Source : Winnipeg Free Press

CANADA'S key entertainment company, Alliance-Atlantis Communications, caused a stir 10 days ago by announcing that it planned to cut back on production of television series, mini-series and art films.

Since then it has said it will close its Nova Scotia production house, Salter Street Films, which it acquired just two years ago, and its documentary arm, Great North.

The reason given was that the company believed there was a "permanent downturn in domestic and international demand."

Perhaps.

It depends on what demand you're talking about because as the company's statement also said, Alliance-Atlantis has no intention of dropping its highly profitable CSI franchise, which leads the most popular shows in the United States. Reading between rather obvious lines: Financing American production that makes good money is fine, but "Canadian" production is not sufficiently profitable to bother with.

The unions representing actors, Canadian writers and film crews are livid. Led by the attractive, accomplished Paul Gross, who played the Mountie in Due South, one of Canada's most successful series, they are complaining that the Alliance-Atlantis move effectively means the end of Canadian drama as we know it and that the government must step in to help. Once again, Canada's government-supported film and television community is wringing its hands and bewailing its fate and demanding that the government step in to save it.

Meanwhile, Canadian audiences are largely silent. If Canadian drama production were to disappear tomorrow, most would hardly notice. The audience for Canadian production is small. Most Canadians simply prefer to watch American shows. Few Canadian shows gather either a large audience or critical acclaim.

To put it bluntly, while Mr. Gross and the Canadian production industry care, few others do.

That's a shame because there are talented people working in film and television who are perfectly capable of making both good programs and films and a good living. Neither can happen with the system as it currently exists.

I have an obvious axe to grind here, because my life partner is a producer of Canadian film and television. I hope that gives me more insight than bias.

The problem is not that there is a permanent downturn in demand so much that, as our television writer explained in an extensive survey last Sunday, television (and by extension film) is undergoing a technologically-driven revolution. The days when American or any networks controlled 90 per cent of the viewers are over. Today's technology is only beginning to offer the type of choices that are around the corner. Networks are under pressure as pay-per-view, downloading and recording technologies are changing both the way we watch and the way what we watch is financed. Television used to be free. The advertisers paid for it. Today, viewers pay the cable companies who pay the specialty channels. Advertising is still important, but it's under threat. Neither the regulatory nor the subsidy systems in Canada meet today's conditions. Americans have a large home audience as a springboard for international sales. Canadians have a home audience that is too small to support the cost of most domestic drama.

Canadian broadcasting itself will fail, however, if it cannot provide a unique option to competitors as changing technologies make international broadcasting borders more and more irrelevant.

The problem with the regulatory and subsidy system is it relies too much on bureaucrats to dish out money and make the rules and too little on the private sector. Canada has built a system that makes it attractive for Americans to film here (although the rising dollar is threatening that), but fails to encourage an entrepreneurial approach to indigenous Canadian production.

Regulators make Canadian productions the cod-liver oil of Canadian television. Canadian broadcasters are forced to air Canadian productions to keep their licences. At the same time, bureaucrats dole out financing to productions they deem meet "Canadian" requirements. The reaction to setbacks is always to ask for more regulation and more direct subsidy. It is not the way.

The Alliance-Atlantis decision offers an opportunity for all levels of government to wonder whether their systems of subsidy are working as they should. The answer should be clear enough.

Indigenous productions can be commercially successful, but they have to attract international audiences. Bureaucrats are not good at picking such winners.

But Canada insists on sticking with a system in which bureaucrats decide who gets to be financed and who doesn't. The financing system has become a lottery offering huge risks and few rewards. If, instead of trying to pick winners, the governments encouraged the private sector to invest, Canada might emulate the success of other countries. Without the private sector, Canada's television industry will continue to decline. The way to get the private sector involved is to reduce direct government funding and provide tax relief to investment. Do that and Alliance-Atlantis might get interested again.

© Winnipeg Free Press