Columbia. An understanding of the B.C. si t u a t i o n was gained by researching and i l l u s t r a t i n g the organization of the various parts: production, d i s t r i b u t i o n , and exh i b i t i o n . This was undertaken by reading various industry publications on the "business" of f i l m making and reading newspaper and trade journal a r t i c l e s . Information about the history of public policy as well as current federal and pr o v i n c i a l programs for feature f i l m making was taken from task force reports, Canadian Film Corporation reports, and Tel e f i l m Canada annual reports. S t a t i s t i c s on the industry were gained from S t a t i s t i c s Canada, Tele f i l m Canada, the Canadian Film and Video C e r t i f i c a t i o n O f f i c e , and p r o v i n c i a l agencies, in p a r t i c u l a r , B.C. Film annual reports. Personal interviews based on a questionnaire were held with eighteen B r i t i s h Columbia producers who were i n i t i a t i n g feature f i l m projects in 1988. Canadian producers are dependent on access to federal and p r o v i n c i a l sources of finanicng for as much as 62 per cent of their financing. The balance i s provided by broadcasters, private investors, and deferral agreements, or through co-productions with other countries. Because of Hollywood's control of Canada's exhibition market, only 3-5 i i i per cent of screen time i s accorded to Canadian feature films. Because of our small domestic market, Canadian producers must rely on international sales to break even. Moreover, feature filmmaking in Canada, l i k e in most other countries, i s characterized by great r i s k and l i t t l e chance of p r o f i t a b i l i t y . The Canadian government i s now supporting a nucleus of Canadian-owned d i s t r i b u t o r s with subsidies to help them es t a b l i s h both a c a p i t a l base and contacts in the international marketplace. Domestic t e l e v i s i o n production has also been a factor in Canada's feature f i l m development. Writers, d i r e c t o r s , producers, and technicians have gained experience by being able to work in the broadcast medium. Successful production companies produce a mixture of both t e l e v i s i o n and feature films. As well, these companies have established relationhips with companies in other countries, thereby providing them with an expanded market and opportunites for co-productions. B.C.'s feature f i l m sector i s comprised of small production companies with limited revenues who produce feature films on a project-by-project basis through the opportunities provided by B.C. Film and T e l e f i l m . Few have enough c a p i t a l to plan and manage substantial feature f i l m or t e l e v i s i o n production. Increases in B.C. production are a d i r e c t result of success in getting t h i s support. However, Telefilm's funding to the province's filmmakers i s unreliable, evidenced by the production of eleven films in 1988 and only one in 1990. A major drawback for B.C. producers i s the geographic distance from head o f f i c e s of e x i s t i n g Canadian broadcasting networks and major feature f i l m d i s t r i b u t i o n companies in Eastern Canada. However, B.C. producers have access to a strong l o c a l base of crews, studio f a c i l i t i e s , and substantial post production, f a c i l i t a t e d by the breadth of American location shooting and commercial production being done in our province. The need i s to e s t a b l i s h a new, r e a l i s t i c l e v e l of operation for the feature f i l m industry in B.C. and to provide the support to sustain i t for 5-7 years in order to i t to become viable. Given the above conditions, the three main factors in achieving a viable feature f i l m industry in B.C. w i l l be: a) the development of several medium-size companies; b) the provision of adequate funds from federal and p r o v i n c i a l sources; and, c) the promotion of the supply of good q u a l i t y s c r i p t s . ACKNOWLEDGEMENTS v I would l i k e to thank Gerald Hodge for his patience and good advice throughout the research and writing of t h i s t h e s i s . Without his help I would never have completed t h i s . A special thanks to my daughter Jesse Winter whose sunny di s p o s i t i o n kept up my own s p i r i t s throughout the l a s t three years. Thanks also to John Olver and Craig Davis. v i TABLE OF CONTENTS Page ABSTRACT i i ACKNOWLEDGEMENTS v TABLE OF CONTENTS v i LIST OF TABLES ix CHAPTER ONE - SETTING THE STAGE Introduction 1 Purpose 1 Feature Filmmaking in B r i t i s h Columbia 2 Significance of the Thesis 4 Methodology 7 Problems in Data C o l l e c t i o n 8 Overview 9 CHAPTER TWO - THE MECHANICS OF A FEATURE FILM INDUSTRY Introduction 10 Production 11 Development 11 Pre-production 12 Pr i n c i p a l photography 13 Post production 13 Canadian Production Companies 13 Di s t r i b u t i o n 23 Canadian D i s t r i b u t i o n Companies 29 Thea t r i c a l Exhibition 33 A n c i l l a r y Markets 37 Home Video 37 Pay-television 39 Canadian Network Televison 41 Canadian Syndicated Television Stations ...42 U.S. Pay Television 42 U.S. Network Broadcast Television 43 Foreign Theatrical Exhibition 44 Foreign Pay and Broadcast T e l e v i s i o n . . . . 45 The Hollywood Eff e c t 46 Feature Film Financing in Canada 51 Development Financing 51 Production Financing.... 53 Conclusion 56 CHAPTER THREE - FEDERAL AND PROVINCIAL POLICIES AND PROGRAMS Introduction 58 Federal Programs 1968 - 1983 58 Capital Cost Allowance Program 59 O f f i c i a l Co-production Treaties 61 Screen and Import Quota Program 61 The "Boom Years" - Impact of the CCA 62 Federal and Pro v i n c i a l Programs After 1983 69 The Broadcast Fund 73 Feature Film Fund 79 Feature Film D i s t r i b u t i o n Fund.... 81 Film Importation Act 82 B.C. FILM 84 Impact of the Feature Film Fund, the D i s t r i b u t i o n Fund, and B.C. Film 85 Conclusion .91 CHAPTER FOUR - SURVEY OF B.C. FILM PRODUCTION COMPANIES Introduction 95 Limitations of Methodology :...96 Composition of Feature Film Companies in B.C 99 Categories of Production Companies/Producers 102 Television Commericals. 102 Government and Corporate Sponsored Videos 104 Television Dramas and Documentary Films 104 Feature Films 105 v i i i Current Feature Film Projects 106 Development Funding 106 Production Budgets 108 Production Financing ...108 Factors Af f e c t i n g Production in B r i t i s h Columbia 111 Training 114 Addendum 114 Conclusion 116 CHAPTER FIVE - SUMMARY AND RECOMMENDATIONS 118 Context of Canadian Feature Filmmaking 118 B.C.'s Feature Film Sector .120 The Ontario Experience ...123 Prospects For Feature Filmmaking in B.C 124 Recommendations 1 27 BIBLIOGRAPHY 1 30 APPENDIX Feature Film Production Companies in B.C 137 ix LIST OF TABLES Page TABLE 1 PROVINCIAL DISTRIBUTION OF CANADIAN PRODUCTION COMPANIES: 1987-1988 15 TABLE 2 TOTAL PRODUCTION REVENUE BY CLASS OF CUSTOMER AND BY PROVINCE OF THE PRODUCTION COMPANY: 1987- 1988 17 TABLE 3 EXPORT SALES BY CLASS OF CUSTOMER OF THE PRODUCTION COMPANY: 1987-1988 18 TABLE 4 REVENUE FROM THE SALE OF PRODUCTIONS BY TYPE PRODUCTION AND REGION OF PRODUCTION COMPANY: 1979-1983 20 TABLE 5 TOTAL PRODUCTION REVENUE BY CLASS OF CUSTOMER AND BY PROVINCE OF PRODUCTON COMPANY: 1985-1988 22 TABLE 6 NUMBER OF FEATURE FILMS PRODUCED IN CANADA BETWEEN 1983-1989.... 23 TABLE 7 NUMBER AND COST OF SHORT AND FEATURE PRODUCTION BY YEAR: 1 974-1983 64 TABLE 8 TOTAL VALUE OF CERTIFIED INDEPENDENT AND VIDEO PRODUCTION, BY LOCATION OF PRODUCTION COMPANY: 1974-1985 66 TABLE 9 TELEFILM PRODUCTION SUPPORT, EXCLUDING THE BROADCAST FUND: 1983-1986 68 TABLE 10 TELEFILM PARTICIPATION IN SCRIPTWRITING AND DEVELOPMENT: 1983-1 989 75 TABLE 11 PROVINCIAL BREAKDOWN OF BUDGET AND TELEFILM PARTICIPATION SINCE THE INCEPTION OF THE BROADCAST FUND: 1983-1989 76 TABLE 12 SOURCES AND PERCENTAGE OF FINANCING FOR PROGRAMS SUPPORTED BY THE BROADCAST FUND: 1988- 1989 77 TABLE 13 PROVINCIAL BREAKDOWN OF BUDGET, NUMBER OF PROJECTS, AND TELEFILM PARTICIPATION SINCE THE INCEPTION OF THE FEATURE FILM FUND: 1986 1989 87 X TABLE 14 SOURCES AND PERCENTAGE OF FINANCING FOR FEATURE FILMS SUPPORTED BY THE FEATURE FILM FUND: 1988-1989 88 TABLE 15 COMPANIES INVOLVED IN FEATURE FILM PRODUCTION IN B.C.: 1986-1988 100 TABLE 16 CHARACTERISTICS OF COMPANIES INVOLVED IN FEATURE FILM PRODUCTION IN B.C.: 1986-1988 103 TABLE 17 DEVELOPMENT FUNDING FROM VARIOUS SOURCES FOR CURRENT FEATURE FILM PROJECT: 1988 107 TABLE 18 BUDGET OF FEATURE FILMS RECEIVING PRODUCTION FINANCING: 1988 109 TABLE 19 PRODUCTION FINANCING FROM VARIOUS SOURCES: 1988 1 10 \ 1 PROSPECTS FOR A FEATURE FILM INDUSTRY  IN BRITISH COLUMBIA CHAPTER ONE INTRODUCTION There i s only sporadic mention in our magazines, newspapers, and other media of Canadian films opening in theaters, and never any mention of films o r i g i n a t i n g from B r i t i s h Columbia filmmakers. In B r i t i s h Columbia, much attention i s given to the presence of American production companies using the province as a location for their f i l m and t e l e v i s i o n productions. Set against t h i s have been numerous government e f f o r t s to nurture a feature f i l m industry in Canada. Born out of a long-time c u r i o s i t y about these anomalies and encouraged by such recent c r i t i c a l successes as The Decline of the American Empire and A Winter Tan, this thesis examines B r i t i s h Columbia's indigenous feature f i l m industry: i t s problems and prospects. PURPOSE The purpose of t h i s thesis i s to assess the potential of establishing a viable indigenous feature f i l m industry in B r i t i s h Columbia. The focus i s limited to private sector production of feature length films ( i . e . , 75 minutes or longer and intended for t h e a t r i c a l release), and proceeds upon the following objectives: 1 . To id e n t i f y the factors that are central to the development of a viable and indigenous feature f i l m industry; 2 2. To examine the extent to which these factors are currently present in B r i t i s h Columbia; and, 3. To determine the policy response of the province toward developing an indigenous industry in B r i t i s h Columbia. An indigenous f i l m industry in B r i t i s h Columbia indicates that the major share of the production process i s located in the province. Therefore, an indigenous industry requires a nucleus of producers who, through ongoing production companies, can i n i t i a t e , manage, and complete the production process. Moreover, they must be able to f i n d the necessary financing to carry out production and arrange e f f e c t i v e d i s t r i b u t i o n and sales. These producers, in turn, create opportunities for d i r e c t o r s , writers, and other creative personnel. FEATURE FILMMAKING IN BRITISH COLUMBIA Foreign Production in B r i t i s h Columbia Up u n t i l the l a s t few years, B r i t i s h Columbia has been used by American companies primarily as a location for feature filmmaking and t e l e v i s i o n series (Audely, 1986; Testar, 1985). The B r i t i s h Columbia Film Promotion Of f i c e has been successful in a t t r a c t i n g increasing numbers of American and foreign productions to the province. For example, over $150 m i l l i o n was spent on production in B r i t i s h Columbia in 1987 by foreign producers. Ninety-five percent of t h i s production originated in the United 3 S t a te s (Cox, 1987). I nc luded among the obv ious reasons f o r t h i s a re the c u r r e n c y exchange r a t e , a t t r a c t i v e l o c a t i o n s , adequate s t u d i o f a c i l t i e s , and lower wage s c a l e s . F o r e i g n p r o d u c t i o n i n B.C. has been an important f a c t o r in the growth of e x p e r i e n c e d t e c h n i c a l crews, s t u d i o f a c i l t i e s and a s u b s t a n t i a l amount of post p r o d u c t i o n s e r v i c i n g be ing done in the p r o v i n c e (Aude ly , 1986). A c c o r d i n g to a p r o v i n c i a l Department of Communications su rvey , 2,550 i n d i v i d u a l s were d i r e c t l y i n v o l v e d i n the p r o d u c t i o n i n d u s t r y in B.C. ; however, l o c a l t a l e n t in the American p r o d u c t i o n s i s s t i l l r e l e g a t e d to s u b s i d i a r y r o l e s , wh i l e key c r e a t i v e p e r s o n n e l , such as l e a d i n g a c t o r s , d i r e c t o r s , w r i t e r s , c inematographer s , and e d i t o r s , a re imported f o r the h i gh v i s i b i l i t y , h i gh pay ing jobs (Brunet , 1986). N e v e r t h e l e s s , t he re i s concern over the dependence of B.C. on f o r e i g n p r o d u c t i o n . The volume of such p r o d u c t i o n c a r r i e d out in B.C. may vary s u b s t a n t i a l l y over time depending l a r g e l y on f a c t o r s beyond p r o v i n c i a l c o n t r o l . For example, changes in American government p o l i c y , changes in the c u r r e n c y exchange r a t e , or changes in f e d e r a l tax p o l i c y w i t h i n Canada can a l l a f f e c t the degree of a t t r a c t i v e n e s s of the p r o v i n c e as a p r o d u c t i o n l o c a t i o n . Constant f l u c t u a t i o n in the l e v e l of U.S. p r o d u c t i o n s i n c l u d i n g the c u r r e n t drop in o v e r a l l U.S. f i l m p r o d u c t i o n 1 and c o m p e t i t i o n from the U n i t e d S t a t e s i n a t t r a c t i n g s t u d i o - b a s e d p r o d u c t i o n make B .C . ' s c u r r e n t l e v e l v u l n e r a b l e . There a re p r e s e n t l y 44 s t a t e s and 60 c i t i e s i n the U.S. w i th f i l m promot ion o f f i c e s (Cawdery, 1986). 1. C h r i s t o p h e r H a r r i s and Dav id Sherman, "Not a Bad Wrap to the Decade, " P l ayback , January 22, 1990, p. 3. 4 Indigenous Fea tu re F i lmmaking P r i o r to 1987, the re were on l y a h a n d f u l of f e a t u r e l e n g t h f i l m s produced i n the p r o v i n c e . In the e a r l y e i g h t i e s , th ree ve ry low budget (under $200 thousand d o l l a r s ) f e a t u r e f i l m s were produced u s i ng a combinat ion of p e r s o n a l investment and f e d e r a l fund ing (B ruyere , 1986). In 1983, f o r example, of a t o t a l p r o d u c t i o n revenue of $8.1 m i l l i o n (up from $3.0 m i l l i o n f i v e yea r s e a r l i e r ) 80 percen t of i t was earned from the p r o d u c t i o n of t e l e v i s i o n commerc ia l s , e d u c a t i o n a l , and c o r p o r a t e f i l m s . The remainder was made up from t e l e v i s i o n dramas and documentar ie s . In 1983, B .C . -based companies r e p r e s e n t e d 5.4 percent of the revenues of the Canadian i n d u s t r y . SIGNIFICANCE OF THE THESIS Indus t ry t rends and government i n i t i a t i v e s are p r o v i d i n g o p p o r t u n i t i e s f o r the i n d u s t r y in B r i t i s h Co lumbia . The f e a t u r e f i l m s e c t o r i s p a r t of a complex of f i l m and t e l e v i s i o n - r e l a t e d a c t i v i t y t ha t i n c l u d e s not on l y t h e a t r i c a l e x h i b i t i o n , but now the growing a n c i l l a r y markets of home v i d e o and pay t e l e v i s i o n . E i g h t y pe rcen t of a f e a t u r e f i l m ' s revenue i s generated from these t h r e e markets ( T e s t a r , 1985). P a y - t e l e v i s i o n expanded i n the e a r l y 1980's at a r a t e of 50 per cent per y e a r , and the market f o r home v i d e o at 25 per cent per y e a r . Of t h i s , 16% of revenues a re expected to come from home v ideo d i s t r i b u t i o n , and 5 evidence indicates that t h i s figure w i l l continue to grow for several years as the number of home VCR sales in Canada continues to increase annually (Cawdery, 1986). As a r t i c u l a t e d in many royal commission reports, the Canadian government has long recognized the importance of f i l m as a c u l t u r a l resource and vehicle for a r t i s t i c expression. In addition to entertainment and relaxation, i t i s a means of communicating to vast audiences (Moore, 1986). In the U.S., 99% of the films viewed in the theaters are domestic films, while 97% of the films viewed in Canadian theatres are made outside of the country. In comparison, Australian domestically produced films take up 20% of t o t a l screen time while in B r i t a i n and France the figures are 20% and 49% respectively. Robert Fulford remarked: " i t would seem that a given population should from time to time be able to see i t s e l f on the screen. That just seems fundamental and not even for n a t i o n a l i s t i c purposes, but because of questions of i d e n t i t y " (Fulford, 1982). Television has further expanded the influence of American mass entertainment. The substantial part of English language Canadian t e l e v i s i o n programming, a considerable part of which i s f i l l e d by feature films, i s almost e n t i r e l y American in content (Masse, 1986). Domestic feature f i l m production in a l l countries, except the United States, depends on a support structure of f i n a n c i a l assistance from public sources. This i s e s p e c i a l l y true in Canada because of a small domestic market in proximity to the U.S. To further these ends, the i n s t i t u t i o n s of the National Film Board (NFB), the Canadian Broadcasting Corporation (CBC), and Tele f i l m 6 Canada are mandated by parliament to define, enhance, and support Canadian identit y and c u l t u r a l expression. Ever since the National Film Board was established in 1939, the federal government has provided assistance in support of the industry. Through the Canadian Film Development Corporation (renamed Tel e f i l m Canada in 1984) and the Canada Council's f i l m programs, the goverment has provided for an a r t i s t i c , technical, and economic climate in which i t s creative talents could be translated onto the screen. Further to t h i s , since 1986, changes to the 1968 Broadcasting Act gave the Canadian Radio-television and Telecommunication Commission (CRTC) the authority to enact more stringent regulatory p o l i c i e s for Canadian content in the broadcasting system. Since 1983, the Canadian Broadcasting Corporation (CBC) has represented an important market for independently-produced Canadian programs. Federal I n i t i a t i v e s The federal government, through T e l e f i l m Canada, invests $95 m i l l i o n annually for the development of f i l m production through three funds: the $35 m i l l i o n d o l l a r broadcast fund created in 1983, (raised to $60 m i l l i o n in 1988); the $35 m i l l i o n d o l l a r feature f i l m fund created in 1986; and, the $17 m i l l i o n d o l l a r d i s t r i b u t i o n fund created in 1988. 7 The CBC had set a goal of obtaining 50% of i t s programming from independent producers, and, as stated in the recent broadcasting policy of 1988, the CBC has been mandated to achieve 95% Canadian content by 1990 2. A 1987 agreement between the NFB and Te l e f i l m Canada was struck to aid feature f i l m production in the regions outside of Montreal and Quebec. These funding bodies would make available $5 m i l l i o n annually for twelve feature f i l m co-productions with independent producers. P r o v i n c i a l I n i t i a t i v e s Quebec, Ontario, Alberta, Manitoba, B r i t i s h Columbia, and Saskatchewan a l l have programs to support f i l m production. A l l programs make i t a condition of funding that the majority of the production budget i s to be spent in the province so that the majority of economic benefits that flow from production a c t i v i t y accrue to the province involved. In September 1987, the B.C. government established B.C. Film, an agency that invested $10.5 m i l l i o n from l o t t e r y proceeds over three years. The fund i s intended to strengthen the indigenous industry and to complement the success the industry has had in a t t r a c t i n g foreign production into the province. B.C. Film also provides funds to B.C.-based companies and individuals for s c r i p t development, production, pre-production, promotion, and d i s t r i b u t i o n . 2. Kathryn Young, "Fulfillment of 95% Dream Growing Closer," Playback, March 6, 1989, p. 19. 8 METHODOLOGY An under s tand ing of the B.C. s i t u a t i o n was ga ined by r e s e a r c h i n g how the f i l m i n d u s t r y f u n c t i o n s and the i n t e r -r e l a t i o n s h i p s and o r g a n i z a t i o n of the v a r i o u s p a r t 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 . T h i s was undertaken by read ing v a r i o u s i n d u s t r y p u b l i c a t i o n s on the " b u s i n e s s " of f i l m making and read ing newspaper and t r ade j o u r n a l a r t i c l e s , i n p a r t i c u l a r , the Canadian magazines of Cinema Canada and P layBack . I n fo rmat ion about the h i s t o r y of p u b l i c p o l i c y as w e l l as c u r r e n t f e d e r a l and p r o v i n c i a l programs f o r f e a t u r e f i l m making was taken from task f o r c e r e p o r t s , Canadian F i l m C o r p o r a t i o n Annual Repor t s , T e l e f i l m Canada annual r e p o r t s , es says and c r i t i c i s m from the J o u r n a l of Canadian s t u d i e s , one of the few sources f o r a r t i c l e s on government f i l m p o l i c y . S t a t i s t i c s on the i n d u s t r y were ga ined from S t a t i s t i c s Canada, T e l e f i l m Canada, the Canadian F i l m and V ideo C e r t i f i c a t i o n O f f i c e , and p r o v i n c i a l a g e n c i e s , in p a r t i c u l a r , B.C. F i l m Annual r e p o r t s . P e r s o n a l i n t e r v i e w s based on a q u e s t i o n n a i r e (appendix one) were h e l d w i th e i gh teen B r i t i s h Columbia p roducer s who were i n i t i a t i n g f e a t u r e f i l m p r o j e c t s in 1988. I d e n t i f i c a t i o n of the p r o d u c t i o n companies was f a c i l i t a t e d by d i s c u s s i o n s w i th the c u r r e n t d i r e c t o r of the B.C. F i l m Fund, as w e l l as a government o f f i c i a l i n the M i n i s t r y of Tour i sm, R e c r e a t i o n and C u l t u r e . S e v e r a l open-ended i n t e r v i e w s and phone c o n v e r s a t i o n s were h e l d w i th the v a r i o u s i n d u s t r y a s s o c i a t i o n s . 9 PROBLEMS IN DATA COLLECTION There i s a considerable amount of specialized history of Canadian filmmakers and c u l t u r a l and h i s t o r i c a l accounts of the National Film Board and the CBC. Furthermore, most analysis of the Canadian f i l m industry concerns the role of government. Research and publications about the marketing and d i s t r i b u t i o n of films are few, even in the United States. Rarer are studies dealing with the ''business' of independent filmmaking in Canada. OVERVIEW Chapter two provides an understanding of how the industry functions as whole, including the three p r i n c i p a l sectors of the industry: production, d i s t r i b u t i o n , and exh i b i t i o n . Included are the a n c i l l a r y markets of conventional t e l e v i s i o n , pay-t e l e v i s i o n , and home video. Chapter three outlines the current policy directions of the federal and p r o v i n c i a l government. Chapter four presents a p r o f i l e of B.C. producers who have i n i t i a t e d feature films, in addition to an analysis of the scale, l e v e l of a c t i v i t y , s t a f f i n g and sources of financing of these companies. The methodology (a f i e l d survey) and i t s subsequent l i m i t a t i o n s w i l l also be addressed in t h i s chapter. Conclusions about the feature f i l m industry in B.C. are suggested in the f i n a l chapter (and recommendations are made with respect to present p r o v i n c i a l and federal programs). 10 THE MECHANICS OF A FEATURE FILM INDUSTRY CHAPTER TWO INTRODUCTION Feature filmmaking i s a collaborative process. One or more producers must bring together the many a r t i s t i c (e.g. writing, d i r e c t i n g , and acting) and technical s k i l l s required, as well as the necessary financing, to complete a feature f i l m . S i m i l a r l y , as an i n d u s t r i a l process, feature filmmaking i s also c o l l a b o r a t i v e . In other words, there must be a working relationship among the three major sectors: production, d i s t r i b u t i o n , and ex h i b i t i o n . Producers must fi n d and esta b l i s h e f f e c t i v e d i s t r i b u t i o n and exhibition in both Canadian and foreign markets. Without such relationships, a f i l m may be made but not seen. Since i t i s important to understand the i n t e r -relationships between the three sectors, t h i s chapter i s provides an overview of the complex process of production d i s t r i b u t i o n , and exhibition. This includes the process and mechanics of each stage, the foreign and domestic markets for feature f i l m , and the location of the production and d i s t r i b u t i o n sectors in Canada. Since the American industry i s well known and better documented than Canadian feature filmmaking, the mechanics of the industry was gleaned from American publications. A d d i t i o n a l l y , since foreign control of d i s t r i b u t i o n and t h e a t r i c a l exhibition l i m i t s Canada's revenue capacity, a brief history and impact of major Hollywood production, the "hollywood e f f e c t " , i s provided. F i n a l l y , methods of financing Canadian feature films in a li m i t e d market are discussed. PRODUCTION During the film-making process, which takes approximately 12 to 24 months from the start of the development phase to t h e a t r i c a l release, a feature f i l m progresses through four p r i n c i p a l stages: (1) development, (2) pre-production, (3) p r i n c i p a l photography, and (4) post production. 1. Development In the development stage, underlying l i t e r a r y material i s acquired, either outright, through an option, or by engaging a writer to create a s c r i p t . In Canada, sc r i p t w r i t e r s may approach a producer to develop their project or, frequently, the producer performs the functions of writing, producing, and d i r e c t i n g . The s c r i p t must be s u f f i c i e n t l y d e tailed to provide the production company and others p a r t i c i p a t i n g in the financing of the f i l m with enough information to estimate the cost of producing i t . In Canada, production budgets can range from under $200 thousand to an average of $3 m i l l i o n . 1 The producer uses t h i s package to obtain commitments for production financing which can come from a combination of investors, d i s t r i b u t o r s , broadcasters such as networks and pay-t e l e v i s i o n services or government agencies. The conventional wisdom of the American f i l m industry (and the pattern i s similar in Canada) i s that one in ten potential properties acquired by producers are put into serious development; of these, one in ten w i l l be produced (O'brian, 1987). In the United States, agents are frequently used by a producer to package the financing and marketing campaign and make sales once the project i s completed. 2. Pre-production During pre-production, the producer completes the necessary financing, d i s t r i b u t i o n and business arrangements. The selection of the dir e c t o r , production manager, actors, actresses, and technical personnel i s begun. Preproduction i s complete when commitments for production financing are locked in place and a budget i s prepared. 1. Occasionally, production budgets have been higher. Notable examples are David Cronenburg's Dead Ringers with a budget of $14.2 m i l l i o n and Bethune: The Making  of a Hero, a co-production between Canada, France, and China, with a budget of $20 m i l l i o n . Playback, August 20, 1990, p. 1; Tel e f i l m Canada Annual Report, 1987-1988, p. 61. 13 3. P r i n c i p a l photography The production financing i s the money used to complete p r i n c i p a l photography and post production. P r i n c i p a l photography, the actual filming of the film, i s the most costly and requires intensive labour use and cash flow. It involves the technicians hired from various unions, the cast, the lease of outside locations or studio f a c i l i t i e s , and the purchase or rental of a l l the supplies and materials that w i l l be required. 4. Post production During the post production stage, the e d i t i n g , scoring and mixing of dialogue, music, and sound effects tracks of a feature f i l m take place and master prints are prepared. These a c t i v i t i e s require te c h n i c a l l y sophisticated editing and sound and e f f e c t s laboratories. Canadian Production Companies According to S t a t i s t i c s Canada 2 there were 519 production and 152 laboratories and post-production service companies operating in Canada in 1987-1988. The production sector i s almost completely Canadian-owned and i s 2. Government of Canada, " S t a t i s t i c s on the Film Industry," S t a t i s t i c s Canada Cat. -87-204, Table 1 and Table 8, Annual, 1987-88. concentrated in Ontario (277 firms) with 63 per cent of t o t a l production revenue, Quebec (116 firms) with 25 per cent of t o t a l production revenue, and to a lesser degree, B r i t i s h Columbia (63 firms) with 7 per cent of t o t a l production revenue (Table 1). Production companies primarily produce t e l e v i s i o n commercials, t e l e v i s i o n dramas, documentaries, educational programs, government sponsored programs, i n d u s t r i a l (corporate) programs, and feature length films. They receive revenue for their productions from d i s t r i b u t o r s , conventional t e l e v i s i o n broadcasters, pay-television services, advertising agencies, educational i n s t i t u t i o n s , government agencies, corporations, and other production companies in both domestic and foreign markets.-* In 1987 - 1988, Canadian production companies earned 30 per cent of the $379 m i l l i o n t o t a l production revenue in the production of commercials for advertising agencies. Television broadcasters were the second largest customer at $91 m i l l i o n in sales, while d i s t r i b u t o r s , the primary buyers 3. Revenue i s received from other production companies by providing post production services, camera work, editi n g , and other contract work. PROVINCIAL DISTRIBUTION OF NUMBER OF PROVINCE FIRMS Atlantic Reg ion 21 Quebec 116 Ontario 277 Manitoba 10 Saskatchewan 10 Alberta 22 British Co lumbia, 63 Northwest Terr i tor ies and Yukon T O T A L 519 TABLE 1 CANADIAN PRODUCTION COMPANIES 1987-1988 ($000) PAID EMPLOYEES TOTAL FULL TIME PART TIME REVENUE $,000 78 14 4,650 634 353 94,189 1,443 560 229,383 35 5 2,395 16 8 1,313 101 9 10,112 279 54 26,700 2,586 1,003 378,742 of feature films and t e l e v i s i o n programs, generated $36 m i l l i o n in revenue (Table 2 ) . 4 A high degree of s p e c i a l i z a t i o n exists within the industry in B.C. and Canada as most companies l i m i t their a c t i v i t y to one or two categories of production ( i . e . , t e l e v i s i o n programs, t e l e v i s i o n commercials, corporate videos e t c . ) . For example, in 1987-1988, 23 of the 63 production companies earned 32 per cent of their revenue from advertising agencies, whereas only one quarter of the firms reported production revenue from two or more d i f f e r e n t types of production a c t i v i t i e s (Table 2). An additional $19 m i l l i o n in Canada was earned d i r e c t l y by producers in export revenues, (Table 3)^ down fom $30 m i l l i o n the previous year.** Foreign d i s t r i b u t o r s primarily buy feature films and t e l e v i s i o n programs and revenue to producers from these categories was $3.3 m i l l i o n . Additional buyers of feature films are pay-television services ($188 thousand) and to some degree, conventional t e l e v i s i o n ($1.2 m i l l i o n ) . However, i t i s not possible to ascertain how much 4. Government of Canada, " S t a t i s t i c s on the Film Industry," S t a t i s t i c s Canada Cat. 87-204, Table 3, 1987-1988. 5. Ibid., Table 4. 6. Government of Canada, " S t a t i s t i c s on the Film Industry," S t a t i s t i c s Canada Cat. 87-204, Table 4, Annuals 1986-1987 and 1987-1988. 17 TABLE 2 Total Production Revenue, by Oast of Custom«r and by Province of tha Production Company 1987-1688 Distributors Free Television Pay/Cable Television Advertlslnn Aoondea Educational Institutions Government Province or Region Number of firms Revenue VSpool Number of Revenue W00)._ Number of firms Revenue Number of Aims Revenue y$oool Number of firms Revenue •(two) Number of Revenue firms •'S0O0) Atiartoc-Atlantique Quebec - Quebec Ontario Manitoba Saskatchewan Alberta British Columbia, Yukon & Northwest Territories Columbia Britannique. Yukon et Territories Nord-Ouest Canada 5 33 58 1 $13 $17,538 $17,047 $7 $721 4 50 79 1 1 3 $175 $37,955 $44,468 9 20 $649 $5,529 9 21 74 6 3 4 $6,760 $599 $16,741 $85,653 $643 $347 $1,531 $8,587 $114,101 4 16 $251 $226 $2,196 $32 $20 $879 12 39 58 5 7 12 $1,327 $5,327 $8,611 $241 $266 $2,087 $4,245 Industry Other Production Company _Qjher_ Unspecified Total All Customers Province or Region Atlantic-Atlantique Ouebec - Quebec Ontario Manitoba Saskatchewan Alberta British Columbia, Yukon & Northwest Territories Columbia Britannique, Yukon et Territories Nord-Ouest Canada Number of "nra Revenue f$O00' Number of firms Revenue •($000) Number of Dim: Revenue •'$ooo' Number ol firms Revenue •($0001 Number of Dans Revenue 13 42 112 4 6 13 30 220 $1,471 $9,723 $46,400 $410 $611 $3,139 $3,854 $65,608 3 22 53 2 2 5 13 100 $77 $2,127 $14,481 $8,423 $25,346 42 2 3 $621 $1,216 $8,845 x $64 $1,347 $345 $13,446 2 12 $6,153 $305 $9,102 21 116 277 10 10 22 63 519 $4,650 $94,189 $239,383 $2,395 $1,313 $10,112 $26,700 $378,742 TABLE 3 EXPORT SALES, BY CLASS OF CUSTOMER AND PROVINCE OF THE PRODUCTION COMPANY: 1987-88 CLASS OF CUSTOMER Distributors Free Television Pay/Cable Television Advertising Institutions Educational Institutions Province No, <?f Firms Revenue No. of Firms Revenue No. of Firms Revenue No. of Firms Revenue No. of Firms Revenue '($000) '($000) '($000) '($000) '($000) Ouebec 7 $871 9 859 - - - - - - - 2 x Ontario 18 $3,304 11 1,234 4 x 7 x 5 x Other 2 x 1 5 65 2 x 1 x Canada 27 $4,278 25 2,158 6 188 8 7,019 7 15 CLASS OF CUSTOMER Government Industry Other Production Company Other Total Export Revenue Province No, of Firms Revenue No. of Firms Revenue No. of Firms Revenue No. of Firms Revenue No. of Firms Revenue '($000) '($000) '($000) '($000) '($000) Ouebec -- - - -- 1 x - - 16 2,001 Ontario 1 x 4 1,429 4 4,024 1 x 43 17,035 Other 1 x - 3 x 1 x 10 439 Canada 2 14 4 1,429 8 4,338 2 x. 69 19,495 1 For reasons of confindentiality, other province production revenue from foreign distributors has been included with Ontario. of t h i s revenue was received by companies s p e c i f i c a l l y for feature f i l m production. Of the 27 companies involved in t h i s a c t i v i t y , v i r t u a l l y a l l were located in Quebec (7 firms) and Ontario (18 firms). Data in Table 4 7 i s presented to indicate the increase in t o t a l production revenues in B.C. between 1979 and 1983. However, t h i s breakdown of production categories and data regarding revenue i s used only as a general guide.^ Production revenues in B.C. increased to $8.1 m i l l i o n in 1983, up from $3.0 m i l l i o n in 1979. Revenue from feature films was very i n s i g n i f i c a n t compared to Ontario and Quebec, declining to $15 thousand d o l l a r s from $300 thousand in 1980 and increasing again to $217 thousand in 1983. Approximately 80 per cent, or $6.4 m i l l i o n of t o t a l production revenues, was earned from the production of t e l e v i s i o n commercials, i n d u s t r i a l , and educational films by B.C. producers in 1983. 7. Government of Canada, "Culture S t a t i s t i c s , " S t a t i s t i c s Canada Cat. 87-620, 1977-1979. 8. In these years, S t a t i s t i c s Canada data broke down revenues based on only four categories: feature films and shorts, t e l e v i s i o n programs, t e l e v i s i o n commercials, and i n d u s t r i a l and educational programs. Respondents include only on-going production companies. However, the usual pattern for the production of feature films or t e l e v i s i o n series i s to incorporate a separate company through which to finance the production or productions involved. Thus, the data from Table Four does not r e f l e c t the production budgets (value) of these productions. Information concerning such productions w i l l be examined in Chapter Three when information regarding government programs i s looked at. 20 TABLE 4 REVENUE FROM THE SALE OF PRODUCTIONS BY TYPE OF PRODUCTION AND REGION OF PRODUCTION COMPANY 1979-83 (1) ($000) Region and Type of Revenue 1979-80 1980-81 1981-82 1982-83 Percentage Change 1983-84 1979-1983 British Columbia (2) Theatrical Features Television Programs Television Commercials Industrial & Educational Quebec Theatrical Features Television Programs Television Commercials Industrial & Educational Ontario Theatrical Features Television Programs Television Commercials Industrial & Educational Otehr Provinces Theatrical Features Television Programs Television Commercials Industrial & Educational TOTAL: All Provinces 300 240 1.740 672 2.952 3,214 7.014 9.350 2.014 21.592 1,451 17,657 27.626 9,393 56.127 44 176 701 10.717 11.638 15 166 1.747 743 2,671 4.429 11.971 13,599 3.340 33,339 1,168 19.466 227.813 9,663 58.110 188 946 1.147 12,210 14,491 102 209 2,075 906 3,292 12.086 11,259 16,256 3,307 42,908 2.801 18,781 31.389 12,659 65,630 46 762 1.352 15.648 17.808 120 1.150 2.755 4,180 8,205 14,341 5,666 14,250 6,107 40,364 6,047 28,360 34,374 25,331 94.112 318 1.088 1,500 7,249 10.155 217 1,516 3.706 2,659 8,098 3,943 13,089 17.685 5.612 40,329 1.555 24,653 37.666 29,375 93.249 322 1.518 1,791 3.508 7.139 Theatrical Features 5.009 5,800 15.035 20,826 6.037 Television Programs 25.087 32,549 31,011 36,264 40,776 Television Commercials 39.417 44.306 51,072 52.879 60,848 Industrial & Educational 22.796 25,956 32,520 42.867 41.154 92,309 108.611 129.638 152,836 148,815 174% 87% 66% -3% 61% (1) Excludes revenue from the rental of production facilities and freelance work for other companies. (2) Includes a small amount of revenue from Yukon and N.W.T. production companies. Source: Statistics Canada, Education, Culture and Tourism Division S t a t i s t i c s Canada data was again revamped in 1985-I986y and was broken down into eight categories. A ninth category (pay/cable-television) was added in 1987 (Table 5). Table 5 indicates that t o t a l production revenue for B r i t i s h Columbia increased to $27 m i l l i o n d o l l a r s in 1988 from $2.0 m i l l i o n in 1979. Of t o t a l production revenues, 32 percent or $8.5 m i l l i o n , was received from the production of t e l e v i s i o n commercials and 25 percent or $6.8 m i l l i o n was received from educational, goverment, and i n d u s t r i a l programs. There were 34 feature films produced by 29 production companies in Canada between 1987-1988. This i s an increase from 26 feature films a year e a r l i e r , and data from S t a t i s t i c s Canada 10 between 1985-1989 show a steady r i s e in feature f i l m production, about 8 films per year (Table 6). 9. Data for 1984 were not published that year. 10. Government of Canada, " S t a t i s t i c s on the Film Industry," S t a t i s t i c s Canada Reports for the years 1986-1989. TABLE 5 TOTAL PRODUCTION REVENUE BY CLASS OF CUSTOMER AND BY PROVINCE OF PRODUCTION COMPANY 1985 - 1988 Revenue ($000) Province and Class of Customer 1985-1986 1986-1997 1967-198? British Columbia Distributors 610 1,045 721 Television Programs 1,614 2.695 1,228 Pay/Cable Television - 3,563 253 Advertising Agencies 6,397 8,321 8.587 Educations Institutions 465 311 642 Government Programs 2,342 3,072 2,341 Industrial Programs 4,924 3,867 3,854 Other Productions Go's 9.927 9,432 8,423 Other (Unspecified) 759 5.592 650 TOTAL 27,039 38,638 26,700 Ontario Distributors 13.006 13.670 17.047 Television Programs 50,490 50,845 44,468 Pay/Cable Television - 3.340 5,529 Advertising Agencies 72.926 67.656 16,741 Educations Institutions 2,367 2,682 226 Government Programs 7,118 11.245 5,327 Industrial Programs 41,695 41,761 46.400 Other Productions Co's 15.122 9.475 14,481 Other (Unspecified) 12,734 18,801 14.998 TOTAL 215.457 219.474 239,383 Quebec Distributors 2,492 14,301 17.538 Television Programs 22.232 24,184 37.955 Pay/Cable Television - 3,012 849 Advertising Agencies 16.959 14.591 16,741 Educations Institutions 1,720 325 226 Government Programs 6.835 8,669 5.327 Industrial Programs 4.871 9.509 9,723 Other Productions Co's 732 2,813 271 Other (Unspecified) 1,122 — 2,032 TOTAL 66.112 77.658 94.189 Other Provinces Distributors 129 399 488 Television Programs 939 497 472 Pay/Cable Television - 119 Advertising Agencies 1.867 2.553 3,120 Educations Institutions 627 147 1.182 Government Programs 2,142 2.336 3,921 Industrial Programs 3,856 2,748 5.631 Other Productions Co's 732 2,723 271 Other (Unspecified) 1.122 — 2,032 TOTAL 11,414 11.403 18,470 320,022 349,212 378,742 23 Of these 34 feature films, 12 were produced in Ontario, 13 were produced in Quebec, and one feature f i l m was produced in B r i t i s h Columbia. 1 1 NUMBER OF FEATURE FILMS PRODUCED IN CANADA BETWEEN 1983-1989 * Highlights for 1988-1989 were available from Ottawa only. There were no further breakdowns. DISTRIBUTION A d i s t r i b u t o r of feature films purchases rights from the producer to d i s t r i b u t e a f i l m in spe c i f i e d markets within defined t e r r i t o r i e s 1 2 for a sp e c i f i e d term. The rights purchased can include any, a l l , or part of the markets of t h e a t r i c a l exhibition (motion picture theatres), pay-television, home video, and conventional t e l e v i s i o n (network and a f f i l i a t e or independent s t a t i o n s ) . The term can range from six months to twenty-five years but i s normally seven to f i f t e e n years. International sales occur 11. Government of Canada, " S t a t i s t i c s on the Film Industry," S t a t i s t i c s Canada, Cat. 87-204, Table 5, Annual, 1987-1988. 12. Examples of t e r r i t o r i e s are: World, North America, Canada, Quebec, canada excluding Quebec, English Canada, United States, any other country, or combination of the above. TABLE 6 1983- 1984 1984- 1985 1985- 1986 1986- 1987 1987- 1988 1988- 1989* 27 22 22 26 34 46 24 where the d i s t r i b u t o r has acquired rights to t e r r i t o r i e s outside Canada. These rights are sold off t e r r i t o r y by t e r r i t o r y and sales can occur at any time. As late as 1972, theatres s t i l l accounted for 70% of d i s t r i b u t o r revenues, but now optimum results from the d i s t r i b u t i o n of any f i l m i s achieved through orderly exploitation in the t h e a t r i c a l and a n c i l l a r y markets, usually in the following order 1^. 1. Theatrical 2. Video 3. Pay-televison 4. Broadcast network t e l e v i s i o n 5. Syndicated (station-by-station sales) t e l e v i s i o n It i s d i f f i c u l t to estimate the proportion of revenues gained from each market; however, a 1984 study from the Film Canada Center offered the guide: t h e a t r i c a l 40% - 75%, video 20%, pay-television 25% - 30%, conventional t e l e v i s i o n 10%. The timing of the revenues from these sources varies from f i l m to f i l m and revenues are spread over several years. The following broad sketch from a 1989 document from Mariah Film Investments 1^ i s an overview of when revenue can be expected to be received from these markets. T y p i c a l l y , approximately 90 percent of t h e a t r i c a l receipts from United States and Canadian d i s t r i b u t i o n are received in the f i r s t twelve months after the f i l m i s f i r s t exhibited, with the remaining 10 percent in the second twelve months. 13. Connie Ede, Film Society P r o b e r ' s Workbook' (Vancouver:Women in 14. Mariah Film Investments, Producer's Workbook, (Vancouver: Women in Film Society, 1989), p. 71. 25 (Theatrical receipts from the rest of the world are t y p i c a l l y received 40 percent in the f i r s t year following i n i t i a l t h e a t r i c a l release, 50 percent in the second year and 10 percent in the t h i r d year.) Home video r o y a l i t i e s are received 80 percent in the f i r s t year following t h e a t r i c a l release and 20 percent in la t e r years. Pay and cable license fees are t y p i c a l l y received in the second and t h i r d years following t h e a t r i c a l release. If the d i s t r i b u t o r i s s e l l i n g to a t h e a t r i c a l exhibitor then she must secure the play-dates for the f i l m in a given market, acquire the necessary number of pr i n t s of the f i l m , and invest in advertising (print, radio, and tele v i s i o n ) to generate audience demand. These expenses, the d i s t r i b u t i o n fee, are usually charged against the producer and, t y p i c a l l y , the fee can be approximately 25 to 45 percent of revenues generated at the box o f f i c e after deducting the exhibitors' expenses and p r o f i t ( i f any). The amount d i s t r i b u t o r s spend on prin t s and advertising vary, and i s l e f t to the di s c r e t i o n of the d i s t r i b u t o r . However, expenses incurred in d i s t r i b u t i n g feature films can be substantial and depend on many factors. These factors include the i n i t i a l response by the public, the nature of i t s advertising campaign, and the pattern of i t s release (e.g. the number of theaters booked and the length of time that a motion picture i s in release). For a major feature f i l m produced and d i s t r i b u t e d by the studios, d i s t r i b u t i o n expenses can range from $4 - $15 m i l l i o n . For a t y p i c a l 26 feature f i l m launch of a Canadian f i l m in Canada, expenses can be between $20,000 and $100,000. These expenses include t e l e v i s i o n and radio advertising, newspaper advertising, and costs in making posters. Dis t r i b u t o r s acquire feature films at any point in the production process, but Canadian films are usually acquired by Canadian d i s t r i b u t o r s before production has commenced. Called "pre-sales", the d i s t r i b u t o r s advance money or invest in the f i l m . D i stributors invest to 1) guarantee a flow of product; 2) secure an equity position that guarantee returns from a l l markets; 3) earn a d i s t r i b u t i o n rights fee, and to 4) produce films. This f i n a n c i a l commitment, in turn, a t t r a c t s government and private sources of financing. The d i s t r i b u t o r t y p i c a l l y agrees to make a minimum payment against d i s t r i b u t i o n proceeds, payable in stages throughout production, upon completion of the f i l m and, sometimes, payments are made to the producer over a period of time. In addition to Canadian d i s t r i b u t o r s , the producers may enter into joint ventures and seek financing from other sources such as foreign d i s t r i b u t o r s and pay-television services. These jo i n t ventures guarantee d i s t r i b u t i o n to a wider market, spread r i s k , and assure market entry. 27 The d i s t r i b u t i o n deals made by f i l m producers and d i s t r i b u t o r s are varied and in the case of the large American d i s t r i b u t o r s "largely depend on the question of who excercises more power over whom".1^ In general, there are f i v e types of d i s t r i b u t i o n deals: 1 . F l a t Sale A producer s e l l s the rights to the feature f i l m for a given sum in a given market. There i s no r i s k because a producer obtains the money upfront but they do not share in any p r o f i t s . 2. P r o f i t Deal This i s the basic method used by the American majors when they acquire independently produced films for d i s t r i b u t i o n in the United States and other markets. They pay for the negative cost of the f i l m but deduct a l l launch costs from the rental revenues and charge a fee which ranges anywhere between 25 - 45 percent of the film's rental and the o r i g i n a l advance to the producer. 3. Gross Deal The d i s t r i b u t o r pays an advance to the producer, the receipts are shared between the d i s t r i b u t o r and the 15. Manjunath Pendakur, "Economic Relations Between Selected Canadian Producers and American Major D i s t r i b u t o r s : Implications for Canada's National Film Poli c y , " Canadian Journal of Communications, (Spring 1985): p. 173. 28 producer from f i r s t d o l l a r (from a l l sources) with no deductions other than the producer's advance, and the di s t r i b u t o r absorbs the launch costs. 4. Straight Royalties S p l i t The producer receives no advance, but both parties s p l i t r i s k and p r o f i t s . 5. Non-Cross-collateralization A producer may obtain a l l the necessary financing needed from a d i s t r i b u t o r and in turn s e l l only certain rights to market the fi l m to that company. For example, the producer may s e l l home video or pay-te l e v i s i o n r i g h t s , separately, to a d i f f e r e n t company, therefore preventing the d i s t r i b u t o r from recouping losses from t h e a t r i c a l release with income from any of the other rights sold. To reduce r i s k , the major American d i s t r i b u t o r s usually i n s i s t on a l l the rights to certain t e r r i t o r i e s so they can recoup some of their costs from t e l e v i s i o n , home video, and pay-television. This advance i s " c r o s s - c o l l a t e r a l i z e d " by the d i s t r i b u t o r . That i s , i f money advanced to the producer and costs of d i s t r i b u t i o n are unrecouped afte r t h e a t r i c a l exhibition, then the d i s t r i b u t o r retains the producer's share of the revenues gained from other rights such as home video. Independent Canadian d i s t r i b u t o r s give small advance guarantees and a smaller f i n a n c i a l commitment towards prin t s and advertising of the t h e a t r i c a l release. 29 Many producers and d i s t r i b u t o r s attend a combination of the annual f i l m and video markets. Held at the same time each year, these markets are used not only to buy rights to t e l e v i s i o n programs and feature films, but serve as an important venue to obtain production financing. The nine major markets are: the Monte Carlo market ( t e l e v i s i o n and cable), the Be r l i n Film F e s t i v a l ( t h e a t r i c a l ) , the American Film Market in Los Angeles ( t h e a t r i c a l and t e l e v i s i o n ) , MIP-TV in Cannes, France ( t e l e v i s i o n and cable), Cannes Film F e s t i v a l ( t h e a t r i c a l and video), MIPCOM ( t e l e v i s i o n ) , and MIFED in Milan, I t a l y ( t h e a t r i c a l and video), the Banff Television F e s t i v a l (television) and NAPTE in New Orleans ( t e l e v i s i o n ) . Canadian D i s t r i b u t i o n Companies The Canadian d i s t r i b u t i o n sector has become complicated because there i s no longer a single set of d i s t r i b u t o r s negotiating with theatre exhibitors for the rights to feature films. Television has spawned made-for-television productions which frequently involves d i r e c t contracting between producers and networks while the advent of pay t e l e v i s i o n and home video has created opportunities for new entrants. As a r e s u l t , an understanding of the structure of the d i s t r i b u t i o n and exhibition sectors involves an understanding of several entertainment industries which d i f f e r in organization. 30 The year 1986-1987 was the f i r s t year that S t a t i s t i c s Canada s p e c i f i e d the fiv e p r i n c i p a l markets that d i s t r i b u t o r s served and i t was the f i r s t year that video wholesalers were included. 1^ These f i v e markets are feature f i l m , conventional t e l e v i s i o n , pay-television, home video, and the non t h e a t r i c a l market. 1^ S t a t i s t i c s Canada reported that there were 180 d i s t r i b u t o r s of f i l m and videos operating in Canada in 1987-1988. Of these, 157 were Canadian-controlled and 23 were subsidiaries of U.S. production-distribution f i r m s . 1 ^ In addition, the p r i n c i p a l a c i t i v i t y of 47 of these 180 firms was video wholesaling. D i s t r i b u t i o n companies are concentrated in Ontario (101 firms) and Quebec (58 firms). In B.C., there are no t h e a t r i c a l d i s t r i b u t o r s . The 13 d i s t r i b u t o r s located in B.C. primarily serve the educational and t e l e v i s i o n markets. In 1987-1988, 833 feature films were d i s t r i b u t e d to the t h e a t r i c a l exhibition market in Canada. Of these, 43 Canadian firms d i s t r i b u t e d 669 1^ feature films (264 English-language, 257 French-language, 148 foreign s u b t i t l e d films) 16. Previous to 1987, S t a t i s t i c s Canada grouped a l l f i l m and video d i s t r i b u t o r s together without regard to the market in which they served. 17. The non-theatrical market includes showings at schools, u n i v e r s i t i e s , i n s t i t u t i o n s such as prisons or hospitals, and commercial airplanes. 18. Government of Canada, " S t a t i s t i c s on The Film Industry," S t a t i s t i c s Canada Cat. 87-204, Table 13, Annual, 1987-1988. 19. These include new and re-issued t i t l e s . A t i t l e may be counted more than once i f i t i s d i s t r i b u t e d by more than one d i s t r i b u t o r . It can also be counted twice i f i t i s released in two languages. 31 while 10 foreign-owned companies d i s t r i b u t e d 164 feature films (142 English-language and 22 French-language f i l m s ) . 2 ^ Of t o t a l d i s t r i b u t i o n revenues of $622 m i l l i o n received from the f i v e markets, $149 m i l l i o n were received from t h e a t r i c a l exhibition in Canada. In t h i s market, Canadian d i s t r i b u t o r s accounted for only $21 m i l l i o n or 14 per cent of t o t a l exhibition revenues, while the foreign firms accounted for $128 m i l l i o n or 86 per cent df t o t a l revenues in t h i s market. 2 1 The 23 Canadian companies received $7.9 m i l l i o n from Canadian feature f i l m s . 2 2 Thus, i t i s estimated that close to 68 per cent of th e i r films were foreign copyright material. Not only are revenues largely a t t r i b u t a b l e to foreign enterprises, they are also concentrated in r e l a t i v e l y few hands. Furthermore, i t i s obvious that the foreign companies are d i s t r i b u t i n g the more commercial or blockbuster films. In Canada, while both the American and Canadian sectors d i s t r i b u t e foreign-copyright films, independent low-budget American or foreign films are more often acquired by Canadian d i s t r i b u t o r s a f t e r production i s completed. Major Hollywood and non-Hollywood feature films such as Platoon are almost always d i s t r i b u t e d in Canada by the major Hollywood d i s t r i b u t i o n companies. These Canadian 20. Government of Canada. " S t a t i s t i c s on the Film Industry," S t a t i s t i c s Canada Cat. 87-204, Table 22, Annual, 1987-1988. 21. Ibid., Table 12 and Table 17. 22. Ibid., Table 15. 32 d i s t r i b u t o r s rarely acquire rights to d i s t r i b u t e a major American f i l m and find i t d i f f i c u l t to buy rights to foreign films because the producers i n s i s t on treating Canada as part of the United States market, thereby including the rights to Canada as part of their negotiations. Although Canada i s tech n i c a l l y a foreign market, the majors treat Canada as part of the i r domestic market by retaining the d i s t r i b u t i o n rights to their own films. 2-* There i s an estimated range of between ten to f i f t e e n d i s t r i b u t o r s in Canada capable of playing f i n a n c i a l roles in the production and d i s t r i b u t i o n of feature films. The others simply mantain inventories of productions and supply these to c l i e n t s upon request. Between 1983-1984, 184 Canadian feature films were di s t r i b u t e d in Canada. No data i s available as to their actual playing time; however in 1985, of three films given awards as box o f f i c e h i t s , only two had box o f f i c e receipts in excess of one m i l l i o n . In 1984, the number one f i l m grossed only $850,000 at the box o f f i c e (Globerman, 1986, p. 94-95). This data has not changed in recent years. Of the major Canadian films released in 1986-1987, the three highest grossing films were David Cronenburg's DEAD RINGERS, which made approximately $1.2 m i l l i o n in Canada; One Magic 23. Manjunath Pendakur, "Economic Relations Between Selected Canadian Producers and American Major D i s t r i b u t o r s : Implications for Canada's National Film P o l i c y , " Canadian Journal of Communications, (Spring 1985): p. 167. 33 Christmas. which grossed $1.5 m i l l i o n in Canada and $15 m i l l i o n in the United States; and The Gate, which grossed $1.85 m i l l i o n in Canada. The range in playing time can be one week on one theatre screen (grossing only $1,000) to four weeks i n i t i a l l y on 16 theatre screens, dropping to one screen afte r one week. A B.C.-produced 1987 feature f i l m , The  Outside Chance of Maximillian Glick, d i s t r i b u t e d by Toronto-based A l l i a n c e Releasing, grossed $250,000 from t h e a t r i c a l exhibition in Canada. THEATRICAL EXHIBITION The exhibitor leases the f i l m from a d i s t r i b u t o r and s e l l s i t to the consumer. A standard agreement between d i s t r i b u t o r and exhibitor often provides for sharing the print media costs of advertising the f i l m in a s p e c i f i c market; however, l o c a l p rint advertising i s paid for by the exhibitor. The "box o f f i c e gross" are revenues c o l l e c t e d at the theatres from ti c k e t sales. The "rental revenues" are the revenues shared with the d i s t r i b u t o r after the deduction of the exhibitor's operating costs. The d i s t r i b u t o r ' s share i s either 90 percent of the balance, or an amount equal to a negotiated fixed percentage of the box o f f i c e revenue, whichever i s greater. Depending on the film's performance, the net revenues can be a substantial amount or possibly even a negative amount. 34 The d i s t r i b u t o r deducts a l l the launch costs related to pr i n t , p u b l i c i t y , shipping, etc., and i t i s from the remaining rental revenues that the producer may receive her share of the revenues. "Generally, the net result of t h e a t r i c a l release w i l l be a gross revenue return of less than 50 percent of the costs of prin t s and advertising. The remaining unrecouped costs are recovered from a n c i l l a r y market sales" (Ede, Connie, 1988). Revenue potential in the a n c i l l a r y markets i s increased by t h e a t r i c a l release because exposure to the advertising and p u b l i c i t y results in heightened audience awareness of the f i l m (Ellis,1987). Where the video license agreement for a f i l m i s completed p r i o r to release of the fi l m , the terms of the agreement usually include requirements that the f i l m be exhibited in a minimum number of designated markets and that the f i l m receive a minimum of a cert a i n d o l l a r amount of advertising during the t h e a t r i c a l release. For these reasons, most independent d i s t r i b u t o r s consider the t h e a t r i c a l release to simply be the necessary forerunner to the more lu c r a t i v e a n c i l l a r y market release ( P h i l l i p s , 1982). Theatrical exhibition i s characterized by a very high l e v e l of concentration and foreign p a r t i c i p a t i o n e s p e c i a l l y in the important urban markets. Two theatre chains, Famous Players and Cineplex-Odeon, dominate t h e a t r i c a l exhibition in Canada. Out of a t o t a l of 1,477 screens, Famous players operates 471 screens and Cineplex-Odeon operates 462 35 screens. Famous Players i s 100 percent owned by the U.S. producer-distributor, Paramount Pictures, which i s , in turn, a subsidiary of Famous Incorporated (formerly Gulf and Western) and Cineplex Odeon i s 49 percent owned by MCA and 29 percent owned by the Bronfman group of Canada. These screens are concentrated in the l u c r a t i v e downtown, f i r s t - r u n (new films are open f i r s t in t h i s market) theatre markets and in the nine p r i n c i p a l urban centers, which account for approximately one-half the Canadian population. Films which appeal to s p e c i f i c limited segments of the marketplace but are f e l t to be too limited for the major chains are exhibited through a loosely a f f i l i a t e d independent c i r c u i t , often c a l l e d "art houses." Because of U.S. a n t i - t r u s t l aws 2 4, the majors no longer own exhibition chains and exhibitors must now b i d 2 ^ for the right to exhibit films. However, in Canada, the majors enjoy a monopoly because bidding does not take place. Instead, exclusionary relationships developed between the majors and Canada's exhibition chains in the 1920's whereby both Famous Players and Cineplex-Odeon developed a policy of non-aggressive competition for films. Each c i r c u i t aligns i t s e l f 24. In 1948, the United States supreme court decided under the Sherman Act, l a t e r c a l l e d the Paramount Decree, that i t was contrary to the public interest for major producer-distributor combines to excercise d i r e c t or in d i r e c t control over American theatre chains. 25. Bidding i s the practise exhibitors in competing geographical areas in the United States use to acquire films or packages of films from major d i s t r i b u t o r s . They o f f e r guarantees of f i l m rental revenues in return for the exclusive right to exhibit the f i l m . 36 with, and receives 100 percent of the product from s p e c i f i c d i s t r i b u t o r s who block book^ their films with that exhibitor. For example, Famous Players exhibits a l l the films from i t s parent company, Paramount, as well as MGM, Twentieth Century Fox, and Warner Brothers. Cineplex-Odeon exhibits a l l the films from Pan Canadian and MCA Universal. These two exhibition chains also have d i s t r i b u t i o n d i v i s i o n s and d i s t r i b u t e some Canadian films. However, when they commit to t h e a t r i c a l d i s t r i b u t i o n , these organizations are usually interested in a l l domestic and sometimes foreign r i g h t s . Because of the i r strong revenue p o t e n t i a l , these exhibitors rely on d i s t r i b u t o r s who hold rights to the American blockbusters such as Star Wars. These d i s t r i b u t o r s have spent large amounts on p u b l i c i t y and advertising which, in turn, a f f e c t s the a v a i l a b i l i t y of theatres because exhibitors prefer films which have been highly publicized. These guarantee p r o f i t s to both exhibitor and d i s t r i b u t o r , reduce uncertainty of box o f f i c e p o t e n t i a l , and assure them of a dependable supply of popular films. In the period between 1980-86, the six highest grossing films had an average share of t o t a l North American t h e a t r i c a l revenues equal to around 30 percent (Motion Picture Association of 26. Block booking i s the practise whereby art exhibitor buys a package of films from a d i s t r i b u t o r no matter what the market value. This reduces r i s k s by guaranteeing p r o f i t s to both parties and helps write off any losses incurred by showing the many marginal films. 37 America, 1986). In e f f e c t , the market i s divided between "block-buster" films and a l l others with the former generating the overwhelming majority of box o f f i c e revenues (Globerman, 1985). Canadian d i s t r i b u t o r s ' access to these major exhibition chains i s limited because they obtain available play dates only after the American d i s t r i b u t o r s have booked their productions. Canadian films have t r a d i t i o n a l l y been given only 3 per cent screentime in Canadian theatres (Cinema Canada, January, 1986). ANCILLARY MARKETS Home Video This market involves f i v e sets of par t i c i p a n t s : producers, manufacturers ( i . e . , c a r r i e r s of the home video label such as Paramount Home Video), duplicators, d i s t r i b u t o r s 2 ^ , and dealers ( r e t a i l e r s ) . Manufacturers receive the d i s t r i b u t i o n rights from the producer and generally contract out the duplication of the f i l m onto cassette, and s e l l the cassette to the d i s t r i b u t o r who, in turn, s e l l s to the r e t a i l o r . The r e t a i l e r may s e l l or rent the cassette to the consumer, although sales are limited (Ede, 1989). Gross r e t a i l revenues are shared roughly in the following proportions: manufacturers 30 percent (which i s 27. The term " d i s t r i b u t o r " i s used d i f f e r e n t l y than in other sectors of the f i l m industry. 38 shared with the producer in royalty payments), duplicators 20 percent, d i s t r i b u t o r s 25 percent and r e t a i l e r s 25 percent. Home video exploitation generally begins six to nine months afte r the i n i t i a l t h e a t r i c a l release and approximately six months to one year p r i o r to release on pay or conventional t e l e v i s i o n . Payment to the d i s t r i b u t o r i s generally made by means of a non-refundable advance made against future r o y a l t i e s (a percentage of sales after costs) from video revenue. The home video market has become the fastest growing market for d i s t r i b u t o r s and producers of feature films. Between 1983 and 1988 d i s t r i b u t o r s ' and wholesalers' revenue from home video in the Canadian market rose from $6 m i l l i o n to $213 m i l l i o n to become the largest single source of reported revenue for the industry out of a' t o t a l of $622 m i l l i o n in sales and rental revenue ( S t a t i s t i c s Canada, 1987-88). Highlights from 1988-89 S t a t i s t i c s Canada data state i t generated $341 m i l l i o n out of a t o t a l of $769 m i l l i o n in sales and rental revenue ( S t a t i s t i c s Canada Highlights, 1988-89). Since the contents of home video are the same as that of the t h e a t r i c a l market, the home video market i s dominated by foreign-copyrighted material. One study estimates that the eleven major foreign manufacturers accounted for between 90 and 95 percent of revenues (Nordicity Group Ltd., July 1985). 39 In 1987, an average t h e a t r i c a l l y released f i l m in the U.S. alone could be expected to s e l l between 75 thousand and 150 thousand video cassette copies, grossing a home video d i s t r i b u t o r between $2.3 to $4.3 m i l l i o n . A blockbuster l i k e Top Gun can ea s i l y s e l l over 300 thousand copies which can result in a $9.3 m i l l i o n return. Foreign sales for many t i t l e s can double these figures (Bruyere, 1985). Some say that i t i s more accessible than foreign t h e a t r i c a l release and estimate that i t can increase revenues tenfold or more ( E l l i s , 1985). Although the Canadian home video market i s very small, they have given Canadian producers small advances of between $3 thousand to $10 thousand against r o y a l i t i e s (Bruyere, 1985). It i s hoped that soon i t w i l l be important enough to generate pre-sales and substantial advances. Pay-Television Although films cannot be shown on pay-television u n t i l the completion of video ex p l o i t a t i o n , or by s p e c i f i c arrangement with the video d i s t r i b u t o r , sales to t h i s market can be made at any time. Most of the programming on pay-t e l e v i s i o n , including feature films, bypasses the d i s t r i b u t i o n system to some extent because pay-television networks are becoming d i r e c t l y involved in the development of productions. Agreements are made between the pay-te l e v i s i o n services and the producers to ensure the pay services of getting the kind of programming they want. 40 Canadian Pay Television Canadian pay-television began operating in 1983. There are three English-language services 2**: 1. F i r s t Choice Canadian Communications Corporation ( F i r s t Choice), serving 500,000 subscribers in Eastern Canada; 2. Allarcom Pay Television Limited (APT), serving 200,000 subscribers in Western Canada; and 3. The Family Channel which began operations in 1988. Generally, for any f i l m which has had a successful t h e a t r i c a l release, i t can be expected that some or a l l of the Canadian pay t e l e v i s i o n services w i l l acquire up to one year's pay t e l e v i s i o n r i g h t s . F i r s t Choice i s often w i l l i n g to license a f i l m prior to production or t h e a t r i c a l release with a usual license fee of $ .10 per production d o l l a r . For example, a $1,000,000 f i l m w i l l be licensed for $100,000. Where films are acquired af t e r production or release, the license fee i s normally a fixed amount per subscriber, with fees being dependent on the number of subscribers at the time the f i l m i s shown. A percentage of t h i s license fee i s pre-sale financing, where they commit to make a minimum payment against license fees, payable in stages throughout the course of production, or, upon delivery of the completed f i l m . This fixed amount per 28. There are also the three specialty services: The Sports Network (TSN), CHUM Limited (MuchMusic) and Chinavision Canada Corporation (Chinavision). 41 subscriber i s often dependent on the t h e a t r i c a l success and v i s i b i l i t y of the f i l m . Canadian pay-television services acquire highly v i s i b l e and commercial American films. Canadian Network Televison Feature films represent a very small proportion of the programming of conventional t e l e v i s i o n which i s largely represented by the two p r i n c i p a l networks in Canada, the Canadian Broadcasting Corporation (CBC) and the Canadian Television Corporation (CTV), their p r i v a t e l y owned a f f i l i a t e d stations, and the Global Television Network. Besides news and current a f f a i r s , the content of t e l e v i s i o n programming i s comprised of made-for-television movies and mini-series. For a c q u i s i t i o n of t h i s type of programming, the majority are completed programs for which they have purchased, but they are beginning to co-produce more frequently with independent producers. Increased exposure of films in the video and pay t e l e v i s i o n markets have contributed to the decreasing numbers of feature films purchased by networks. U n t i l recently, prime time drama at the CBC was comprised of approximately 75 percent American content. The only CBC t e l e v i s i o n series produced in B r i t i s h Columbia was The Beachcombers, which stopped production in 1990 after 17 years. Licensing of Canadian feature-length films by network t e l e v i s i o n i s very l i m i t e d . A d i s t r i b u t o r or broadcastor may make a firm contractual commitment that i s not in cash 42 or w i l l not be paid early enough to be available in cash during production. Therefore, pre-sale financing i s primarily in the form of license fees from t e l e v i s i o n networks and pay-television outlets. License fees from the CBC or CTV range from $150,000 to $250,000 (occasionally as high as $500,000) for showing in prime time. Acquisition decisions are normally made at the network l e v e l in Toronto although regional o f f i c e s have been involved in a number of projects at the development stage. Canadian Syndicated Television Stations The Canadian syndication market i s s t i l l in i t s early stages of development, but i t i s possible to make station-by-station sales to network a f f i l i a t e s or independent stations. These sales may be concluded at any time, but the fil m may not be shown u n t i l the expiry of a l l exclusive windows. One of the largest Canadian groups i s Western International Communications which owns Canwest Broadcsting and Global t e l e v i s i o n . Groups of stations such as t h i s have, in the past few years, established development funds. For example, in 1988 Canwest Broadcasting has made $10 m i l l i o n available over 5 years for the development of t e l e v i s i o n dramas. U.S. Pay-Television American pay-television has been the most lu c r a t i v e market for Canadian programs so f a r . Three of the major pay 43 networks, Home Box Off i c e (HBO), the Disney Channel, and the USA Network, have been involved in co-productions with Canadian producers and as of 1983, have purchased the pay-t e l e v i s i o n rights for 60 Canadian productions, 22 of which were bought prior to production and 9 that were made s p e c i f i c a l l y for HBO. For example, the Disney Channel has invested in two Canadian i n i t i a t e d co-productions, "Danger Bay" and "The Edison Twins". They have continued to p a r t i a l l y finance these series with T e l e f i l m Canada and the CBC for the past few seasons. American pay-television channels and the Public Broadcasting System (PBS) also make presale license or equity investment commitments in Canadian programs (Patterson, 1987). U.S. Network Broadcast Television The U.S. t e l e v i s i o n industry currently spends over $6 b i l l i o n a year on programming and i s the largest t e l e v i s i o n market in the world with 240 m i l l i o n domestic viewers compared to Canada's twenty m i l l i o n viewers (Playback, July 9, 1988). It consists of the four major broadcast networks, the American Broadcasting Corporation (ABC), the National Broadcasting Corporation (NBC), the Columbia Broadcasting System (CBS), and Fox TV, a d i v i s i o n of 20th Century Fox. Their l i c e n s i n g fees for a primetime program range from $800,000 m i l l i o n to $1.5 m i l l i o n an hour compared to Canadian network fees of $250,000 an hour. Each of the networks are extremely competitive with one another, 44 s t r i v i n g for substantial ratings from their programs for commercial advertising revenue. These networks buy very few imported programs but instead, work in close association with th e i r own producers. Only a small percentage of feature films have been licensed to network t e l e v i s i o n and the li c e n s i n g fees have declined. This decline i s attributed to the growth of the pay t e l e v i s i o n and home video markets, and the a b i l i t y of commercial networks to produce and acquire made-for-television movies at a lower cost than license fees previously paid for feature films. Only two Canadian producers have been successful in obtaining co-productiOn agreements with the U.S. networks. The f i r s t was R.S.L. Entertainment Corporation (Robert Lantos and Steven Roth) with Night Heat, a police drama. The second was the V.H. Production Incorporated (Robert Cooper) co-production, Adderly, a spy drama. Both were supported by T e l e f i l m Canada and are broadcast on CTV t e l e v i s i o n . International Markets Foreign Theatrical Exhibition The international markets for feature films are complex and vary somewhat due to currency exchange rate flu c t u a t i o n s . Nevertheless, these markets provide a source of revenue for t h e a t r i c a l d i s t r i b u t i o n , e s p e c i a l l y the major 45 European markets such as B r i t a i n , West Germany, France, and Au s t r a l i a . Sales can range from $3,000 in Iceland to $1 m i l l i o n in Great B r i t a i n . Producers or d i s t r i b u t o r s either attempt to s e l l each t e r r i t o r y one by one, or find a sub-distributor who w i l l buy a l l foreign rights for one lump sum. Many producers hire sales agents to represent their projects in the international marketplace. In Canada, there are several sales agents based in Eastern Canada experienced enough to know the international marketplace very well and who attend to a l l or most of the important f i l m markets. There are approximately ten sales agents in Canada that could perform t h i s r o l e . Foreign Pay and Broadcast Television France and the U.K. have the most complex broadcast t e l e v i s i o n networks outside of North America. However, pay t e l e v i s i o n outside of North America i s not a major market factor. Canadian producers have had the best success with the public broadcasters in the B r i t i s h , French, and West German markets. 46 THE HOLLYWOOD EFFECT The American Majors The h i s t o r i c a l control of the United States feature f i l m industry by the s t u d i o s 2 ^ , often c a l l e d the "majors", i s well known. The majors are characterized by v e r t i c a l operations of production and d i s t r i b u t i o n through related entertainment conglomerates under common ownership and co n t r o l . The eight U.S. "majors" generated average annual revenues in Canada of $12.9 m i l l i o n compared to an average of $725,000 generated by Canadian d i s t r i b u t o r s through Canadian features films. Their combined production budgets are worth over $2 b i l l i o n d o l l a r s annually and they consistently receive ninety percent of f i l m revenues in the U.S. market alone. They have worldwide d i s t r i b u t i o n systems and may receive in the range of 38 per cent to 50 percent of additional revenues by gaining entry into major foreign markets such as the B r i t a i n , France, and Canada (Patterson, 1986). Characteristic of the majors i s their reliance on mass-merchandising techniques of saturation advertising through t e l e v i s i o n , radio, and print to generate audience demand. The major American d i s t r i b u t o r s of the blockbuster 29. The eight leading studios which have production-d i s t r i b u t i o n combinations of th e i r own are: Buena Vista (Disney), Columbia Pictures, Twentieth-Century Fox, Orion Pictures, Paramount Pictures, MGM-United A r t i s t s , Universal- Pictures, and Warner Brothers. Manjunath Pendakur, Ibid., p. 167. 47 films may spend between $2 m i l l i o n and $24 m i l l i o n for p r i n t s , negatives and advertising alone to market a f i l m in the United States and Canada. Widely-read magazines devoted to the industry, such as Premiere, and nationally broadcast shows, such as Entertainment Tonight, highlighing newly released films have national exposure whereas in Canada there i s no such national entertainment news coverage on indigenous production. Although they are the largest source of investment for feature films, they only pay large advances on mass appeal properties that they f e e l can be successful in the American and world markets (Globerman, 1986). A 1985 study 3^ on ten Canadian feature films which had obtained d i s t r i b u t i o n deals in the early eighties with major American d i s t r i b u t o r s revealed that p r o f i t a b i l i t y for Canadian producers remained at best, a "mixed picture". Of eight films for which the author could obtain r e l i a b l e data, f i v e were not in a p r o f i t p o sition, which meant their Canadian investors were s t i l l waiting for returns on their investment. Ant i - t r u s t laws and the advent of t e l e v i s i o n resulted in the loss of a stable market for the majors, i . e . , they began the process of becoming v e r t i c a l l y - d i s i n t e g r a t e d . The large-scale production process of the major studios began to be c a r r i e d out by large numbers of small and spec i a l i z e d companies which subcontracted th e i r services and equipment 30. Manjunath Pendakur, Ibid., p. 169. 48 to producers who organized the f i l m project. The studios began a strategy of decreasing the number of their own productions and increasing production costs in search of blockbuster films. Between 1976 and 1984, the combined production budgets of American feature films increased more than f i v e - f o l d , r i s i n g from $482 m i l l i o n to $2.5 b i l l i o n . This increase r e f l e c t s the higher budgets for individual films rather than an increase in the quantity of films produced. The studios also spread their r i s k by forming a l l i a n c e s with other industries, p a r t i c u l a r l y those with the potential to control and develop technologies associated with v i s u a l media. The smaller companies serve a variety of c l i e n t s , not only the production of feature f i l m but every other market segment such as commercials, i n d u s t r i a l s , and educational films. Only a small minority of the small companies concentrate exclusively on t e l e v i s i o n and t h e a t r i c a l f i l m . Storper defines t h i s complex as an "entertainment industry complex" in which the production and post production companies are committed to certa i n functions but not prec i s e l y to certain products.^ 1 The studios also began to acquire more films after completion by independent producers in order to spread their r i s k . They increased their a c q u i s i t i o n and d i s t r i b u t i o n , in Canada, of independent American, European, and other 31. Michael Storper, The Changing Organization and Location  of the Motion Picture Industry: Interregional S h i f t s in the United States ( C a l i f o r n i a : University of C a l i f o r n i a , 1985), p. 50-58. 49 productions. The result was a shortage of feature films in the v i s u a l entertainment industry. The t o t a l amount of films produced by the studios had f a l l e n by 40% from the mid-70's to the 80's due to the strategy of r e s t r i c t i n g supply through increased production costs, i . e . , from $5 m i l l i o n to $17 m i l l i o n in search of blockbuster h i t s . For example, in 1974 the majors produced 557 films, while ten years l a t e r they produced 311 films. The trend became the increasing p a r t i c i p a t i o n of independent producers such that by 1984, 58% of feature films in the United States were produced by independents and 31% by the majors. The studios have a guaranteed d i s t r i b u t i o n of their f i r s t - r u n films and consistently secure the best locations, release dates, and commited playing time from the exhibitors in the maximum number of theatres. They block-book by s e l l i n g a package of films to an exhibitor, supplying them with a consistent flow of high q u a l i t y films annually. They may open in as many as 1500 theatres at once. They also have the advantage of achieving the maximum number of bookings to smaller independent theatres not associated with theatre chains. By virtue of the number of films they produce, finance, or d i s t r i b u t e at any one time, the studios can c r o s s - c o l l a t e r a l i z e t h e i r films across d i f f e r e n t markets. Any d i s t r i b u t o r v e r t i c a l l y - i n t e g r a t e d with either of the major theatre chains or video chains can use t h i s access to the main points of sale as a means to acquire a l l commercially valuable foreign or domestic films. 50 The t h e a t r i c a l market for Canadian films i s the smallest revenue source for Canadian d i s t r i b u t i o n and production companies. Because of the r e l a t i v e l y few Canadian-produced films compared to the number of imported films, wild variations occur simply on the strength of one or two Canadian films at the box o f f i c e . There i s an upper l i m i t to the Canadian marketplace's capacity to provide a return to the producer on a popular feature f i l m aimed only at the domestic market. Canadian producers need universal d i s t r i b u t i o n of their films in order to achieve break even leve l s or p r o f i t a b i l i t y . In a study by Lyon and T r e b i l c o c k 3 2 , for the Canadian f i l m industry to survive, Canadian independent filmmakers must count on 70% foreign sales. Assuming that an average Canadian feature f i l m costs $3.5 m i l l i o n d o l l a r s , i t i s estimated that the f i l m must generate a box o f f i c e of approximately $16 m i l l i o n ( f i l m rental of approximately $5.6 mill i o n ) in order to recover i t s negative costs plus the costs of p r i n t i n g and advertising (The Canadian Motion Picture D i s t r i b u t o r s Association, 1986). At an acceptable average f i l m rental (for Canada) of around $800,000, i t i s obvious that the Canadian market i s not s u f f i c i e n t l y large for a f i l m producer to recoup such costs. Nor i s t h i s helped by the a n c i l l a r y markets in Canada. The combined f i l m rentals from t e l e v i s i o n and pay-television averaged $500,000 32. Daniel Lyon and Micheal Trebilcock, Public Strategy and  Motion Pictures. (Ontario: Ontario Economic Council, 1982) p. 81-82. 51 for films released by CMPDA member companies in Canada. For those same films, net revenue from the home videocassette market averaged $300,000. For example, the 1983 Canadian feature, Meatballs estimated to have earned approximately $4 m i l l i o n at the Canadian t h e a t r i c a l box o f f i c e , twice what any previously Canadian f i l m had earned. This l e v e l of box o f f i c e gross receipts would net the producer $750,000 - $1 m i l l i o n a f t e r deducting costs and fees of theater, exhibitor, and d i s t r i b u t o r . Assuming a Canadian network sale in the range of $250,000 - $300,000, the maximum revenue generated for the producer in Canada would be about $1.5 m i l l i o n . To break even, a popular Canadian movie would have to gross between $400,000 and $500,000 at the box o f f i c e with about 1/3 to 1/2 that amount coming from Toronto. FEATURE FILM FINANCING IN CANADA Development Financing U n t i l very recently, there were few consistent outlets in Canada for scrip t w r i t e r s or producers to receive development funding. However, the increase in general production lev e l s has created more opportunities and interest in the c r a f t . The importance of investing in s c r i p t development i s widely recognized and can be seen with the increase in private and public development monies available and by an increase in courses and workshops such as PRAXIS, in Vancouver and the increase in applicants to funding 52 a g e n c i e s . In Canada, t he re i s an e s t ima ted e l e v e n m i l l i o n d o l l a r s a v a i l a b l e f o r development a n n u a l l y , coming from a v a r i e t y of s o u r c e s , which i n c l u d e the f o l l o w i n g : 1. P r o v i n c i a l fund ing agenc ie s such as F i l m B.C. and p r o v i n c i a l A r t s C o u n c i l s ; 2. F e d e r a l a genc ie s such as T e l e f i l m Canada, the Department of Communicat ions, the Canada C o u n c i l , and the NFB; 3. P a y - t e l e v i s i o n s e r v i c e s such as the F i r s t Cho i ce development fund , the Foundat ion to Underwr i te New Drama f o r P a y - T e l e v i s i o n (FUND) and Superchanne l ; and, 4. C o n v e n t i o n a l t e l e v i s i o n networks and t h e i r a f f i l i a t e s . There i s an important d i s t i n c t i o n between development and p r o d u c t i o n f i n a n c i n g : the development loans o b t a i n e d by the producer a re u s u a l l y re imbursed or c o n v e r t e d to e q u i t y when the p r o j e c t goes i n t o p r o d u c t i o n . However, i f the p r o j e c t i s not p roduced , fund ing agenc ie s keep the loans on the books, and they can be a s s i gned to the next p r o d u c t i o n agreement. On the o ther hand, the f i r s t d o l l a r of p r o d u c t i o n f i n a n c i n g does not f low u n t i l a l l f i n a n c i n g r e q u i r e d to complete the p r o d u c t i o n i s committed i n a form a c c e p t a b l e to each f i n a n c i e r ( P a t t e r s o n , 1987). To spread r i s k , the l a r g e r p r o d u c t i o n companies have s e v e r a l p r o j e c t s in development, and u t i l i z e d i f f e r e n t sources of f u n d i n g . 53 Production Financing - The Patchwork Qui l t Approach Producers in Canada use a combination of several sources as a means of financing t h e i r feature films. As outlined in the section under d i s t r i b u t i o n in t h i s chapter, producers may receive a portion of the i r financing through d i s t r i b u t o r investment. Other portions may come from federal and p r o v i n c i a l agencies, pay-television networks, conventional t e l e v i s i o n networks, to a lesser degree, home video advances, and other production companies through co-productions. For example, the B.C.-produced feature f i l m , The Outside Chance of Maximillian G l i c k , in addition to p a r t i a l s e l f - f i n a n c i n g , received production financing from T e l e f i l m Canada, B.C. Film, CBC, and BCTV, and a f i l m investment company. 1. Co-production Financing A co-production involves a f i l m produced by two or more production companies, between public or private-sector filmmakers of d i f f e r e n t countries, or the international treaty co-productions administered by Te l e f i l m Canada. 2. Equity financing Since no studio system has ever existed in Canada, producers u t i l i z e d tax shelters. Financing and investment or se c u r i t i e s companies either raise money by providing investment opportunities for other investors or individual investors and investment companies acquire units or shares in the f i l m , either through public prospectus or a private 54 memorandum. Some of these investment companies have up to three areas of corporate a c t i v i t y 3 3 : 1) interim and loan lending, 2) f i l m d i s t r i b u t i o n d i v i s i o n s , 3) a general partner of a l l limited partnerships that place f i l m projects in brokerage houses. Investment companies usually offer entire packages of d i f f e r e n t entertainment categories from d i f f e r e n t companies: feature films, made-for-television movies, and t e l e v i s i o n s e r i e s . Most of these projects have a s i g n i f i c a n t amount of pre-sales from pay-television services and d i s t r i b u t i o n deals. 3. Joint ventures When no formal co-production treaty exists between Canada and another country, or where the exi s t i n g treaty i s not being used, j o i n t ventures can provide an independent producer with greater access to financing, markets, and creative t a l e n t . A producer may seek part of the investment in a f i l m from d i s t r i b u t o r s to boost investor confidence and to guarantee d i s t r i b u t i o n upon i t s completion. If the financing i s coming from more than one source, (for e.g., European d i s t r i b u t o r s , pay-television, network t e l e v i s i o n , etc.,) not only i s the risk spread out among them but also market entry i s assured. 33. The Association of Canadian Film and Television Producers and Ryerson Polytechnical I n s t i t u t e , "A Conference for Investment Industry Professionals on Investment Opportunity in the New Canadian Entertainment Industry," meeting in Toronto, 1985, p. 11. (Typewritten.) 55 4. Interim Financing Federal and p r o v i n c i a l agencies, private investors, investment and s e c u r i t i e s companies that s p e c i a l i z e in bank financing, and cable companies through programs such as the Rogers Telefund may loan money to a producer u n t i l such time as a sale of equity units can occur, or u n t i l pre-sale commitments become due and payable. 5. Venture Capital Programs Many provinces, including B r i t i s h Columbia, offer venture c a p i t a l programs which are available to the f i l m production industry to encourage private investment. Pr o v i n c i a l rules state that a venture c a p i t a l corporation must provide an o f f e r i n g memorandum or prospectus for public investment, but i f i t s s o l i c i t i n g only private investment, they may be exempt from the above c r i t e r i o n . A VCC must maintain an arms-length rel a t i o n s h i p with businesses i t invest in and cannot have majority control in businesses i t invests i n . A VCC offers i t s investors a 30 per cent B.C. tax c r e d i t . 6. Deferral Agreements Although a minor proportion of the financi-ng, production personnel and others may waive a portion (e.g. 10%) of t h e i r fees during p r i n c i p a l photography and post production u n t i l the f i l m has recouped i t s investment. Producers may also defer fees and the deferred amounts are 56 usually equal in proportion across the board. Post production services and laboratories may off e r service discounts for a Canadian feature f i l m . CONCLUSION Production in Canada i s a highly specialized a c t i v i t y as most companies l i m i t their a c t i v i t y to one or two categories of production. Evidence indicates that in any given year, feature f i l m production i s a consistent production category for very few production companies. Feature f i l m production i s more often the result of a collaboration between various individuals who form partnerships for the benefit of a s p e c i f i c project. To date, t h i s a c t i v i t y has been primarily centered in Ontario and Quebec. Because of Canada's small domestic market and the "Hollywood e f f e c t " , producers in Canada, and B r i t i s h Columbia in p a r t i c u l a r , rely on a patchwork approach of financing for their productions. This approach includes p a r t i a l s e l f - f i n a n c i n g , loans and d e f e r r a l s , federal and/or p r o v i n c i a l funding agencies, limited partnership agreements, and to some extent, pre-sales with d i s t r i b u t o r s , home video d i s t r i b u t o r s , and pay and conventional t e l e v i s i o n networks. To recover their investment, producers must have access to d i s t r i b u t o r s who can secure foreign t h e a t r i c a l and a n c i l l a r y r i g h t s . These d i s t r i b u t o r s , in turn, must be capable of absorbing the considerable costs involved in mounting a successful f i l m release because these costs are incurred 57 before any revenue is received and well before any revenue from the anci l lary markets. Since theatrical distributors and broadcasters invest in a feature film projects before completion, they play a significant role in shaping the product they later s e l l to the public, and the product becomes part of the dis t r ibut ion network at a very early stage. Hence, not only must they be f inancial ly stable operations, with rights to both foreign and domestic t i t l e s , but they must be capable of understanding the worth of the project. 58 FEDERAL AND PROVINCIAL FILM POLICIES AND PROGRAMS CHAPTER THREE INTRODUCTION This chapter b r i e f l y reviews the history and development of fi l m p o l icy in Canada, and, in pa r t i c u l a r B r i t i s h Columbia, and concludes with a look at current federal and pr o v i n c i a l f i l m p o l i c i e s and programs. "U n t i l the seventies, a feature f i l m industry did not exist in Canada to any degree. Between 1943 and 1959, only 37 films were attempted in Canada, about 2 films a year" (Task Force on Broadcasting Policy, 1986). In 1967, for example, less than $500,000 had been spent on the production of feature films, although Canadians had spent approximately $103 m i l l i 6 n at the box o f f i c e " (Task Force on Broadcasting Policy, 1986). FEDERAL PROGRAMS 1968 - 1983 Canadian Film Development Corporation Direct federal assistance for Canadian feature f i l m production began in 1968, when the Canadian Film Development Corporation (CFDC) was established with an appropriation of $10 m i l l i o n . The CFDC's objectives were to develop and strengthen the industry with regular sources of financing and to encourage the production of films that would be d i s t i n c t l y Canadian. CFDC programs consisted of development 59 financing, loans, and equity investments in selected films. Between 1968 and 1974, the CFDC participated in the financing of 119 films (68 English-language and 51 French-language projects). However, "Most of the corporation's investments were, in ef f e c t grants since the films in which i t p a r t i c i p a t e d returned l i t t l e of their investment" (Tebilcock, 1983). Between 1969 and 1978, CFDC annual revenues from equity investments never exceeded 20 percent of i t s t o t a l f i l m investments, and i t twice exhausted i t s appropriation. Consequently, the CFDC's f i n a n c i a l c e i l i n g was increased to $20 m i l l i o n in 1971, and $25 m i l l i o n in 1974. In English Canada, because of strong foreign control of d i s t r i b u t i o n , "the production sector h i t a roadblock when Canadian d i s t r i b u t i o n of these films were required (CFDC Annual Report 1974-1975)". These d i s t r i b u t i o n and marketing problems severely reduced the p r o f i t a b i l i t y of Canadian feature films and their p o s s i b i l i t i e s for financing. Consequently, the "solution" to t h i s dilemma was the establishment of the Capital Cost Allowance (CCA) program, a f i n a n c i a l incentive designed to encourage private investment in f i l m production (Kelly, 1987). Capital Cost Allowance Program Since 1954, private investment in f i l m had been encouraged through a 60 per cent Capital Cost Allowance. No d i s t i n c t i o n was made, however, to the o r i g i n of the f i l m . Therefore, there was no great incentive for Canadian 60 investors to invest in high r i s k , obscure Canadian productions in comparison to the lower ri s k box o f f i c e successes produced in the United States. In 1974, as a complementary measure to the CFDC, the government amended the Income Tax Act to provide investors in c e r t i f i e d 1 Canadian feature films with a 100 per cent c a p i t a l cost allowance in the f i r s t year. In 1976, the program was expanded to cover short films and t e l e v i s i o n programs. After 1976, the CFDC became more of an interim financier in which up to $500,000 per f i l m was loaned before permanent financing through the tax shelter was secured. Loans were repaid when the production funds were raised, and u n t i l 1981, the CFDC retained a p r o f i t p a r t i c i p a t i o n . However, in 1983, the CCA was spread over two years and, in 1987, i t was reduced to 30 per cent a year under the 1987 Tax. Reforms (Department of Finance, B u l l e t i n , 1986). 1. I n i t i a l l y , the program required that a c e r t i f i e d Canadian feature f i l m be produced by a Canadian producer, and two-thirds of the individuals f i l l i n g key creative positions (e.g. director and screenwriter) were Canadian. It was agreed that reviews be undertaken, and that the c r i t e r i a would be tightened as the industry developed. For more precision over what constituted a Canadian f i l m , a point system was established in 1976 to award points for each Canadian providing the services in creative positions. By 1982, i t became mandatory that at least one of either the director or screenwriter, and one of the highest or second highest paid actors, be Canadians. Also, to encourage a greater use of Canadian themes and subject matter, extra points are awarded in instances where the author of the work on which the screenply i s based, and the p r i n c i p a l screenwriter are Canadian. (Canadian Film and Videotape C e r t i f i c a t i o n Process, 1983). . 61 O f f i c i a l Co-production Treaties The CFDC also administered the o f f i c i a l co-production t r e a t i e s with other countries for films which met the c r i t e r i a for an o f f i c i a l co-production. 2 Benefits to Canadian producers included collaboration with more experienced producers and creative personnel, access to foreign support programs, foreign markets, and d i s t r i b u t i o n networks (Trebilcock, 1986). To date, T e l e f i l m manages the treaty agreements between 18 countries (Telefilm Annual Report, 1988). Screen and Import Quota Program Between 1967 and 1983, there was very l i t t l e CFDC support for Canadian d i s t r i b u t o r s and there was no regulation of exhi b i t i o n . However, the CFDC would invest up to $25,000 in a CFDC-financed f i l m based on matching funds from a Canadian d i s t r i b u t o r . Nonetheless, "this program was not very a t t r a c t i v e to Canadian d i s t r i b u t o r s because they did not normally invest in the films they d i s t r i b u t e d " (Bergman, 1982). As regards the exhibition sector, the CFDC supervised a voluntary exhibitor quota program, whereby a portion of t h e a t r i c a l screen time was reserved for domestic films. This lasted only a very short period of time. Exhibitors Famous Players and Cineplex-Odeon undertook to 2. Under the Income Tax Regulations, co-productions automatically q u a l i f y for the CCA, whether or not they meet a l l the c r i t e r i a for c e r t i f i c a t i o n (Canadian Film and Videotape C e r t i f i c a t i o n O f f i c e , S t a t i s t i c a l B u l l e t i n , 1985). 62 show Canadian feature films four weeks annually at each of thei r theatres across Canada but both Cineplex-Odeon and Famous Players declined further p a r t i c i p a t i o n after two and a half years. Other countries use mandatory quotas or use an alter n a t i v e strategy of a box o f f i c e tax which i s meant to create funds for domestic production by taxing d i s t r i b u t o r s or exhibitors. There have been unsuccessful attempts to interest the provinces to pa r t i c i p a t e (regulation of t h e a t r i c a l exhibition of films f a l l s under p r o v i n c i a l j u r i s d i c t i o n ) in a co-ordinated quota or tax program-*, but no feder a l - p r o v i n c i a l agreement has been reached to date . The "Boom Years" - Impact of the CCA The years 1977 to 1980 are often referred to as the "boom" years of Canadian feature f i l m production. The combination of direct CFDC support and the stimulus to private investment through the CCA resulted in a substantial growth in the production of Canadian feature films. 3. Daniel Lyon and Micheal Trebilcock, Public Strategy  and Motion Pictures - The Choice of Instruments to Promote the Development of the Canadian Film Industry Toronto: Ontario Economic Council, 1982. 63 Production budgets of these feature films rose from $1.3 m i l l i o n in 1974, for 2 features films, to a peak of $175 m i l l i o n in 1979, for 67 features, before declining to $21 m i l l i o n for 32 features, in 1983 (Table 7 ) . 4 The production budgets l i s t e d in Table 7 include the o f f i c i a l co-productions produced with fiv e other countries. The t o t a l productions budgets of these o f f i c i a l co-productions were $92.8 m i l l i o n . In 1979, when Canada's ov e r a l l co-production a c t i v i t y was f i r s t examined, Canada was the majority partner in 17 of these productions, and equal partner in another 6, contributing 47 percent of the $76 m i l l i o n in t o t a l budgets. Canada's co-production treaty with France has always been the most productive, co-producing 32 out of 44 of these. The CFDC- commissioned study found that imbalances favoured the foreign producer, in such ways as excluding Canadian writers, d i r e c t o r s , and di r e c t o r s of photography (CFDC, 1980). As a r e s u l t , new guidelines were established in 1981 for Canadian producers planning foreign co-productions. Between 1974 and 1985, the percentage of c e r t i f i e d productions being c a r r i e d out by B.C.-based producers remained quite low in comparison to Alberta, Quebec, and Ontario. The value of c e r t i f i e d production budgets in B.C. 4. Canadian Film and Video Tape O f f i c e , S t a t i s t i c a l B u l l e t i n , 1974-1983. TABLE 7 NUMBER AND COST OF SHORT AND FEATURE PRODUCTION BY YEAR: 1974-1983 ($000) Number Total Cost Number Total cost Total Combines Cost Year Features fin thousands of $) Shorts fin thousands of $) Number /In thousands of $ i 1974 2 1,361 2 1,361 1975 20 6,939 20 6,939 1976 23 19,068 35 6,179 58 25,247 1977 39 35,201 58 10,091 97 45,292 1978 35 47,162 73 9,755 106 56,917 1979 ' 67 175,163 121 31,946 188 207,109 1980 53 154,872 136 50,653 189 205,525 1981 39 59,640 102 52,401 141 112,041 1982 34 42,950 92 33,793 126 76,743 1983 32 21,266 62 15,891 94 37,157 Total 774,331 Canadian Film and Video Certification Office, 1985 65 was worth only $.9 m i l l i o n in 1985 after reaching a peak of $8.7 m i l l i o n in 1981 (Table 8).^ The poor performance of these "tax shelter" films i s attested to by a 1980 CFDC survey of 33 productions financed during 1977 to 1979. The survey revealed that the f r a c t i o n of the o r i g i n a l investment returned to the unit holders was only about 25 percent (Lyon and Trebilcock, 1985)^, that "no more than one in twenty-f i v e of those who purchased f i l m units recovered the cost of the i r investment" (Wise, 1981), and more than half of these films were never released (Knelman, 1987). However, a lim i t e d number of these films became commercial successes, most notable being Prom Night, The Changeling, Ticket to  Heaven, and Quest for F i r e although with li m i t e d Canadian content. Furthermore, a limited number of the producers from t h i s period are the p r i n c i p a l s behind Canada's largest production companies: Robert Lantos and Stephen Roth of A l l i a n c e Entertainment, Harold Greenburg, of A s t r a l Bellevue Pathe, and Garth Drabinsky of Cineplex-Odeon. 7 There were many reasons for t h i s 1980 decline in production. The p r i n c i p a l problems were inadequate marketing, d i s t r i b u t i o n , and exhibition, r e f l e c t i n g the lim i t e d involvement of the major t h e a t r i c a l d i s t r i b u t i o n companies as most of the films received l i t t l e , i f any, 5. Canadian Film and Video C e r t i f i c a t i o n O f f i c e , 1985. 6. It i s further noted by these authors that r e l i a b l e s t a t i s t i c s have never been compiled (and may never be). 7. Martin Knelman, Home Movies, (Toronto: Key Porter Books Ltd.) p. 128. TABLE 8 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 Atlantic Provinces 329 422 310 TOTAL VALUE OF CERTIFIED* INDEPENDENT FILM AND VIDEO PRODUCTION, BY LOCATION OF PRODUCTION COMPANY 1984-1985 ($000) British Ontario Manitoba Saskatchewan Alberta Columbia TOTAL Quebec 2,410 9,814 16,799 22,076 68,092 2,436 41,421 1,581 3,646 14,987 30,993 37,975 72,796 120,703 107,739 47,264 285 23,660 20,847 1,470 10,280 24,991 150 29,780 39,752 1,800 38,722 59,670 100 47 362 564 5,340 516 43 30 125 245 24 134 28 97 904 599 10,849 21,812 28,751 1,835 682 827 228 528 276 283 264 3,627 7,136 8,740 5,528 1,426 1,171 952 B.C. as a % of total 1,581 6,684 25,174 48,979 61,290 8.0% 1.0% 1.0% 208,884 2.0% 205,898 3.0% 128,612 7.0% 57,495 10.0% 39,389 4.0% 71,857 2.0% 101,430 1.0% Production certified for purposes of the Capital Cost Allowance en 67 d i s t r i b u t i o n (Theisen, 1985). The production budgets were so high, they could only be recovered with worldwide d i s t r i b u t i o n campaigns, and, a disproportionate part of the budget (as high as 35%) were paid in interest, fees, and commissions to investment brokers, lawyers, and accountants over and above that paid to crews and cast. This led to greatly increased production budgets, increased r i s k , and reliance on success outside Canada. Hence, in the following years, investors were less anxious to become involved in productions of thi s magnitude (Department of Communications, 1985). Revenue Canada's l e g i s l a t i o n governing the CCA made i t a i l l e g a l to p r e - s e l l the f i l m through d i s t r i b u t i o n agreements specifying revenue guarantees, and the f i l m was delivered finished, the most d i f f i c u l t time to s e l l i t (Lantos, 1986). Knowledgeable Canadian d i s t r i b u t o r s were precluded from influencing the type of project thus while there were more properties, many were t o t a l l y unmarketable.^ Investors were required to choose individual films and were unable to invest in production companies that "could spread their r i s k " over a number of projects. Lastly, private investment c a p i t a l was organized by banks and investment companies, or non-industry individuals with l i t t l e experience in f i l m . The "ri s k free" nature of these private 8. Stratavision Inc. The Impact of the Implementation of the Review Procedures of "The investment Canada Act" on  the Competitiveness of the Canadian Film and Video  Industry, Report prepared for the DOC, draf t , c t . 24, 1985. TABLE 9 TELEFILM PRODUCTION SUPPORT, EXCLUDING THE BROADCAST FUND: 1983-1986 ($000) Other Quebec Ontario B.C. Regions TOTAL 83- 84 Budget 17,000 736 - -- 17,746 Telefilm 4,015 136 -- -- 4,151 84- 85 Budget 4,464 3,574 61 - 8,099 Telefilm 855 1,088 20 -- 1,963 85- 86 Budget 403 875 — -- 1,278 Telefilm 168 300 — — 468 Source: Telefilm Canada CO 69 and public offerings and the re s u l t i n g abuses to the tax shelter led to the tax shelter reforms and the 1983 reduction to 30 percent.^ FEDERAL AND PROVINCIAL POLICIES AND PROGRAMS AFTER 1983 A SHIFT TO CANADIAN TELEVISION PRODUCTION CFDC support for interim financing of feature f i l m production declined between 1983 and 1986 (Table 9 ) 1 ^ as the CCA f a i l e d to generate private investment for feature films. Instead, the federal government shifted i t s support to independent production of t e l e v i s i o n programs. As part of the 1983 federal broadcasting strategy, the CFDC was renamed Te l e f i l m Canada and given $35 m i l l i o n annually (raised to $60 m i l l i o n annually in 1987, and $80 m i l l i o n annually in 1989) 1 1 to administer the Canadian Broadcast Program Development Fund. This fund, supported i n d i r e c t l y by taxes on cable services, provided producers with financing for t e l e v i s i o n programs never before av a i l a b l e . As a general rule, up to half of the broadcast fund was given to independent production for the CBC and the other half was for private broadcasters. This coincided with 1983 changes in the CBC's mandate which c a l l e d for a c q u i s i t i o n of 90 9. Peter Grantham, Television International, September, 1988, p. 56. 10. T e l e f i l m Canada, 1985-1986. 11. This $18 m i l l i o n increase i s designated for Quebec companies, resulting in a 50:50 r a t i o of T e l e f i l m support between Quebec companies and other provinces. 70 percent of i t s programming, exclusive of news, sports, and current a f f a i r s , from independent producers by 1990 (Juneau, 1986). Previous to t h i s , there had been very limited involvement by independent production companies in producing Canadian t e l e v i s i o n programs. Instead, the broadcasting industry r e l i e d on foreign programming which could be acquired for less than the cost of aquiring or producing comparable Canadian programs. Further to t h i s , recommendations from the 1986 Report of the Task Force on Broadcasting (The Caplan-Sauvageau Report) c a l l e d for a substantial increase in Canadian content requirements throughout the broadcasting system. Hence, 1986 changes to the Broadcasting Act gave the Canadian Radio-television and Telecommunication Commission (CRTC) 1 2 authority, through "conditions of license," to enact more stringent regulatory p o l i c i e s . This resulted in decisions specifying increases in Canadian content, increased expenditures on Canadian programs, and increased acquistion of independent productions throughout the broadcasting sector. Private broadcasters were required to provide sixty percent Canadian content in prime-time. 1 3 In 1981, CRTC began to regulate pay-television and specialty services. Based on the optimistic subscriber 12. Consistent with i t s mandate under the Broadcasting Act of 1968, the CRTC regulates broadcasting under three sectors: t e l e v i s i o n , radio, cable, and in 1987, pay and specialty services. 13. This amounts to approximately 90 Canadian broadcasts per year (Grantham, Television Business International, September, 1988. 71 projections f i l e d in 1981, the CRTC set r e l a t i v e l y stringent Canadian content conditions. Compliance, together with lower subscriber revenues and massive marketing expenditures, resulted in d e f i c i t s for each of the services (Task Force on Broadcasting, 1985). The CRTC responded in 1986 by reducing the Canadian content requirements. Current regulations required each of the services to spend at least 20 percent of gross subscriber revenues on acq u i s i t i o n of, or investment i n , Canadian programming. They w i l l be required to increase their expenditures on Canadian programs as they further t h e i r subscriber bases. 1 4 Development i n i a t i v e s , by the pay t e l e v i s i o n services, in turn, were spawned. In 1987, the Foundation to Underwrite New Drama for Pay Television (FUND) was established by F i r s t Choice Canadian Communications Corporation to foster the development of new s c r i p t s for feature films and made-for-pay t e l e v i s i o n programming. They commit $1 m i l l i o n annually in interest-free loans, payable on the f i r s t day of p r i n c i p l e photography, to Canadian 14. The CRTC also l i m i t e s the importation of American services that d i r e c t l y a f f e c t the v i a b i l i t y of comparable Canadian pay-television services. For example, they do not authorize services such as Home Box O f f i c e , The Movie Channel, and the Disney Channel for carriage by cable systems in Canada as such services have no Canadian content l e v e l s . 72 s c r i p t w r i t e r s regardless of previous experience. They fund three l e v e l s of s c r i p t development i . e . , treatments, f i r s t and f i n a l d r a f t s . 1 5 In 1989, FUND began a program for more experienced writers, committing a maximum of $50,000 d o l l a r s . The establishment of p r o v i n c i a l f i l m funding agencies began in the early eig h t i e s . Previous to t h i s , there had been l i m i t e d support available through p r o v i n c i a l arts councils, the most notable being the Ontario Arts Council, or d i r e c t l y through s p e c i f i c grants from p r o v i n c i a l m i n i s t r i e s such as in B.C.. In 1982, The Ontario Film Development Corporation (OFDC) with an annual budget of $8.2 m i l l i o n , the Societe generale du cinema du Quebec (SGCQ) with an annual budget of $8.6 m i l l i o n , and the Alberta Film Development Corporation (AFDC) with an annual budget of $4.5 m i l l i o n were established. In 1987, six years l a t e r , B.C. Film was created with an annual budget of $10.5 m i l l i o n over three years. In 1989, Saskatchewan and Nova Scotia followed, with annual budgets of $2.5 m i l l i o n each in both 1989 and 1990. A l l pr o v i n c i a l funding agencies require that a minimum of 75 percent of the t o t a l production budget be spent on s a l a r i e s , wages, and goods and services within the province. 15. FUND Annual Report, 1987-1989. 73 The Broadcast Fund Broadcast fund programs were intended to promote an increase in high qu a l i t y Canadian t e l e v i s i o n productions in the categories of drama, children's programming, and vari e t y . Telefilm's three objectives were to 1) increase financing for private production; 2) increase national and international d i s t r i b u t i o n of Canadian programs; and, 3) to increase awareness and appreciation of Canadian televison and f i l m achievement in Canada and abroad. As stated in the 1983 T e l e f i l m annual report, there was a growing awareness of both the necessity and the pot e n t i a l of international dealings. Broadcast fund programs include s c r i p t development and production financing through interim loans and equity investments. The fund provides one t h i r d of the budget of a given production, and in exceptional circumstances, w i l l provide up to 49 per cent of the budget. To attr a c t investment from the broadcasting and business sectors, the other two thirds must be found from domestic and international sources. To access the fund, i t i s mandatory 74 for producers to have, in addition to meeting the Canadian content requirements, 1 6 a prior license or pre-sales commitment from a Canadian t e l e v i s i o n broadcaster, up to 25 per cent of the budget, or a pay-television service guaranteeing that the production would be shown on t e l e v i s i o n in prime-time within two years Of completion. 1^ T e l e f i l m began to support production in the regions by opening o f f i c e s in Halifax and Vancouver in 1986. As well, the corporation continued to renegotiate the o f f i c i a l co-production t r e a t i e s amending them in many countries to include t e l e v i s i o n . T e l e f i l m encouraged foreign producers and pay t e l e v i s i o n - s e r v i c e s such as Home Box Of f i c e to consider co-ventures with Canadian producers. Representatives from Tel e f i l m , for the f i r s t time, began regular attendence at the major international f i l m and t e l e v i s i o n markets covered in Chapter two. The three foreign o f f i c e s of the National Film Board located in Paris, London, and Los Angeles were transferred to the auspices of T e l e f i l m Canada to f a c i l i a t e co-productions and co-ventures. T e l e f i l m also continued to support the industry through grants to f e s t i v a l s and seminars. 16. T e l e f i l m Canada determines whether a production q u a l i f i e s as "Canadian" by using both the CRTC d e f i n i t i o n and the c e r t i f i c a t i o n c r i t e r i a for Canadian features established under the Income Tax Act for the purposes of the Capital Cost Allowance. Assistance i s given on a s l i d i n g scale depending on the number of Canadian content points the f i l m has. 17. This removed the t e l e v i s i o n sale, a t r a d i t i o n a l source of revenue, from the d i s t r i b u t o r . 75 Between the years 1983-1989, T e l e f i l m invested a t o t a l of $13,674 m i l l i o n for the development of s c r i p t s (Table 1 0 ) . 1 8 TABLE TEN TELEFILM PARTICIPATION IN SCRIPTWRITING AND DEVELOPMENT 1983-1989 ($000) 1983- 1984 1,169 1984- 1985 2,800 1985- 1986 1,405 1986- 1987 3,800 1987- 1988 2,400 1988- 1989 2,100 TOTAL 13,674 Total production budgets for t e l e v i s i o n programs increased to a peak of $198 m i l l i o n in 1987-1988 and declined s l i g h t l y to $172 m i l l i o n in 1988-1989 (Table 1 1 ) . 1 9 T e l e f i l m p a r t i c i p a t i o n between 1983 and 1989 averaged out to approximately 32.1 per cent of t o t a l production budgets. B r i t i s h Columbia producers benefitted from the Broadcast Fund to some degree, but, in fact, the share of Broadcast Fund production c a r r i e d out by producers in the province dropped from nine per cent in 1983-84 to one per cent in 1985-86 and increased to three per cent, or $3 m i l l i o n in 1988-1989 (Table 11). In 1985-1986, $6.9 m i l l i o n in Broadcast Fund production was c a r r i e d out by Alberta 18. P r o v i n c i a l breakdowns by province are not available (Telefilm Annual Reports, 1983-1989). 19. T e l e f i l m Canada Report, 1986. TABLE 11 PROVINCIAL BREAKDOWN OF BUDGET AND TELEFILM PARTICIPATION SINCE THE INCEPTION OF THE BROADCAST FUND: 1983-1989 ($000) Atlantic British %TC B.C. as Provincial Provinces Quebec QnJarJB. Manitoba Alberta Saskatchewan Columbia Ifilal Participation % Ol Total 83-84 Budget - 36,514 11,081 141 - 143 4,857 52,736 21.2% 9.0% Telelilm - 6,438 3,656 44 - 40 1,024 11,202 9.0% 84-85 Budget 266 68,146 62,786 421 1,767 263 5,923 139,572 30.6% 4.0% Telefilm 88 20,780 19,548 130 410 88 1,694 42,738 4.0% 85-86 Budget 3,030 83,163 82,885 6,927 2,140 178,145 37.1% 1.0% Telelilm 1,362 29,239 31,626 - 3,110 - 782 66,119 1.0% 86-87 Budget 1,656 87,548 77,581 3,164 171,571 30.6% 2.0% Telelilm 656 24,226 25,799 - - - 1,234 52,541 2.0% 87-88 'Budget 6,396 85,661 931 198,244 38.4% 5.0% Telefilm 3,105 37,961 37,464 - - - 436 76,180 5.0% 88-89 'Budget 3,333 62,949 97,424 1,695 548 387 6,327 172,664 34.8% 3.0% Telefilm 1,278 24,062 30,400 813 259 190 2,935 60,137 5.0% 32.1%asavg. 4.3% as avg. 1987- 88* Does not include the foreign share ($10,526,499) of co-productions in which Canada is an equal or minority partner. 1988- 89* Does not Include the foreign share ($18,106,430) of co-productions in which Canada is a minority partner cn TABLE 12 SOURCES AND PERCENTAGE OF FINANCING FOR PROG SUPPORTED BY THE BROADCAST FUND: 1988-1989 ($000) Total Production Budget $172,664 Con t r i b u t i o n % Telef i lm Contribution 60,136 3 5 % Canad ian Broadcasters 38,318 2 2 % Private Sec to r 24,751 14% Produce rs /P roduce r Re la ted 9,652 6% Canad ian Distributors 5,201 3% Other Government Sources 6,182 4% Foreign Part ic ipants 28,421 16% T O T A L 172,664 100% 78 producers compared to $2 m i l l i o n by B.C. producers. However, thi s i s due to Alberta's p r o v i n c i a l f i l m fund which allowed producers to lever funds from T e l e f i l m . Film B.C. was not established u n t i l 1987. Although i t i s beyond the scope of t h i s chapter to l i s t the contribution to production financing from other sources for the years between 1983-1989 in c l u s i v e , Table Twelve l i s t s the breakdowns for 1988-1989. It i s important to note that of the $38 m i l l i o n Canadian broadcasters contributed in the form of broadcast rights, an additional $9.2 m i l l i o n not shown above was in the form of investments. As explained in the 1988-1989 Telefi l m annual report, the above financing structure i l l u s t r a t e s that producers use a large proportion of the pre-sale of rights, $38 m i l l i o n to cover production costs while the remaining $9.2 i s retained by producers as guaranteed revenue. S i m i l a r l y , the foreign participants' contribution of $28.4 was applied to production costs; however, an additional $2.2 m i l l i o n not shown above constituted guaranteed returns. As of 1988, there has been ninety co-productions; sixty-three have been between Canada and France, and fourteen have been with the United Kingdom (The Canadian Film and Television Association, 1988). Since 1980, there 79 was also increasing numbers of Canadians in key creative positions which r e f l e c t e d the regulatory changes enacted in 1980 and 1982 concerning Canadian involvement. 2^ Between 1983 and 1986, there had been no impetus for the financing of Canadian feature f i l m s . 2 1 The CCA had been lowered to 30 per cent by the federal government and, despite the infusion of funds from the broadcast fund, feature films remained a low p r i o r i t y to broadcasters. It wasn't u n t i l 1985 that the s t r u c t u r a l weaknesses in the industry were outlined by the federal government. 2 2 These were: 1. the foreign domination of f i l m d i s t r i b u t i o n in Canada and lack of access to the revenues generated; 2. the under-capitalization of production companies due to the limited size of the domestic market, and 3. the concentration of theatre ownership and the v e r t i c a l integration of d i s t r i b u t i o n and exhibition. Feature Film Fund The report's recommendations resulted in the establishment in 1986 of an annual $33 m i l l i o n feature f i l m fund administered by T e l e f i l m Canada. This fund was to 20. For data pertaining to the increase in Canadians in s p e c i f i c creative postions, see data from the Canadian Film and Video C e r t i f i c a t i o n s Process, 1986. 21. It must be noted that some feature films were produced u t i l i z i n g the broadcast fund, including B.C.-based productions, My Kind of Town, Samuel Lount, and Sandy Wilson's My American Cousin in 1984-1985. 22. Government of Canada, "Report of Film Industry Task Force, Canadian Cinema, A S o l i d Base", November 1985. 80 promote the production of c u l t u r a l l y relevant Canadian feature f i l m s . 2 ^ Financing programs consist of equity investment, interim financing, loans, and non-interest bearing advances. To enable producers to reach a wider market, $3 m i l l i o n i s designated for dubbing and s u b t i t l i n g of productions, and to d i s t r i b u t o r s , to enable them to dub foreign films for which they have acquired r i g h t s . In addition to the i n i a t i v e s already undertaken through the Broadcast fund, T e l e f i l m coordinates Canada's p a r t i c i p a t i o n in the three international Canadian f i l m f e s t i v a l s and provides a portion of the funding for the Canadian Centre for Advanced Film Studies in Toronto, Canada's only major f i l m school. Programs under the Feature Film Fund include: 1. Non-interest bearing advances for s c r i p t and project development; 2. Development financing up to a maximum of $100,000 per project and $250,000 per production company; 3. Production financing in the form of equity investments not exceeding 40% of the production budget up to a maximum of $1.5 m i l l i o n and d i s t r i b u t i o n of the same fi l m up to a combined t o t a l maximum of $2 m i l l i o n ; 4. Secured loans to production companies on a project-by-project basis and to production companies on a corporate basis to a maximum of $250,000; and To e s t a b l i s h a rel a t i o n s h i p between production and d i s t r i b u t i o n , producers require a guarantee or advance from a Canadian-owned d i s t r i b u t i o n company guaranteeing the 23. One t h i r d i s designated to Quebec production companies. 81 film's t h e a t r i c a l release in Canada within one year of completion. A l l d i s t r i b u t i o n and sub-distribution agreements which touch the Canadian market in a l l media must be d i r e c t l y through Canadian-owned companies. Any non-Canadian rights not negotiated at the time funds are released w i l l be offered to a Canadian export sales agent. The Feature Film D i s t r i b u t i o n Fund In October 1988, the Feature Film D i s t r i b u t i o n Fund, with an annual budget of $17 m i l l i o n over fiv e years, came into e f f e c t . It i s divided into two parts: 1) a P r i n c i p a l Fund of $13.8 m i l l i o n to help established Canadian d i s t r i b u t i o n companies acquire d i s t r i b u t i o n r i g h t s , primarily to Canadian films but also to foreign films, and to contribute towards marketing Canadian productions; 2) and a Contingency Fund of $1.8 m i l l i o n available to d i s t r i b u t i o n companies with less experience in d i s t r i b u t i n g Canadian films, to enable then to acquire rights to Canadian films only. These are long-term corporate loans can serve as a revolving l i n e of c r e d i t , up to a maximum of $500,000. To be e l i g i b l e , d i s t r i b u t o r s must have at least 24 months of recognized experience and are required to have dis t r i b u t e d at least 12 films in Canada in the 24 months immediately preceding the app l i c a t i o n . At least 2 of the 12 e l i g i b l e films must be c e r t i f i e d Canadian. Morevover, applications between separate e l i g i b l e producers and di s t r i b u t o r s are allowed as joint applications. 82 Film Importation Act - B i l l C-134 The 1985 task report on the feature f i l m industry also recommended that the federal government "make a clear policy statement that Canadian-ownership and control over d i s t r i b u t i o n in Canada i s e s s e n t i a l " and further, "take the appropriate l e g i s l a t i v e and regulatory measures to ensure that t h i s policy i s c a r r i e d o u t " . 2 4 This r e f l e c t s the current view of the federal government's that a stronger d i s t r i b u t i o n sector in Canada would thereby lead to more investment in Canadian films by d i s t r i b u t o r s . As a r e s u l t , l e g i s l a t i o n e n t i t l e d , the Film Importation Act, was introduced to license the importation of feature films for d i s t r i b u t i o n . This was to provide Canadian d i s t r i b u t o r s with equitable opportunity to import and d i s t r i b u t e films to the Canadian market (Telefilm Annual Report, 1987). The l e g l i s a t i o n would require f i l m importers to prove that the rights for a f i l m had been negotiated under a separate agreement unless the foreign d i s t r i b u t o r could show i t had invested more than 50% of the cost of production. The law would es t a b l i s h Canada as a separate d i s t r i b u t i o n market instead of an adjunct to Hollywood's North American system. Canadian d i s t r i b u t i o n companies would also gain the right to d i s t r i b u t e the films not produced by the Hollywood studios, which could be either foreign or independent American 24. Government of Canada, "Report of Film Industry Task Force, Canadian Cinema, A S o l i d Base", November 1985. 83 feature films. Thus, a Canadian-owned d i s t r i b u t o r would be able to handle popular foreign films in Canada, regardless of who controlled the f i l m rights in the United States. In Quebec, since 1986, the majors have been able to d i s t r i b u t e films for which they hold world r i g h t s , but independent American feature films have beendistributed by Quebec d i s t r i b u t o r s . As well, the Quebec Cinema Act prohibits independent foreign and Canadian d i s t r i b u t o r s from d i s t r i b u t i n g in Quebec i f they are not based in the province (Globe and Mail, October, 1986). As most American d i s t r i b u t o r s either own world rights in a f i l m or they are the major investor, i t i s unlikely that the new rules w i l l prevent a p r o l i f e r a t i o n of new foreign investment in the future. Distributors such as Victor Loewry from A l l i a n c e / V i v a f i l m say, "hollywood studios w i l l be able to outbid Canadian companies and continue their domination of the Canadian market" (Kelly, 1987). His company recently bid $2 m i l l i o n for the Canadian rights to RAMBO 111 a non Hollywood U.S. f i l m but that bid was turned down in favor of one from T r i s t a r , a U.S. d i s t r i b u t o r owned by a Columbia/Coca-cola conglomerate. They also bought up Quebec rights to a french f i l m despite a 1986 agreement with the Quebec government to leave those films to Quebec companies. C r i t i c i s m s are that the major d i s t r i b u t o r s w i l l 84 enter into sublicensing contracts (Astral with 20th Century) and be able to use government money to help the major's d i s t r i b u t e foreign and non-hollywood movies in Canada, giving only a small percentage of p r o f i t s to their Canadian partners. B.C. FILM B.C. Film provides support for s c r i p t development, pre-production (to a maximum of $35,000), production financing through equity investments or interest-bearing loans for feature films, t e l e v i s i o n dramas, documentaries, and te l e v i s i o n s e r i e s . Support for s c r i p t development was raised to a maximum of $15,000 in 1990 from a maximum of $10,000. To be e l i g i b l e for s c r i p t development, writers require a l e t t e r of support from a broadcaster or d i s t r i b u t o r . B.C. Film d i f f e r e n t i a t e s between "16w budget" feature films which have budgets of less than $2.4 m i l l i o n and those which are higher. Low budget films are e l i g i b l e for up to $500,000 to a maximum of 50 per cent of the budget (up from 25 per cent) and the others are e l i g i b l e for up to $600,000, to a maximum of 25 per cent of the production budget. B.C. Film only invests in those projects that have f i n a n c i a l guarantees and release commitments from t h e a t r i c a l d i s t r i b u t o r s , broadcasters, or pay-television services, and normally, a guarantee from T e l e f i l m for production financing. The agency provides loans up to $5,000 per fi l m to B.C.-based d i s t r i b u t i o n companies for costs associated with p a r t i c i p a t i o n at international or domestic markets, and producers, for assistance in p r e - s e l l i n g their development packages at these markets. B.C. f i l m also a s s i s t s with professional development for producers and screenwriters, provides support to industry associations and provides support for business seminars. Throughout the f i r s t three years, there have been additional changes to B.C. Film's funding programs. A financing program has been added for t e l e v i s i o n series to a maximum of $750,000 and, as of 1990, B.C. Film w i l l p a r t i c i p a t e f i n a n c i a l l y in the development, production and marketing of international co-productions. This p a r t i c i p a t i o n w i l l be calculated"as a percentage on the proportion of the budget that i s to be spent in Canada and 75 per cent of the Canadian portion must be spent in B.C.. Foreign producers can not apply to B.C. Film d i r e c t l y , and they must work in collaboration with a B.C.-based production company. In September 1990, B.C. Film's o r i g i n a l allotment of $10 m i l l i o n was increased to $15 m i l l i o n over three years. IMPACT OF THE FEATURE FILM FUND. THE DISTRIBUTION FUND, AND  FILM B.C. It wasn't u n t i l the establishment of B.C. Film in 1987, which allowed producers receiving support from the pro v i n c i a l agency to lever funds from T e l e f i l m Canada, that a substantial increase of Te l e f i l m support went to B.C. 86 producers. This increase went to support feature f i l m production in B.C rather than broadcast fund support for te l e v i s i o n production as shown in Table 11. The percentage of T e l e f i l m support to B.C. jumped to 20 percent in 1988-1989 or $7 m i l l i o n for seven feature films (Table 13). Furthermore, Tele f i l m invested a t o t a l of $14.9 m i l l i o n in productions or i g i n a t i n g outside Ontario and Quebec. This sum represents a dramatic increase of $12 m i l l i o n in Telefilm's p a r t i c i p a t i o n to the regions from Telefilm's investment of $2.6 m i l l i o n to the regions the previous year. This increase in t o t a l investment from T e l e f i l m was due to an additional allotment of approximately $11.4 m i l l i o n allocated by the Canadian government in May 1988 for aid in the production of films made outside Ontario and Quebec (Telefilm Canada, 1988-1989). It i s not known i f t h i s additional funding w i l l continue. In 1986-1987, the f i r s t year of the feature f i l m fund, there were no investments made in the production financing of B.C. feature films. Of the $16.2 m i l l i o n invested that year, $6 m i l l i o n went to French-language projects and $10.2 m i l l i o n went to 14 English-language projects located in Montreal and Toronto and 1 in Halifax (Table 1 3 ) . 2 5 In 1987-1988, out of a t o t a l $20.2 m i l l i o n , T e l e f i l m invested $12.4 m i l l i o n in the production of 15 English-language feature films and invested $7.2 m i l l i o n to eight French-language feature films. Of these 23 feature films, 25. T e l e f i l m Annual Reports, 1986-1987, 1987-1988, 1988-89. TABLE 13 PROVINCIAL BREAKDOWN OF BUDGET, NUMBER OF PROJECTS, AND TELEFILM PARTICIPATION SINCE THE INCEPTION OF THE FEATURE FILM FUND: 1986-1989 ($000) Broadcast Fund Atlantic British Total Number B.C. as Production Provinces Quebec Ontario Manitoba Alberta Saskatchewan Columbia of Projects Total % of Total 86- 87 Budget* Telefilm 87- 88 Budget* Telefilm 88- 89 Budget* Telefilm 1,100 1,300 4,845 2,365 6,000 18,143 7,800 35,197 15,478 8,100 39,000 11,100 11,159 4,945 4,877 2,341 7,167 3,307 17,792 6,928 22 23 34 40,300 16,200 56,700 20,200 81,037 35,365 22% 20% * Excludes foreign contributions to co-producitons where Canada has a minority interest. % of TC Participation 1986- 87 1987- 88 1988- 89 40.1% 35.6% 44.0% 88 TABLE 14 SOURCES AND PERCENTAGE OF FINANCING FOR FEATURE SUPPORTED BY THE FEATURE FILM FUND: 1988-198 •($000) Total Production Budgets $81,037 Contribution % 1 Telefi lm Participation $35,365 44% 2 Private Investors $7,237 9% 3 Producers/Producer-Re lated $11,886 15% 4 Distributors $4,154 5% 5 Broadcasters $4,388 5% 6 Other Government Sources $14,730 18% 7 Foreign Participants $3,277 4% Total $81,037 10% 89 11 originated in Montreal, 9 in Toronto, and 2 in B r i t i s h Columbia. A t o t a l of $2.2 m i l l i o n out of the t o t a l $22.6 m i l l i o n went to films originating in areas other than Montreal and Toronto. It must be noted that in t h i s year, Te l e f i l m invested 10 per cent, or $1.4 m i l l i o n , in David Cronenburg's Dead Ringers, which had a budget of $14.2 m i l l i o n . This resulted in lowering Telefilm's o v e r a l l p a r t i c i p a t i o n in feature f i l m budgets to 31 per cent. If t h i s f i l m i s excluded, Telefilm's p a r t i c i p a t i o n would r i s e to 44 per cent. Table 14 breaks down the 1988-1989 sources of financing for feature films into seven c a t e o g o r i e s . 2 6 It i s interesting to note that the contribution of private investors decreased to 9 per cent from 34 per cent in 1986-1987 (not shown below) which r e f l e c t s the reduction in tax shelters. Contributions from producers, productions teams, and service companies in category three i s very s i g n i f i c a n t , worth $11 m i l l i o n , and i s the t h i r d highest category for contributions. In the Canadian d i s t r i b u t i o n category, $4.2 m i l l i o n was used to finance Canadian feature films; however as T e l e f i l m explains, "a further $8.9 m i l l i o n (not shown) was set aside by producers as revenue guarantees" (Telefilm, 1988-1989). This represents a t o t a l of $13.1 m i l l i o n contributed by Canadian d i s t r i b u t o r s to the 34 feature films financed in 1988-1989 which increased from the $6.3 m i l l i o n 26. T e l e f i l m Annual Report, 1988-1989. 90 contributed by d i s t r i b u t o r s in 1987-1988. This increase in d i s t r i b u t o r s ' f i n a n c i a l assistance to Canadian feature films was "largely due to Telefilm's new d i s t r i b u t i o n fund which began in 1988-1989" (Telefilm, 1988-1989). In the f i f t h category, Canadian Broadcasters have doubled their contribution from $2.7 m i l l i o n in 1987-1988 to $4.4 m i l l i o n in 1989. "This $4.4 m i l l i o n was from licenses from pay-television, while a further $700,000 was set aside by producers as revenue" (Telefilm, 1988-1989). The sixth category, other government sources i s the second most s i g n i f i c a n t category, worth $14.8 m i l l i o n . This was due to the contribution of the NFB, which, l i k e T e l e f i l m Canada was allocated extra funding for production in 1988 ($4.4 m i l l i o n ) . The remaining $10.4 m i l l i o n came from the p r o v i n c i a l funding agencies including Film B.C. The seventh category, foreign p a r t i c i p a n t s , contributed $3.3 m i l l i o n for production costs. However, an additional $1.4 m i l l i o n (not shown) was retained by producers as guaranteed revenues (Telefilm, 1988-1989). It i s also important to note that of the $3.2 m i l l i o n contributed by foreign p a r t i c i p a n t s , $2.3 m i l l i o n went towards 8 french-language films and only $895,000 went towards 2 english-language feature films (Telefilm, 1988-1989). 91 CONCLUSION Government attempts to promote the development of a feature f i l m industry in Canada are r e l a t i v e l y new and have had to overcome major obstacles and involved much learning. In the seventies, the federal government focused i t s p o l i c i e s on production through d i r e c t support to producers through the CFDC and through the CCA program. This combination resulted in a tremendous increase in private investment and feature f i l m production. However, since producers must be able to recoup their investment through d i s t r i b u t i o n and exhibition networks both domestically and i n t e r n a t i o n a l l y , t h i s focus by the federal government on production to the exclusion of d i s t r i b u t i o n proved unsuccessful. In the early eighties, development in support for feature films shifted from feature f i l m production, where United States interests controlled d i s t r i b u t i o n and made i t d i f f i c u l t to secure exhibition of Canadian-produced films, to t e l e v i s i o n production, where Canada had exerted more control over d i s t r i b u t i o n channels for broadcasting to assure e x h i b i t i o n . The broadcast fund, through i t s e l i g i l i t y requirements was e f f e c t i v e in l i n k i n g production financing to d i s t r i b u t i o n or e x h i b i t i o n . The results have been considerably better in generating productions aimed primarily at Canadian audiences and in developing a domestic production industry. This had an advantage over the e a r l i e r 92 r e l i a n c e on the CCA, s i n c e p roducer s d i d not r e c e i v e f i n a n c i n g u n l e s s t h e i r t e l e v i s i o n programs were to be a i r e d on Canadian t e l e v i s i o n . The CRTC, through c o n d i t i o n s of l i c e n s e f o r b r o a d c a s t e r s and p a y - t e l e v i s i o n s e r v i c e s , encouraged demand fo r Canadian programs and a s u b s t a n t i a l i n c r e a s e i n Canadian content throughout the b r o a d c a s t i n g system. CRTC r e g u l a t i o n s a l s o ensured the e x h i b i t i o n of most Canadian f e a t u r e f i l m s on Canadian p a y - t e l e v i s i o n . The remain ing d i f f i c u l t y i s tha t p roducer s s t i l l r e c e i v e on l y a sma l l amount of money when they l i c e n s e t h e i r t e l e v i s i o n programs to a Canadian b roadca s te r or a p a y - t e l e v i s i o n network. In 1986, the f e d e r a l government, r e c o g n i z i n g that the u n d e r - c a p i t a l i z a t i o n of most Canadian p r o d u c t i o n companies r e s u l t e d i n an i n a b i l i t y to f i n a n c e f e a t u r e f i l m s , e s t a b l i s h e d the f e a t u r e f i l m fund . However, the f e d e r a l government, through the f u n d ' s e l i g i b i l i t y r u l e s , took ca re to e s t a b l i s h a r e l a t i o n s h i p between Canadian d i s t r i b u t o r s and p roducer s by r e q u i r i n g p roducer s to o b t a i n a guarantee or advance from a Canadian-owned d i s t r i b u t i o n company. The f e d e r a l government a l s o f ocus sed a t t e n t i o n on the d i s t r i b u t i o n s e c t o r by e s t a b l i s h i n g the d i s t r i b u t i o n fund in 1988. 93 The e s t ab l i s hment of p r o v i n c i a l a genc ie s such as B.C. F i l m , T e l e f i l m ' s commitment to a l l o c a t e more fund ing to the r e g i o n s , and r e g i o n a l i n i a t i v e s undertaken by the NFB r e s u l t e d in i n c r e a s e s in r e g i o n a l p r o d u c t i o n , i n p a r t i c u l a r , i n B r i t i s h Co lumbia . E f f e c t i v e as these developments have been, T e l e f i l m ' s c o n t r i b u t i o n to p r o d u c t i o n budgets remains a s i g n i f i c a n t 49% of t o t a l p r o d u c t i o n budgets . Fur thermore , i t i s not c e r t a i n tha t T e l e f i l m ' s commitment to p r o v i n c e s o ther than O n t a r i o and Quebec w i l l c o n t i n u e . O n t a r i o and Quebec s t i l l r e c e i v e a s u b s t a n t i a l percentage of t o t a l T e l e f i l m spend ing , i n both f e a t u r e f i l m and broadcas t funds . P r i v a t e investment in f e a t u r e f i l m s i s d e c r e a s i n g , which in tu rn w i l l r e s u l t i n a h i gh demand f o r development and p r o d u c t i o n f i n a n c i n g from government agenc ie s and i n c r e a s e d c o m p e t i t i o n f o r f i n a n c i n g w i th the l a r g e r , more e s t a b l i s h e d companies in Toronto and M o n t r e a l . The c o n t r i b u t i o n of Canadian d i s t r i b u t o r s towards f i n a n c i n g Canadian f e a t u r e f i l m s i s i n c r e a s i n g ; bu t , a t p re sen t i s more s i g n i f i c a n t i n terms of marke t i ng . Fu r thermore , i t i s d i f f i c u l t t o p r e d i c t whether $17 m i l l i o n a year T e l e f i l m p r o v i d e s to Canadian d i s t r i b u t o r s w i l l r e s u l t i n s i g n f i c a n t i n c r e a s e s in f i n a n c i n g Canadian f e a t u r e f i l m s or i n c r e a s e t h e i r a b i l i t y to a c q u i r e r i g h t s to commerc i a l l y s u c c e s s f u l f o r e i g n f i l m s . These Canadian 94 d i s t r i b u t o r s must compete with the Hollywood majors as well as foreign d i s t r i b u t o r s . Since l e g i s l a t i o n through the Film  Importation Act has not yet been passed, the control by the major Hollywood d i s t r i b u t o r s on Canada's t h e a t r i c a l exhibition market w i l l be expected to continue for many years to come. 95 SURVEY OF B.C. FEATURE FILM PRODUCTION COMPANIES CHAPTER FOUR INTRODUCTION The following chapter outlines the current stage of development of an indigenous feature f i l m production sector in B r i t i s h Columbia. Information was c o l l e c t e d to i l l u s t r a t e i t s present c h a r a c t e r i s t i c s and c a p a b i l i t i e s and to determine the extent to which the factors necessary for an indigenous industry are present. To t h i s end, a questionnaire (Appendix One) was designed and personally administered to executives and producers of eighteen production companies developing feature f i l m projects in 1988. I d e n t i f i c a t i o n of the production companies was f a c i l i t a t e d by discussions with the current chairman of B.C. Film, one member from the B r i t i s h Columbia Motion Picture Association (BCMPA) and a government o f f i c i a l within the Ministry of Tourism, Recreation, and Culture. The questionnaire was structured to obtain data for each company regarding: 1. the nature of the company and the p a r t i c u l a r categories of production engaged i n ; 2. the current (1988) f i l m project; 3. the sources and extent of financing of the current project, and; 4. the concerns of the industry. 96 LIMITATIONS OF METHODOLGY 1. Production Infrastructure Feature filmmaking i s dependent on a production infrastructure that consists of f a c i l i t i e s (studios, stages, labs, equipment), and technical expertise in production and post production. Because of the l e v e l of foreign production in the province, B.C. i s recognised as being very well equipped in these f a c i l i t i e s and technical expertise. A 1986 study on the development of the B.C. production industry 1 indicated that the pattern of location shooting in B.C. has resulted in a substantial volume of post production services being c a r r i e d out by companies in the province. With respect to f a c i l i t i e s , and apart from commercial and community t e l e v i s i o n f a c i l i t e s , there are eight studios in Vancouver. Furthermore, issues related to adequate f i l m production f a c i l i t i e s were examined in two studies prepared for the B r i t i s h Columbia Development Corporation in 1985.2, and there have been several a r t i c l e s in the trade journal, Playback, which l i s t s the major f i l m , t e l e v i s i o n , and commercial studios in Canada. Of these, the Bridge Stages: B.C. Film Centre, and the North Shore Studios are considered two of the leading studios in Canada. 3 Therefore, the Paul Audely and Associates Ltd., T h e Development of the Film Industry in B r i t i s h Columbia, 1986. Quantalytics Inc., The Film and Video Industry in  B r i t i s h Columbia: Industry Structure and Market Survey, August, 1985. Urbanics Consultants Ltd., B r i t i s h  ColumbiaFilm Production F a c i l i t i e s Study, October, 1985. Playback, July 10, 1989; Playback, January 8, 1990. present l e v e l of operations of production studios and post production labs and services in B.C. i s not considered further. 2. The Production Nucleus Previous to 1987, there were only a limited number of low-budget feature films produced in the province. Since there has been very l i t t l e opportunity for producers in the past, the precise number of producers who wish to produce feature films i s impossible to determine. Twenty-three producers were o r i g i n a l l y i d e n t i f i e d , but four could not be reached at the time the survey took p l a c e . 4 These four producers are s i g n i f i c a n t , because each has produced or written feature films before and therefore have a "track record" with funding agencies. In fact, three of these producers went on to produce features in 1988.5 However, the majority of a l l other producers, presently residing in B r i t i s h Columbia, who produced feature films in the seventies and early eighties were i d e n t i f i e d . Because of the c a p i t a l requirements of feature filmmaking, and the e l i g i b i l i t y rules of federal and p r o v i n c i a l funding agencies 4. These were: Sandy Wilson, writer and director of My  American Cousin; Christian Bruyere, an independent t e l e v i s i o n producer and s c r i p t w r i t e r ; Robert Frederick, current l i n e producer for the t e l e v i s i o n series, McGuyver, and Charles Wilkinson, director and writer of the 1984 feature f i l m , My Kind of Town. The feature f i l m , My American Cousin, was actually produced by Ontario-based producer, Peter O'brien. 5. Sandy Wilson went on to produce and write the feature, American Boyfriends in 1988; Robert Frederick produced The F i r s t Season in 1988; and Charles Wilkinson produced the feature, Quarantine in 1988. which require experienced producers, the survey does include a l l of the larger ongoing B.C.-based companies who have expressed interest in developing feature films. 3. Limitations of Questionnaire Data gained from several questions are not able to be used. In p a r t i c u l a r , a question was asked whether the company had been set up for the sole purpose of completing a project. Although a l l companies answered no, in the B.C. Film Annual Report, three out of the seven companies who completed feature films and were involved in the questionnaire had d i f f e r e n t company names, and, in two cases involved additional producers other than those interviewed. Questions directed towards the kinds and number of projects these companies had in development proved problematic because "development" was not s u f f i c i e n t l y defined. However, data about the nature-of these projects were included to i l l u s t r a t e the d i r e c t i o n ( i . e . , t e l e v i s i o n production, documentary production, etc.) the companies were taking. Question thirteen regarding the category of market (domestic or international) their previous features were sold in was not relevant as very few has produced features before. Questions 16 and 17 were directed towards the types of s k i l l s they and their employees possessed. This was not p a r t i c u l a r l y useful as v i r t u a l l y a l l companies l i s t e d a wide selection of production and f i n a n c i a l s k i l l s , p a r t i c u l a r l y the companies who primarily produce t e l e v i s i o n commercials. This f i e l d study was administered in June 1988', nine months after the establishment of B.C. Film and i t s release of funds to e l i g i b l e producers. At the time the survey took place, financing arrangements for many projects had not been completed and very few feature films had finished either p r i n c i p a l photography or post production. Furthermore, only a small number of these films had made arrangements with d i s t r i b u t o r s , and none of the companies were receiving revenues from these films. Because of these factors, questions were directed towards the sources of development and production financing rather than s p e c i f i c domestic or international markets that these films, in the l a s t year, possibly gained entry into. Twelve feature films obtained production financing as a result of funding from B.C. Film and T e l e f i l m Canada between September 1987 and A p r i l 1989. Ten have finished p r i n c i p a l photography and have been in d i s t r i b u t i o n throughout 1989. Seven of these producers were interviewed in the f i e l d study. In addition to very limited mentions about these films in newspaper and. trade magazine a r t i c l e s , there are B.C. Film annual reports covering 1987-1989. These reports simply l i s t the production company and the amount of production financing received through B.C. Film. Hence, a br i e f addendum has been added as part of t h i s chapter. COMPOSITION OF FEATURE FILM COMPANIES IN BRITISH COLUMBIA The composition of indigenous production companies in B r i t i s h Columbia f a l l into f i v e production categories (Table 15). This table indicates that feature films, to date, have not been produced by companies whose revenue TABLE 15 COMPANIES INVOLVED IN FEATURE FILM PRODUCTION IN BRITISH COLUMBIA: 1986-1988 No. of Firms Major Production Activity* FEATURE FILMS Number Completed in Development Television Commercials 1 Government and Corporate Sponsored Television Dramas and Documentaries 14 Feature Films 15 18 34 Television Dramas Documentaries Number in Development Television Commercials Government and Corporate Sponsored Television Dramas and Documentaries Feature Films 2 5 13 5 4 6 TOTAL 25 10 SOURCE: Field Survey, 1988 'comprises companies with revenues >50% from this production category comes from t e l e v i s i o n commercials. Of the eighteen companies, five companies reported that a l l of their revenue came from feature f i l m production although a percentage of their time was devoted to developing t e l e v i s i o n programs as well. The remaining thirteen companies reported that more than 50% of their revenues came from producing government and corporate sponsored films, t e l e v i s i o n dramas, and documentaries. Interest in developing feature f i l m projects i s on the r i s e in B r i t i s h Columbia both in regard to those devoting most of t h e i r time to feature film-making and those involved in other categories of f i l m production. These eighteen companies had a t o t a l of 34 feature f i l m projects and 25 t e l e v i s i o n dramas in development. Companies involved primarily in feature f i l m production reported the highest number of feature f i l m projects in development with an average of 3 films per company (Table 15). The production background of the individuals and their s t a f f ranged from creative: d i r e c t i n g , acting, writing, cinematography, sound recording - to business: finance, banking, business management, administration and market research. When asked the percentage of time each respondent spent in p a r t i c u l a r production areas ( i . e . , s c r i p t w r i t i n g , producing etc.) on the i r current feature f i l m project, a l l respondents claimed that more than 50 per cent of their time was spent as producer. Three respondents claimed that 30 per cent of the i r time was spent s c r i p t writing. Between 1986 and 1988, two of the eighteen companies had completed two feature length f i l m s . One of these films was produced by a company whose revenue came from the 102 production of t e l e v i s i o n dramas and documentaries. This feature f i l m was produced with financing funds from B.C. Film and T e l e f i l m Canada and other sources. At the time of the survey, t h i s company had received a d i s t r i b u t i o n agreement with an Ontario-based d i s t r i b u t i o n company. The second feature f i l m was low-budget f i l m produced by a company whose t o t a l revenues came from feature f i l m production. This f i l m was 100 per cent financed in a partnership with an American-based company. The producers were generally reluctant to reveal their average annual revenues; however, data were obtained for 4 companies for 1986 and 6 companies for 1987 and these figures reveal a range of $20,000 - $3 m i l l i o n (Table 16). CATEGORIES OF PRODUCTION COMPANIES/PRODUCERS 1. Television Commercials These companies have been in existence for an average of nine years and employ between 10 and 13 permanent s t a f f , the highest number of f u l l time employees of a l l the production categories. Of the four production categories, they are the largest employer of freelancers, employing up to 200 free-lancers as technicians, production assistants, make-up a r t i s t s , editors, art d i r e c t o r s , actors and actresses, s c r i p t supervisors, sound engineers, c r a f t service personnel, camera assistants, and directors of photography in 1987. Both companies stated that for the years 1986 and 1987, 100% of revenues came were from the production of t e l e v i s i o n commercials. Only one of the companies reported having one feature f i l m and two t e l e v i s i o n projects in TABLE 16 CHARACTERISTICS OF COMPANIES INVOLVED IN FEATURE FILM PRODUCTIONS BRITISH COLUMBIA AVERAGE NUMBER OF Years in Full time Business Staff Gross Revenues From Production Televis ion Commerc ia l s 9 (5-13) 11 (10-13) Government and Corporate Sponsored 10 (2-23) 3 (1-4) $25,000 Telev is ion dramas and Documentar ies 7 (2-15) 2 (1-14) $50,000 - $3,000,000 Feature F i lms 4 (1-6) 2 (1-4) $22,000 F ie ld Survey, 1988 104 development (Table 15). This company reported spending up to 20% of i t s time in t h i s area in 1988. Both companies plan to s h i f t into feature f i l m and t e l e v i s i o n production in the next f i v e years. No revenues or salary costs were given. 2. Government and Corporate Sponsored Videos These are small companies which are either single ownerships or li m i t e d partnerships of between 2 and 4 persons and they do not employ permanent s t a f f . They have been in existence between f i v e to twenty-three years. They employ freelancers, primarily in the areas of s c r i p t w r i t i n g , production assistants, researchers, d i r e c t o r s , technicians, editors, and production managers. Their revenues primarily came from corporate and government sponsored films; however, a percentage came from such production categories as commercials, educational films, equipment rentals, and supplying post production f a c i l i t i e s . Only one company reported annual revenues of approximately $25,000. 3. Television Dramas and Documentaries This production category contains the largest number of companies. These companies have been in existence an average of seven years and range from two to f i f t e e n years. With one exception, a l l companies are either single ownerships or partnerships of between one and three partners and only one of these has a permanent employee. Three of these companies reported losing one partner or permanent employee between 105 1986 and 1987. These companies reported a t o t a l of 14 feature films in development, an average of two per company, 13 t e l e v i s i o n dramas, and six documentaries. At the time of t h i s survey, one company had finished p r i n c i p a l photography, with financing from B.C. Film and Te l e f i l m . This company had raised the remaining portion of i t s financing through the sale of public issues the preceding year. This company has 14 permanent employees and reported that ninety per cent of i t s 1986 and 1987 revenues came from the production of documentary films. Of a l l the production companies in t h i s survey, t h i s company has the highest number of feature films and t e l e v i s i o n dramas in development: four features, six dramas, and two documentaries (Table 15). 4. Feature Films These companies have been in existence for an average of four years and, with one exception, are characterized by single ownerships or lim i t e d partnerships of two people. The exception i s a private investment company with .two d i v i s i o n s ; 1) a private f i n a n c i a l investment d i v i s i o n that functions as a managing general partner in two fil m investment limited partnerships; and, 2) a private Canadian-cont r o l l e d f i l m production company whose four p r i n c i p a l s act as executive producers on selected projects. Their f i l m investment d i v i s i o n primarily invests in c e r t i f i e d Canadian t e l e v i s i o n and feature films. The production d i v i s i o n reported having f i v e feature films and two t e l e v i s i o n dramas in development. For reasons of c o n f i d e n t i a l i t y , very 106 l i m i t e d i n f o r m a t i o n c o u l d be o b t a i n e d as to i t s o p e r a t i o n s . However, u n o f f i c i a l sources suggest tha t t h i s company i s r e c o g n i z e d by the Canadian Employment and Immigrat ion Commission (the CEIC) as a " p r i v a t e l y a d m i n i s t e r e d investment s y n d i c a t e " and, a c c o r d i n g l y , i s a b l e to a t t r a c t A s i an i n v e s t o r s through B .C . ' s Immigrant I nves to r Program. T h i s company i s e s t ima ted to be worth over $35 m i l l i o n d o l l a r s . CURRENT FEATURE FILM PROJECT For those companies tha t r e c e i v e d e i t h e r development or p r o d u c t i o n f i n a n c i n g f o r t h e i r f e a t u r e f i l m s , i n f o r m a t i o n was ga thered c o n c e r n i n g t h e i r sources of f i n a n c i n g (Tab le 17 and 19). The p r o d u c t i o n budgets of those f e a t u r e f i l m s which has completed p r o d u c t i o n f i n a n c i n g are set out in Tab le 18. Development Funding E l even companies r e c e i v e d development fund ing from v a r i o u s s o u r c e s . In a d d i t i o n to a s i g n i f i c a n t amount of producer involvement in the development of t h e i r p r o j e c t s , the h i ghe s t l e v e l (32 per cent ) was r e c e i v e d from T e l e f i l m Canada and p r i v a t e i n v e s t o r s (29 per c e n t ) . There was very l i m i t e d involvement by F i l m B.C. (3 per cent ) a t the development s tage (Table 17). The remain ing n ine per cent of development monies were o b t a i n e d from d i s t r i b u t o r s , the NFB, the CBC, the Canada C o u n c i l , p r i v a t e t e l e v i s i o n TABLE 17 DEVELOPMENT FUNDING FROM VARIOUS SOURCES FOR CURRENT FEATURE FILM PROJECT Persona l /P roducer Investment 3 2 % Private Investment 2 9 % Federa l (Telefilm) 2 7 % Other Federa l Programs 2% Provincial (B.C. Film) 3% Distributor 1% Broadcaster - C B G 1% - Private 1% Pay-Televis ion 4% T O T A L 100% (N=11) Field Survey, 1988 108 stations, Canadian pay- t e l e v i s i o n services, the Federal Department of Supply and Service (DSS), and the Pr o v i n c i a l Ministry of Industry and Small Business Development. Production Budgets Eight companies had completed production financing for the i r feature films. Total production budgets were $14,872,000 and comprised several low budget films (Table 18). One s c r i p t was based on a Canadian novel and another was based on a radio play. In both cases, the options were purchased and the s c r i p t writing was done by B.C. writers. The remaining six screenplays were o r i g i n a l concepts and were written by the producer. Production Financing Producers received the highest proportion of their production financing from T e l e f i l m Canada's Feature Film Fund (29 per cent) and B.C. Film (25 per cent). These companies received the majority of their development funding from T e l e f i l m with r e l a t i v e l y l i m i t e d involvement by B.C. Film at t h i s stage (only three per cent). A s i g n i f i c a n t amount (22 per cent) came from private equity investment, through public sale, and a small proportion from crew, cast, and service d e f e r r a l s . The remaining 26 per cent came from d i s t r i b u t o r s in the form of revenue guarantees, technical services from another province, license fees from the CBC and Canadian pay-television, and a small amount from the Telefilm's Broadcast Fund (Table 19). TABLE 18 BUDGET OF FEATURE FILMS RECEIVING PRODUCTION FINANCING 2 Government and $3,000,000 Corporate Sponsored $550,000 1 Television Dramas $2,300,000 and Documentaries 5 Feature Films $882,000 $2,800,000 $3,000,000 $2,000,000 $340,000 TOTAL $14,872,000 Field Survey, 1988 TABLE 19 PRODUCTION FINANCING FROM VARIOUS SOURCES: % OF CURRENT BUDGET FROM VARIOUS SOURCES Persona l Investment 12% Private Investment 2 2 % Federal Sources Broadcast Fund 3% Feature Fi lm Fund 29% N F B 1% Provincial (Film B.C.) 2 5 % Other 2% Distributor 4% Broadcaster - C B C 2% - Private Pay-Telev is ion 2% T O T A L 100% (N=8) Field Survey, 1988 111 FACTORS AFFECTING PRODUCTION IN BRITISH COLUMBIA The respondants were asked to l i s t the a reas of most concern to them as a producer/company i n B r i t i s h Co lumbia . T h e i r concerns were ranked i n t o the f o l l o w i n g g e n e r a l c a t e g o r i e s and summarized below. MAJOR CONCERNS Rank 1 Weak b r o a d c a s t / d i s t r i b u t i o n o u t l e t s 2 Lack of good s c r e e n p l a y s 3 Lack of mature p r o d u c e r s / e x p e r t i s e 4 Inadequate government fund ing 5 Lack of C a p i t a l 1 . Weak b r o a d c a s t / d i s t r i b u t i o n o u t l e t s The l o c a t i o n of d i s t r i b u t i o n o u t l e t s in O n t a r i o and Quebec and the co r re spond ing l ack of any main d i s t r i b u t i o n companies i n B r i t i s h Columbia was, by f a r , the major concern of these p r o d u c e r s . There i s on ly one d i s t r i b u t i o n company capab le of d i s t r i b u t i n g f e a t u r e l e n g t h f i l m s l o c a t e d in B.C. . as compared to a dozen l o c a t e d in T o r o n t o . S ince T e l e f i l m r e q u i r e s d i s t r i b u t i o n guarantees i n the development s t a ge , l a r g e t r a v e l c o s t s to Toronto or to the U n i t e d S t a te s in sea rch of d i s t r i b u t i o n i s i n c u r r e d . Producers p o i n t e d out tha t they had l i m i t e d U.S. and i n t e r n a t i o n a l c o n t a c t s and no " t r a c k r e c o r d " f o r approach ing them. 1 12 The CBC was perceived to be a major obstacle to production opportunities because of centralized decision-making and the absence of regional t e l e v i s i o n productions ori g i n a t i n g in B.C. 2. Lack of good screenplays A l l producers pointed out that there was a lack of qua l i t y s c r i p t s . They stressed the importance of developing writers and advised that p r o v i n c i a l programs should focus on the creative aspects (writers and producers) over the technical aspects of filmmaking. They linked "continuity of production" to a a v a i l a b i l i t y and volume of s c r i p t s and projects in a l l phases of development. Furthermore, the successful development of producers, writers, and directors in the United States was linked to the frequent and regular opportunities available to these people for work in t e l e v i s i o n where c r e d i b i l i t y can be established. 3. Lack of Mature Producers/Expertise For a production industry to be viable in B.C., mature and proven producers are needed. Support for creating producers and companies with strong "corporate bases" was mentioned frequently to a t t r a c t corporate and development funding. For the smaller budget films to succeed, large "ongoing production e n t i t i e s " are required with sophistocated executive producers who can arrange the financing necessary to produce the smaller films. 4. Government Funding Mechanisms Concern was shown for policy to develop slowly in accordance with the l e v e l of capacity within the province. 113 The federal tax structure was pointed out to be neither useful nor supportive. There was a mixed attitude towards T e l e f i l m ranging from a perception that Tel e f i l m possessed a "limi t e d sense of the capacities of the Western provinces" to the perception that T e l e f i l m had "funded every B.C.-based project they possibly could have". Some f e l t that federal p o l i c i e s lagged behind other countries in promoting c u l t u r a l l y relevant films because of the tremendous pressure in Canada to make films s i m i l i a r to American fi l m s . Suggestions regarding B.C. Film's programs were that the agency's f i n a n c i a l interest should be r e l a t i v e to the amount of money that they i n i t i a l l y invested in a project and that too much of the producer's p r o f i t s were required. Furthermore, B.C. Film's maximum grant for a one-half hour t e l e v i s i o n drama i s $25,000, whereas a one-half hour series l i k e Danger Bay costs $400 thousand per episode. B.C. Film's development loans should be forgiveable, as in Tel e f i l m Canada's. The producers noted that indigenous f i l m making does not seem to rank very high in the province. Other p r o v i n c i a l ministers should talk about f i l m as being a v i t a l part of the community. They also pointed out that there were no consistent venues in B r i t i s h Columbia, as in Quebec, for public viewing. 5. Lack of Capital Raising c a p i t a l was a time-consuming and arduous process which frequently involved approaching three to six government agencies as well as private investors. 114 TRAINING This section of the questionaire sought information concerning the areas of t r a i n i n g that would be most b e n e f i c i a l to producers in B r i t i s h Columbia. The areas judged most in need of education were knowledge of financing arangements, market research, accounting, business plan preparation, and the d i s t r i b u t i o n industry. Because there are few opportunities for B.C. filmmakers to gain experience, workable mechanisms for t r a i n i n g needed to take place. Although Film B.C. has a small apprenticeship program for producers, the producers f e l t that the Canadian t e l e v i s i o n networks should become more involved in t r a i n i n g programs aimed at d i r e c t i n g and producing. ADDENDUM A t o t a l of $5,482,280 was spent by Film B.C. in the period from September 1987 to A p r i l 1989 and a l l o t t e d to the areas l i s t e d below. CATEGORIES Number B.C. Film of Projects Investment Feature Film 11 $4,561,647 Script Development 35 $ 233,382 Pre-production 4 $ 71,500 Short Production 12 $ 344,868 Non-theatrical 5 $ 47,348 SUBTOTAL 67 D i s t r i b u t i o n Professional Development Bursaries/grants $5,258,745 $ 35,525 $ 46,600 $ 141,410 TOTAL 5,482,280 B.C. Film's t o t a l spending of $5.2 m i l l i o n in 1988 went towards the d i r e c t financing of 67 projects, and $4.6 m i l l i o n , or 83 per cent, of B.C. Film's budget was directed towards the financing of 11 feature films. Other s i g n i f i c a n t sources came from the CBC ($1,364,111), independent broadcasters and d i s t r i b u t o r s ($3,514,150), and the private investment community ($5,722,841). Another s i g n i f i c a n t financing source for these producers was received from public sale of equity units. B.C.'s dramatic increase in feature f i l m productiona (from one feature f i l m in 1987 to 11 out of a t o t a l of 34 Canadian features produced in 1988-1989) r e f l e c t s Telefilm's 1988 commitment to regional production that year as well as the several low budget films that received financing. A focus by B.C. Film on production financing rather than development monies possibly r e f l e c t s the fact that B.C. Film was established six years after most other p r o v i n c i a l agencies and that the majority of these projects, with previous aid from Telefilm, were prepared for production. The establishment of B.C. Film has enabled producers in the province to complete a portion of their financing, to lever funds from T e l e f i l m Canada, and to e s t a b l i s h c r e d i b i l i t y and experience. In 1990, B.C. was a l l o t t e d $15 m i l l i o n in funding (raised from $10 m i l l i o n ) for another three year period. This subsequent allotment of funds to B.C., from T e l e f i l m was worth $12.7 m i l l i o n d o l l a r s as i l l u s t r a t e d in Chapter three. Telefilm's B.C. spending increased from $2 m i l l i o n in 1987 to more than $12 m i l l i o n in 1988. Evidence gained through recent newspaper a r t i c l e s indicate that the opportunity afforded to producers by B.C. Film and Tele f i l m has led to further developments in 1990. A B.C. production company produced and completed a 22 episode t e l e v i s i o n series currently a i r i n g on CTV. An Ontario-based company i s currently co-producing a t e l e v i s i o n series with a B.C. production company interviewed in t h i s survey. This series i s based on a feature f i l m completed by a company interviewed in t h i s survey. Two additional companies interviewed in t h i s survey have formed venture c a p i t a l funds and one of these companies have made bids on Burnaby's Bridge studios, now owned by B.C. Pavilion Corporation. CONCLUSION Though there has been some modest development in B.C.'s production sector in the la s t two years, few companies in B.C. are producing or concentrating exclusively on feature films but serve other markets such as i n d u s t r i a l and government sponsored production. The few companies developing feature films are small, short-term companies (have been in existence less than four years) and are comprised of either individuals or partnerships of one or two people who apply for funding on a project-by-project basis. These producers have been attracted to feature f i l m production primarily because of the opportunities afforded by B.C. Film and T e l e f i l m . As compared to the large Eastern-based companies l i k e A l l i a n c e Entertainment with annual revenues of $100 m i l l i o n , whose p r i n c i p a l s have produced 50 feature films, five°mini-series, and the on-going t e l e v i s i o n series, Night Heat, B.C. companies do not have a large and d i v e r s i f i e d volume of both t e l e v i s i o n and feature f i l m productions from which to gain a cash flow. Since B.C. companies rely heavily on government funding, the two most s i g n i f i c a n t factors for further feature f i l m production have been the opportunities afforded by B.C. Film and T e l e f i l m . 118 CHAPTER FIVE SUMMARY AND RECOMMENDATIONS CANADIAN CONTEXT OF FEATURE FILMMAKING To make a feature f i l m in Canada, producers must obtain financing, bring together a r t i s t i c and technical s k i l l s , obtain access to production f a c i l i t i e s , and arrange for d i s t r i b u t i o n and sales. Although there has been some c r i t i c a l l y acclaimed and f i n a n c i a l successes such as The Decline of the American  Empire (grossing $20 m i l l i o n in sales), very few Canadian feature films have attained the volume in sales needed to incur a s e l f - s u s t a i n i n g feature f i l m industry. Because of Hollywood's control of Canada's exhibition market (only 3-5 per cent of screen time i s accorded to Canadian feature films) and because of our nation's small domestic market, Canadian producers must rely on international sales to break even. Moreover, feature filmmaking in Canada, l i k e in most other countries, i s characterized by great risk and l i t t l e chance of p r o f i t a b i l i t y . Canadian producers are dependent on access to federal and p r o v i n c i a l sources of financing for as much as 62 per cent of t h e i r financing. The balance i s provided by broadcasters, private investors, and d e f e r r a l agreements, or through co-productions with other countries. To obtain t h i s government funding, producers must f i r s t secure a commitment from a Canadian-owned d i s t r i b u t i o n company and d i s t r i b u t i o n plans for international t e r r i t o r i e s must be in place. The. Canadian government i s now supporting a nucleus of Canadian-owned d i s t r i b u t o r s with subsidies to help them esta b l i s h both a c a p i t a l base and contacts in the international marketplace. While the r e t a i l home video market in Canada i s expanding rapidly, i t i s not yet a s i g n i f i c a n t source of financing or revenue for Canadian feature films. As i t matures and integrated chains develop, i t i s hoped that a new source of financing for Canadian feature films w i l l emerge. Domestic t e l e v i s i o n production has also been a factor in Canada's feature f i l m development. The Canadian Broadcasting corporation has played a major role in invigorating the industry by t r a i n i n g writers, d i r e c t o r s , producers, and technicians, giving them the experience of working in the broadcast medium. The CBC i s s t i l l the l i f e l i n e for the independent producer, being by far the biggest buyer of Canadian productions.Successful production companies produce a mixture of both t e l e v i s i o n and feature films. As well, these companies have established relationships with companies in other countries, thereby providing them with an expanded market and opportunites for co-productions. Investors are attracted to ongoing production e n t i t i e s which are capable of producing a consistent output of both t e l e v i s i o n and feature films. Concern for support and development of the arts, including f i l m , have been on the national agenda since the 1930's when the Massey Commission recommended the establishment of an endowment fund for the a r t s . We are in many ways and to an unaccaptably high degree, a c u l t u r a l l y 120 occupied country. The books and peri o d i c a l s we read, the films we watch, the radio and t e l e v i s i o n programs to which we are exposed, are ovewhelmingly foreign and predominantly American and the Canadian component i s marginal at best. The Canadian market for feature films i s dominated by the United States. Unless matched by support at home, the net eff e c t of no support would be to lose a l l of our options while gaining none we don't already have. It i s important that Canadians have access to the works of Canadian creators, works that r e f l e c t Canadian experiences and aspirations from a Canadian perspective. Given the nature and pace of technological development, the small control we currently exert w i l l only dwindle unless appropriate measures are taken to enhance the Canadian c u l t u r a l infrastructure and provide a stronger Canadian alt e r n a t i v e to an all-pervasive foreign culture. They are concerned, as they should be, that are means of communication remain in Canadian hands, the better to r e f l e c t the Canadian r e a l i t y , however that may be perceived by our filmmakers. Since enormous sums of money can be spent to make a f i l m , the governments also use less costly devices whenever possible. New laws, regulations, l i c e n s i n g , and low cost support in areas l i k e marketing, d i s t r i b u t i o n , t r a i n i n g and promotion. B.C.'S FEATURE FILM SECTOR Previous to 1987, there were only a limited number of feature films produced in the province. Chapter four outlined the current stage of development of the indigenous feature f i l m sector in B r i t i s h Columbia. Information based on a self-designed questionnaire was c o l l e c t e d to i l l u s t r a t e the present c h a r a c t e r i s t i c s and c a p a b i l i t i e s of the production nucleus and to determine the extent to which the factors necessary for an indigenous industry are present. This questionnaire was personally administered to executives and producers of eighteen productions companies developing feature f i l m projects in 1988. Information was sought regarding the nature of the production company, categories of production engaged i n , the current (1988) feature f i l m , sources and extent of financing of the current feature f i l m , and the concerns of the industry. Table 16 from the f i e l d survey i l l u s t r a t e s that B.C.'s feature f i l m sector i s comprised of small production companies. They are either single ownerships or limited partnerships of between 2 and 4 persons and do not employ permanent s t a f f . The average gross revenues from productionfor these companies were approximately $30,000. Therefore, these companies do not have enough c a p i t a l to plan and manage substantial feature fi l m or t e l e v i s i o n production. The f i e l d survey examined the sources of financing from these 18 production companies and showed that most companies rely on, and compete for, f i n a n c i a l support from T e l e f i l m and B.C. Film (table 17 and 18). Increases in B.C. feature f i l m production are a dire c t result of success in getting t h i s support. However, Telefilm's funding to the province's filmmakers i s unreliable, evidenced by the production of eleven films in 1988 and only one in 1990 (Table 15). 122 Table 15 from the f i e l d survey shows that the majority of production revenues of B.C. companies i s s t i l l garnered from i n d u s t r i a l and government films and t e l e v i s i o n commercials. Television and feature f i l m production produces only a minority of t h e i r income. A major drawback for B.C. producers i s the geographic distance from head o f f i c e s of e x i s t i n g Canadian broadcasting networks and major feature f i l m d i s t r i b u t i o n companies in Eastern Canada. However, B.C. producers have access to a strong l o c a l base of crews, studio f a c i l i t i e s , and substantial post production, f a c i l i t a t e d by the breadth of American location shooting and commercial production being done in our province. The r e a l i t y i s that, at present, B.C. has small production companies with li m i t e d revenues who produce feature films on a project-by-project basis through the opportunities provided by B.C. Film and T e l e f i l m . Currently, B.C. Film has an allotment of $15 m i l l i o n d o l l a r s which i s to be spread over the next three years, but t h e i r mandate includes funding t e l e v i s i o n and documentaries, thereby reducing the share for feature films. Other factors, such as B.C. producers' annual competition with other provinces for their share- of Telefilm's $35 m i l l i o n d o l l a r feature f i l m fund reduces our annual output to between one and six feature films per year. The Ontario Experience By comparison, Ontario's feature f i l m production equals 10-15 films per year. This l e v e l of output has been consistent in the l a s t ten years. Ontario companies have 123 been the primary b e n e f i c i a r i e s of federal assistance programs and have garnered the majority of t h i s funding since the development of the Canadian Film Development Corporation in 1968 and the Capital Cost Allowance program in 1974. Ontario also has a longer history of funding f i l m a c t i v i t y through the Ontario Arts Council and the Cultural Industries Branch in the s i x t i e s and seventies. Currently, the Ontario Film Development Corporation with an annual budget of $20 m i l l i o n continues t h i s t r a d i t i o n . T e l e f i l m has also been aiding feature f i l m d i s t r i b u t i o n companies, and these are presently located in Ontario. The province also provides p r o v i n c i a l tax c r e d i t s worth $20 m i l l i o n . Thus, Canadian t h e a t r i c a l d i s t r i b u t o r s are investing in Ontario-based feature films, thereby helping a well-established nucleus of reputable international and domestical producers. t The broadcast fund s t i l l gives major support to Ontario companies. Five or six of the largest feature f i l m and t e l e v i s i o n production companies are located in Ontario. Some of these companies began as small i n d u s t r i a l f i l m companies, by marketing their productions to, and developing international contacts with, European and American cable broadcasters and d i s t r i b u t o r s . In Canada, they have co-produced with the CBC, Global, and Canadian pay-television. As well, independent broadcasters such as Global and TV Ontario, the educational broadcaster, has provides s i g n i f i c a n t development financing and enters into co-productions with Ontario-based producers. 124 PROSPECTS FOR FEATURE FILM MAKING IN B.C. Given the above conditions, what are the prospects of establishing a viable f i l m industry in B.C.? The three main factors in achieving t h i s w i l l be: a) the development of several medium-size companies; b) the provision of adequate and consistent funds from federal and p r o v i n c i a l sources; c) the promotion of the supply of good q u a l i t y s c r i p t s . The present B.C. feature f i l m sector has no large or medium-size companies. This has led to the . i n a b i l i t y to u t i l i z e extensive funding on a continuous basis. For example, the number of feature films produced annually since 1986 varies from one to eleven. This e r r a t i c pattern means that resources cannot be planned and l o c a l s c r i p t writers cannot be assured of a regular market. The need i s , thus, to e s t a b l i s h a new, r e a l i s t i c l e v e l of operation for feature filmmaking in B.C. and to provide long term and consistent support. The threshold l e v e l would, therefore, require the following: a) that there be scope for 2-4 firms to develop to medium-size (e.g., $5-10 m i l l i o n per year). b) that federal and p r o v i n c i a l funding be available for 2-5 productions per year (e.g., t o t a l production budgets $3 m i l l i o n each); and, c) that an adequate supply of s c r i p t s be available (e.g., 20- 50 s c r i p t s per year). As stated in Chapter two, the conventional wisdom of the f i l m industry i s that one in ten screenplays are put into serious development. There needs to be a pool of s c r i p t s written B.C. in the range of 10 to 20 s c r i p t s per y e a r . B.C. F i l m c u r r e n t l y p r o v i d e s up to a maximum of $15,000 f o r the development of a f e a t u r e f i l m s c r e e n p l a y . At t h i s fund ing l e v e l , i t would c o s t B.C. F i l m approx imate l y $300,000 to $1 m i l l i o n d o l l a r s a n n u a l l y i n d i r e c t f und ing . B.C. w r i t e r s can a l s o acces s the programs a v a i l a b l e through T e l e f i l m and FUND. T e l e f i l m c u r r e n t l y p r o v i d e s up to a maximum of $25,000 per s c r e e n p l a y . FUND commits $1 m i l l i o n d o l l a r s a n n u a l l y in i n t e r e s t - f r e e l o a n s , payab le on the f i r s t day of p r i n c i p a l photography and have a program f o r more e x p e r i e n c e d w r i t e r s , commit t ing a maximum of $50,000 d o l l a r s . An average Canadian f e a t u r e f i l m c o s t s approx imate l y $1 - $3 m i l l i o n to p roduce . For p r o d u c t i o n f i n a n c i n g , c u r r e n t f e d e r a l f e a t u r e f i l m programs p r o v i d e up to 49 percen t of the f i n a n c i n g (or $1.5 m i l l i o n ) and B.C. F i l m p r o v i d e s up to $600,000, to a maximum of 25 per cent of the budget fo r h i gher budget f i l m s . At t h i s l e v e l of government f und ing , B.C. F i l m would have to commit $ 1 - 2 m i l l i o n a n n u a l l y f o r the p r o d u c t i o n of two f i l m s per y e a r . I t ' s ve ry d i f f i c u l t to a s c e r t a i n the l e v e l of development monies needed and f o r how long a p e r i o d i n o rder f o r s t a b l e p r o d u c t i o n companies to d e v e l o p . However c e r t a i n f a c t o r s a re nece s sa ry : long term p o l i c i e s from f e d e r a l and p r o v i n c i a l a g e n c i e s , r e g u l a t i o n , and a h e a l t h y b r o a d c a s t i n g i n d u s t r y . 126 In o rder to c r e a t e these c o n d i t i o n s , there w i l l be a need f o r a c t i o n by both the f e d e r a l and p r o v i n c i a l governments and t h e i r f i l m development a g e n c i e s , T e l e f i l m and B.C. F i l m . The minimum s teps each w i l l have to take a re se t out below. RECOMMENDATIONS B.C. P r o v i n c i a l Government 1. The p r o v i n c e shou ld p r o v i d e s u f f i c i e n t fund ing to B.C. F i l m ( e . g . $4-5 m i l l i o n per year ) over the next 5 year s f o r p r o d u c t i o n f i n a n c i n g . Other a s p e c t s of B.C. F i l m ' s mandate w i l l r e q u i r e a d d i t i o n a l funds . ' 2. B r i t i s h Columbia shou ld c o n s i d e r o f f e r i n g investment i n c e n t i v e s in the form of tax c r e d i t s comparable to those a v a i l a b l e i n O n t a r i o and Quebec. 3. B r i t i s h Columbia shou ld p r o v i d e a d d i t i o n a l seed money to the Knowledge Network to encourage c o - p r o d u c t i o n s and development. 4. The p r o v i n c e shou ld a c t i v e l y and p u b l i c l y market the ind igenous f i l m i n d u s t r y to B.C. p e o p l e . B.C. F i l m 5. B.C. F i l m shou ld be mandated to c o n s u l t w i th T e l e f i l m , the NFB, CBC, and the CRTC on f i l m - r e l a t e d i s s u e s . 6. B.C. F i l m shou ld promote s t rong p r o d u c t i o n e n t i t i e s and c u l t i v a t e B.C. f i lmmaker s , w r i t e r s , and o ther i n d u s t r y p r o f e s s i o n a l s , both those that a re proven and unproven. 127 7. B.C. F i l m shou ld promote and ma in ta in Canadian and f o r e i g n d i s t r i b u t i o n and broadcas t through c o -p r o d u c t i o n s . 8. B.C. F i l m shou ld promote i n i t i a t i v e s tha t focus on d e v e l o p i n g r e l a t i o n s h i p s between p roducer s i n o ther p r o v i n c e s . 9. B.C. F i l m shou ld des i gn programs to encourage new producer s and the development of low-budget f i l m s . 10. B.C. F i l m shou ld e s t a b l i s h a s c r i p t - w r i t i n g fund and a program to promote the development of 20-50 s c r i p t s per y e a r . T e l e f i l m Canada 11. T e l e f i l m shou ld a l l o t $2-5 m i l l i o n per year to B.C. f e a t u r e f i l m s . 12. The support program f o r d i s t r i b u t o r s shou ld be c o n t i n u e d , c o n c e n t r a t i n g on the e s t a b l i s h e d companies in the e a s t . F e d e r a l Government 13. The F i l m Importa t ion Act shou ld now be passed to g i v e Canadian d i s t r i b u t o r s the o p p o r t u n i t y to o b t a i n f o r e i g n d i s t r i b u t i o n ( i n c l u d i n g v i d e o r e t a i l ) r i g h t s . 14. An a d v i s o r y committee shou ld be e s t a b l i s h e d to a d v i s e and r e p o r t on i n d u s t r y comp l i ance . 15. The CBC shou ld be funded to ensure that t h e i r mandate (95 per cent Canadian con ten t ) i s r eached . CRTC should continue to monitor Canadian content requirements by pay-television services thus ensuring that as revenues increase, Canadian content also increases. 130 BIBLIOGRAPHY REPORTS OF PROVINCIAL AND FEDERAL FILM FUNDING AGENCIES A l b e r t a Mot ion P i c t u r e Development C o r p o r a t i o n . Annual Repo r t s . 1985-1986, 1986-1987, 1987-1988, 1988-1989. B a s s e t t , John . The F i l m Indus t ry i n O n t a r i o . O n t a r i o M i n i s t r y of I ndus t ry and Tour i sm, 1973. B.C. F i l m . Annual R e p o r t s . 1987-1988, 1988-1989. B.C. F i l m Indus t ry A s s o c i a t i o n and T e l e f i l m Canada. M inutes of Meet ing w i th Members. February 3, 1988. ( Typew r i t t en . ) B i r d R. M.; Bucovsky M.W.; and and Yatchew A. Tax I n c e n t i v e s  f o r the Canadian F i l m I n d u s t r y . I n s t i t u t e f o r P o l i c y A n a l y s i s , 1981. Bureau of Management C o n s u l t i n g . F i l m Study. Ottawa: Supply and S e r v i c e s Canada, 1976. Canadian F i l m Development C o r p o r a t i o n . Annual Repor t . 1981— 1982. Canadian F i l m Development C o r p o r a t i o n . Annual Repor t . 1978-1979. Cox, K i rwan. "The N a t i o n a l F i l m Board and T e l e v i s i o n , " Task  Fo rce on B r o a d c a s t i n g P o l i c y . 1986. ERA C o n s u l t i n g Economists L t d . An E v a l u a t i o n of the Impact  on the Canadian Fea tu re F i l m Indus t ry of the Inc rease  to 100% of the C a p i t a l Cost A l l owance . Ottawa: S e c r e t a r y of S t a t e , 1979. Government of Canada. " F l o r a MacDonald Announces New P o l i c y to L i c e n s e the Impor ta t ion of F i l m s f o r D i s t r i b u t i o n i n Canada, " News R e l e a s e . Feb rua ry , 1987. Government of Canada. Department of Communicat ions, Canadian F i l m and V ideotape C e r t i f i c a t i o n O f f i c e . The Canadian  F i l m and V ideotape C e r t i f i c a t i o n P r o c e s s : I n t r o d u c t i o n . 1983. Government of Canada. Department of Communications ( P a c i f i c Reg i on ) . "A P r o f i l e of the B r i t i s h Columbia Program P r o d u c t i o n I n d u s t r y . " 1986. Government of Canada. " S t r u c t u r e of the Canadian F i l m I n d u s t r y , " Ottawa: 1985. Government of Canada. Report of Film Industry Task Force, Canadian Cinema, A S o l i d Base. November, 1985. Government of Canada. The National Film and Video Pol i c y . May, 1984. Government of Canada. "Cultural S t a t i s t i c s . " S t a t i s t i c s Canada Catalogue 87-620, 1977-1979. Government of Canada. " S t a t i s t i c s on the Film Industry." S t a t i s t i c s Canada. Catalogues: 87-204, Annual, 1983, 1985, 1986-1987,1987-1988, 1988-1989. National Film Board of Canada. An Operational Plan  Presenting Strategies for the Production and  Di s t r i b u t i o n of Films at the National Film Board of  Canada. 1985. National Film Board of Canada. An Operational Plan  Presenting Strategies for the Production and  Di s t r i b u t i o n of Films at the National Film Board of  Canada. 1985. "Notes for Remarks by the Honourable Flora MacDonald, , Minister of Communications on New Measures Concerning Film Importation in Canada." Toronto. February 13, 1987. Ontario Film Development Corporation. "Program Guidelines of the Ontario Film Development Corporation." March 17, 1986. Tel e f i l m Canada. Annual Reports. 1983-1984, 1984-1985, 1985-1986, 1986-1987, 1987-1988, 1988-1989. Tel e f i l m Canada. P o l i c i e s : Feature Film Fund. (Pamphlet). T e l e f i l m Canada. Procedures: Feature Film Fund. (Pamphlet), Te l e f i l m Canada. Procedures: Canadian Broadcast Program Development Fund. (Pamphlet). Urbanics Consultants Ltd., The B r i t i s h Columbia Film  Production F a c i l i t i e s Study. 1985. CANADIAN BROADCASTING Canadian Broadcasting Corporation. Annual Report. 1986-1987. Canadian Broadcasting Corporation. Let's Do I t ! A Vision of Canadian Broadcasting proposed to the Federal Task Force on Broadcasting Pol i c y . December 1985. 132 Canadian R a d i o - T e l e v i s i o n and Te lecommunicat ions Commiss ion, Annual Repor t . 1988-1989. Canadian R a d i o - T e l e v i s i o n and Te lecommunicat ions Commiss ion. More Canadian Programming C h o i c e s . 1990. Coopers and Lybrand C o n s u l t i n g Group. "Impact of S e l e c t e d P o l i c y Changes i n the Canadian B r o a d c a s t i n g Sys tem," Task Fo rce on B r o a d c a s t i n g P o l i c y . 1986. Report of the Roya l Commission on B r o a d c a s t i n g (Fowler R e p o r t ) . Ottawa: Queen ' s P r i n t e r , 1957. Report of the Committee on B r o a d c a s t i n g (Fowler 2 ) . Ottawa: Queen 's P r i n t e r , 1965. Report of the S p e c i a l Senate Committee on Mass Media (The Davey R e p o r t ) . Ottawa: Queen ' s P r i n t e r , 1970. GENERAL BIBLIOGRAPHY Aud ley , P a u l . Canada ' s C u l t u r a l I n d u s t r i e s : B r o a d c a s t i n g .  P u b l i s h i n g , Records and F i l m . T o r o n t o : James Lor imar and Company, 1983. Bergman, M i c h a e l . "The Rea l Cost of the F e d e r a l D i s t r i b u t i o n B i l l . " Cinema Canada. November 1988. B r yan t , P e t e r . "The Role of the Producer i n Independent P r o d u c t i o n . " T e l e f i l m Canada. (Mimeograph. 1986. Compaine, Benjamin, e d . Who Owns the Media? New York : Knowledge Indus t ry P u b l i c a t i o n s I n c . , 1979. "Canada ' s Communication C h i e f B l a s t s U.S. Ma jo r s ' Dominat ion of D i s t r i b u t i o n M a r k e t p l a c e . " V a r i e t y . September 22, 1983. "Coopers and Lybrand Management Rev iew." Cinema Canada. September, 1987. D rab in sky , G a r t h . Mot ion P i c t u r e s and the A r t s in Canada. T o r o n t o : McGraw-H i l l Ryerson L t d . , 1976. E l l i s , Ra l ph . " T e l e v i s i o n D i s t r i b u t i o n , " Making I t . e d . Barbara Hehner. The Academy of Canadian Cinema and T e l e v i s i o n and Doubleday Canada L t d . 1987. Globerman, S teven . C u l t u r e , Governments and Market s : P u b l i c  P o l i c y and the C u l t u r a l I n d u s t r i e s . Vancouver : The F r a s e r I n s t i t u t e , 1987. 133 Globerman, Steven. Foreign Ownership and Canada's Feature  Film D i s t r i b u t i o n Sector: An Economic Analysis. Vancouver: The Fraser I n s t i t u t e , 1987. Guback, Thomas H. The International Film Industry: Western  Europe and America Since 1945. Bloomington, Indiana: Indiana University Press, 1969. Guback, Thomas H. "Hollywood's International Market," The  American Film Industry. Balio. ed. Madison: The University of Wisconsin Press, 1976. Hardin, Herschel. Closed C i r c u i t s : The Sellout of Canadian  Tel e v i s i o n . Vancouver: Douglas and Mclntyre, 1985. Harris, Christopher, and Sherman, David. "Not a Bad Wrap to the Decade." Playback. January 22, 1990. Haskins, Colin and McFadyen, Stuart. "Market Structure and Television Programming Performance in Canada and the U.K.: A Comparative Study." Canadian Public Policy. Vol. VIII, 1982. Haskins, Colin, and McFadyen, Stuart. "The Canadian Program Development Fund: An Evaluation and Some Recommendations." Canadian Public Policy. Vol.XII. 1986. Hehner Barbara, ed. Making i t : The Business of Film and Television Production in Canada. Academy of Canadian Cinema and Television and DoubleDay Canada Ltd. 1987. Huettig, Mae. Economic Control of the Motion Picture  Industry: A Study in Industrial Organization. Philadelphia: University of Pennsylvania Press, 1944. Johnson, Brian J . "Casting Hollywood North." Maclean's. February 17, 1986. Keast, Ronald, G. "The Role of the Provinces in Public Broadcasting." The Task Force on Broadcasting Policy. Kelly, V i r g i n i a . "Against A l l Odds." Cinema Canada. September, 1987. Leiterman, Douglas. "The Budget." Making I t . ed. Barbara Hehner. The Academy of Canadian Cinema and Television and Doubleday Canada l t d . , 1987. Levine, Micheal. "I Never Heard Them C a l l i t Show Art: The Business Side of Film Production in Canada." Journal of  Canadian Studies. Vol. 16, 1981. 134 MacFayden, Stuart; Hoskins, Colin; and G i l l e n , David. "Canadian Broadcasting: Market Structure and Economic Performance." I n s t i t u t e for Research on Public Policy, 1980. Maslove, A l l a n . "Loans and Loan Guarantees: Business as Usual Versus the P o l i t i c s of Risk." Journal of  Taxation. February, 1982. McQuillan, Peter E. Investing in Canadian Film: Evaluating  the Risks and Rewards. Toronto: CCH Canadian, 1980. Motion Picture I n s t i t u t e of Canada. "Feature Film Financing Seminar." (Typewritten.) 1979. O'Brien, Peter; and Nielson, Richard. "The Property." Making  I t . ed. Barbara Henher. The Academy of Canadian Cinema and Television and Doubleday Canada Ltd. 1987. Paul Audley and Associates Ltd., "The Development of the Film Industry in B r i t i s h Columbia: Review and Recommendations." December, 1986. Pendakur, Manjunath. "Economic Relations Between Selected Canadian Film Producers and American Major D i s t r i b u t o r s : Implications for Canada's National Film Poli c y . " Canadian Journal of Communications. Spring 1985. Quantalytics Inc., The Film and Video Industry in B r i t i s h Columbia: Industry Structure and Market Survey. August, 1985. Rosen, David; and Hamilton, Peter. Off Hollywood. The Sundance Inst i t u t e and the Independent Feature Film Project. 1987. Rotstein Abraham. "The Use and Misuse of Economics in Cultural and Broadcasting Po l i c y , " The Task Force on  Report on Broadcasting Policy. 1986. Sherman, David. "Telefilm has Eyes On Market: Annual Report." Playback. Seoptember, 1989. Tadros, Connie. " F i f t h Column on the March: Roth Leads Forces to Battle L e g i l s a t i o n . " Cinema Canada. May 1988. Tadros, Connie. "D i s t r i b u t i o n Movie House of Cards: A Canadian Construction." Cinema Canada. May, 1988. Testar, Gerald. Clearing Hurdles: A Task Force Rport on the  Motion Picture Industry. Vancouver: Film and Video Industry Association, 1985. / 135 Vancouver Women in F i l m and V ideo S o c i e t y . P roducers  Workbook. 1989. Weinzweig, D a n i e l . " F e a t u r e F i l m D i s t r i b u t i o n . " Making I t . e d . Barbara Hehner. The Academy of Canadian Cinema and T e l e v i s i o n and Doubleday Canada L t d . , 1987. Wise, R i c h a r d . "A C ineramic View of Mot ion P i c t u r e F i l m Inves tments . " Canadian Tax J o u r n a l . M a r c h - A p r i l , Volume XX1V, 1976. Woodside, Ken. Canadian P u b l i c P o l i c y . Department of P o l i t i c a l S t u d i e s , U n i v e r s i t y of Gue lph, S p r i n g , 1979 Woodrow, B r i a n R.; Woodside Kenneth; Wiseman, Henry. C o n f l i c t over Communications P o l i c y . M o n t r e a l : C D . Howe I n s t i t u t e , 1980. Young, Ka th ryn . " F u l f i l l m e n t of 95% Dream Growing C l o s e r , " P l ayback . March 6, 1989. CANADIAN CULTURE AND HISTORICAL ACCOUNTS B e r t o n , P i e r r e . Ho l l ywood ' s Canada. T o r o n t o : M c C l l e l l a n d Stewart L i m i t e d . 1975. Camera West: B r i t i s h Columbia on F i l m 1941-1965, 1986. C rean , S. M. Who's A f r a i d of Canadian C u l t u r e ? Don M i l l s , O n t a r i o : Genera l P u b l i s h i n g C o . , L t d . , 1976. Ekos Research A s s o c i a t e s I n c . , " C u l t u r e in Canada Today . " Report f o r Research and S t a t i s t i c s D i r e c t o r a t e A r t s and C u l t u r e Branch, Department of Communicat ions. Ottawa, 1986. Fox, S t a n l e y . "We are Where We Came From: The Founding of a F i l m Community in B r i t i s h Co lumbia , 1945-1970." J o u r n a l  of Canadian S t u d i e s . 1945-1970. F u l f o r d , R., "The Canada C o u n c i l at T w e n t y - F i v e . " Saturday  N i g h t . March, 1982. Gray , J a c k . " P u t t i n g C u l t u r e on the N a t i o n a l Agenda. " Canadian Bus iness Review. Summer, 1986. J o u r n a l of Canadian S t u d i e s , 1981, " E n g l i s h - C a n a d i a n Cinema S ince 1945 K e a t i n g , L u l u . "The Independent F i lmmaking Groups in E n g l i s h Canada: The Tu rn ing of the T i d e . " J o u r n a l of Canadian  S t u d i e s . V o l . 16, No.1, S p r i n g , 1981. 136 K ing , A l l a n . "The Co f f ee Boy Syndrome and Other O b s e r v a t i o n s on the S ta te of the Canadian F i l m I n d u s t r y . " J o u r n a l of  Canadian S t u d i e s . V o l . 16 1981. Knelman, M a r t i n . Home Mov ies : T a l e s from the Canadian F i l m  Wor ld . T o r o n t o : Key P o r t e r Books L t d . , 1987. McCormack, Thelma. " C u l t u r e and the S t a t e . " Department of S o c i o l o g y . Canadian P u b l i c P o l i c y . York U n i v e r s i t y : X :3 :267 -277 , 1984. M o r r i s , P e t e r . Embat t led Shadows: A H i s t o r y of Canadian Cinema 1895-1939. M o n t r e a l : M c G i l l - Q u e e n ' s U n i v e r s i t y P r e s s , 1978. N e t z e r , D. The S u b s i d i z e d Muse. Cambridge: Cambridge U n i v e r s i t y P re s s , 1978. O s t r y , B e r n a r d . " C u l t u r e i s the Key to Canada. " G lobe and M a i l , 1988. Pendakur, Manjunath. " C u l t u r a l Dependency i n Canada ' s Fea tu re F i l m I ndus ty . " Canadian J o u r n a l of  Communicat ions. V o l . 31. 1981. Report of the Roya l Commission on N a t i o n a l Development in the A r t s , L e t t e r s and S c i ence s (Massey R e p o r t ) . Ottawa: K i n g ' s P r i n t e r , 1951. Report of the F e d e r a l C u l t u r a l P o l i c y Review Committee (Applebaum-Hebert R e p o r t ) . Department of Communicat ions. Ottawa, 1982. T o t s t e i n Abraham. "The Use and Misuse of Economics i n C u l t u r a l and B roadca s t i n g P o l i c y , " The Task Fo r ce  Report on B r o a d c a s t i n g P o l i c y . 1986. Bergman, M i c h a e l . "The Canadian F i l m Indus t ry in the Late 1980's and i n t o the 1 9 9 0 ' s . " Cinema Canada. November, 1988. Johnson, B r i a n . " C a s t i n g Hol lywood N o r t h . " Mac leans . F e b r u a r y , 1986. Johnson, B r i a n . "K ing of the S i l v e r S c reen : Movie Mogul Gar th D r a b i n s k y ' s S tunning R i s e To Wealth And Power." Mac leans . September 28, 1987. 137 APPENDIX QUESTIONAIRE: FEATURE FILM PRODUCTION COMPANIES IN B.C, PART ONE THE PRODUCTION COMPANY/PRODUCER 1. How long has your company been in existence? years date established 2. Was the company set up to complete one project? no yes 3. What i s the form of your company? single ownership lim i t e d partnership no. of general partners j _ other describe 4. Is the company a d i v i s i o n of some other company? no yes location of head o f f i c e 5. At the present time, do you have any feature-length projects in development? no _yes How many? Budget_ Describe 6. What other kinds of projects do you have in development? Please specify project category: 7. How many? number 138 8. Have these r e c e i v e d committed development fund ing? 9. no yes How many p r o d u c t i o n s was your company i n v o l v e d i n 1986 and 1987? 1986 1 987 1988 10, Development Completed T o t a l For the y e a r s , 1986 and 1987, p l e a s e l i s t as percentage the amount of revenue your company r e c e i v e d from each k ind of p r o d u c t i o n : 1986 3 Fea tu re F i l m 3 T h e a t r i c a l Shor t s 3 Documentar ies 3 An imat ion % News/Journa l i sm 3 TV Commercials 3 TV S e r i e s 3 O thers (spec i fy ) 1987 3 Fea tu re F i l m 3 T h e a t r i c a l Shor t s 3 Documentar ies 3 An imat ion % News/Journa l i sm 3 TV Commercials 3 TV S e r i e s 3 O thers ( s p e c i f y ) 11. What was your g ross revenue from p r o d u c t i o n ? 1986 $ 1987 $ 12. For your p r o d u c t i o n s t a f f , what were your s a l a r y expenses? 1986 $ J987 $ 139 13. I f you s o l d f e a t u r e f i l m s , to whom were they s o l d to? CAN U.S. OTHER F i l m / v i d e o d i s t r i b u t o r s T e l e v i s i o n N e t w o r k s / s t a t i o n s ZZZZ-Pay T . V . Other ( s p e c i f y ) . 14. What i s the company's goa l i n the next f i v e year s ? f e a t u r e f i l m s t e l e v i s i o n o ther PART B KEY PRODUCTION PERSONNEL/ STAFFING 15. Of key p r o d u c t i o n p e r s o n n e l , how many d i d you employ 1986 1987 on a permanent b a s i s ? On a temporary b a s i s ? 16. Among your permanent s t a f f , what k inds of s k i l l s do they have? P l ea se s p e c i f y : 17. I f you employ f r e e l a n c e r s ; what i s t h e i r f u n c t i o n ? ( e . g . r e s e a r c h e r , s c r i p t s u p e r v i s o r , w r i t e r , e t c . ) 18. L i s t the o r g a n i z a t i o n s tha t you and your permanent s t a f f a re members of in the i n d u s t r y . 2. 3. 140 TRAINING 19. What type of t r a i n i n g do you f e e l would be u s e f u l f o r the temporary and permanent employees i n your company? ( e . g . p roduc t i on /marke t r e s e a r c h , a c c o u n t i n g , p ro spec tu s p r e p a r a t i o n , e t c . ) 20. Do any of the i n d u s t r y o r g a n i z a t i o n s p r o v i d e a s s i s t a n c e to the employees of your company? no yes Nature of a s s i s t a n c e 21. In your most recent p r o j e c t , ( c h o o s e a r e p r e s e n t a t i v e f . f . p r o j e c t ) what percentage of your t ime d i d you spend working i n the f o l l o w i n g c a t e g o r i e s ? % Producer (packaging and p r e s e l l i n g ) % E x e c u t i v e producer % L i n e p r o d u c e r / P r o d u c t i o n Manager % L o c a t i o n Manager % D i r e c t o r % S c r e e n w r i t e r / s c r i p t e d i t o r % Researcher % Accoun t ing % Ca s t ing /Agent 22. I f your bus ines s i s l e s s than 100% f o r f e a t u r e f i l m s in the i n d u s t r y and i s supplemented by o ther employment, what percentage of t ime i s i n the f i l m i n d u s t r y and what percentage of income? % Time % Income PART C The f o l l o w i n g s e c t i o n i s devoted to the c u r r e n t f e a t u r e f i l m p r o j e c t tha t your company has comp le ted . If t he re a re no completed p r o j e c t s , then p l e a s e choose one tha t i s i n development. 141 CURRENT FEATURE FILM PROJECT 23. What i s the budget of the f i l m ? $ DEVELOPMENT PROPERTY/SCRIPT 24. Source of P roper t y o r i g i n a l s c r e e n p l a y based on another work o ther s p e c i f y 25. D id your company or the w r i t e r r e c e i v e any fund ing f o r s c r i p t development? yes Source : no 26. What was the form of the p r o p e r t y when you began development? f i n a l d r a f t o u t l i n e t reatment o ther ( s p e c i f y ) 27. D id the o r i g i n a t o r remain i n v o l v e d in the p roce s s u n t i l p r o d u c t i o n ? no ( d e s c r i b e ) yes ( d e s c r i b e ) 142 DEVELOPMENT FINANCING FOR THE PROPERTY 28. What means d i d you use to f i n a n c e the development of the p r o p e r t y ? P l ea se l i s t as a pe rcen tage . P e r s o n a l / P r o d u c e r Investment P r i v a t e Investment FEDERAL N a t i o n a l F i l m Board T e l e f i l m broadcas t fund program(s) i  f e a t u r e f i l m fund program(s) Other F e d e r a l Programs PROVINCIAL (B.C.) C u l t u r a l S e r v i c e s Branch B r i t i s h Columbia Development C o r p o r a t i o n M i n i s t r y of I ndus t ry and Smal l Bus ines s D e v e l . F i l m B.C. OTHER Indus t ry O r g a n i z a t i o n s Coproduc t i on w i th another p r o v i n c e ( d e s c r i b e ) _ C o p r o d u c t i o n w i th another company l o c a t i o n _ C o p r o d u c t i o n w i th another coun t ry l o c a t i o n D i s t r i b u t o r / S a l e s Agent: (Can) l o c a t i o n (Fo re i gn ) " l o c a t i o n B roadcas te r Pay-TV Other d e s c r i b e : 143 PRODUCTION FINANCING 29. What means have you used to f i n a n c e the p r o d u c t i o n , post p r o d u c t i o n or d i s t r i b u t i o n of your work? % Pe r sona l Investment % P r i v a t e Investment % D e f e r r a l s PUBLIC % Broadcast fund % Fea tu re f i l m fund % B.C. F i l m Fund Other P rov i nce s % C o - p r o d u c t i o n % T h e a t r i c a l d i s t r i b u t o r s / S a l e s Agents % Advance % E q u i t y investment j % D i s t r i b u t i o n guarantee % B roadca s te r s % Pay-TV % Home v i d e o DISTRIBUTION/MARKETING 30. . D id you p a r t i c i p a t e in the f i l m ' s market ing e f f o r t s ? no yes D e s c r i b e 31. Do you have any p l an s to a t t e n d any of the major f e s t i v a l s or t r ade shows?: no yes I f you have a d i s t r i b u t o r , a re they p a r t i c i p a t i n g ? no yes Mont rea l F i l m F e s t i v a l F e s t i v a l of F e s t i v a l s (Toronto) MIP-TV -Cannes, France London Market NAPTE - New O r l e a n s , U.S.A. ' B e r l i n F i l m F e s t i v a l Cannes I n t e r n a t i o n a l F i l m F e s t i v a l American F i l m Market - Los Ange les o ther ( s p e c i f y ) 32. What percentage of your budget was used f o r a d v e r t i s i n g ? % DISTRIBUTION 33. Can you d e s c r i b e the p roce s s you went throught to seek d i s t r i b u t o r involvement in your p r o j e c t . Was the re t r a v e l i nvo l ved? Was t h i s a l a r g e p o r t i o n of your development or p r o d u c t i o n budget? 34. Have you ever r e c e i v e d any d i s t r i b u t i o n f i n a n c i n g ? no yes 35. At what stage d i d the d i s t r i b u t o r get i nvo l ved? s c r i p t deve lopment /p reproduc t i on pr oduc t i on post p r o d u c t i o n F A C T O R S A F F E C T I N G P R O D U C E R S I N B R I T I S H C O L U M B I A In r e c o g n i t i o n of the f a c t tha t f e a t u r e f i lmmaking in Canada i s a f a c t of l i f e - d e s p i t e : immense " s t r u c t u r a l " c o n s t r a i n t s r e g a r d i n g d i s t r i b u t i o n and e x h i b i t i o n , lukewarm f e d e r a l and at t imes , (when t h e y ' r e even aware) p r o v i n c i a l p o l i c i e s , and of c o u r s e , our sma l l domest ic market; p l e a s e answer the f o l l o w i n g from your own s t andpo in t as a producer in B r i t i s h Co lumbia : 36. I n d i c a t e i n descend ing o r d e r , the areas of most concern to you as a producer in B.C. ( I ' v e o f f e r e d the f o l l o w -ing as a s t a r t i n g p o i n t ) . g u a l i t y of s c r i p t s l a ck of s c r i p t s t r a v e l c o s t s ( i n p r e p r o d u c t i o n stage) t r a i n i n g / e x p e r t i s e ( i n what a reas? ) market ing a d m i n i s t r a t i v e c o s t s o ther (p lease l i s t i n o rder of importance) 

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