Problems facing Canadian TV producers lost in the fee debate
Source: Saskatoon StarPhoenix
Arnie Gelbart has survived the cyclical waves of the Canadian broadcast industry before. But there is no way to sugarcoat this recession. "It's been a tough year," says the president of Montreal- based Galafilm Productions Inc.
"Canadian broadcasters ordered very little new material compared to other years," says Mr. Gelbart, who admits to laying off some of his staff last year.
Mr. Gelbart's fears -- and the overall production blues of the industry -- were lost in the cacophony around the CRTC hearings last November to determine whether or not cable operators should compensate over-the-air broadcasters for carrying their signals.
As the rhetoric flew in Ottawa, production houses wobbled.
"The way the issue had been framed, misdirected the discussion entirely," says Michael Prupas, president and chief executive of Muse Entertainment Enterprises. It devolved into a battle over the survival of local television versus a so-called television tax, he says.
But it should really have been about the survival of Canadian production and whether or not cable and satellite would lift a hand.
Already a handful of companies have fallen off the cliff. Producers of children's and youth entertainment and documentaries -- once the breadand butter of the industry in Canada -- have been hit the hardest. Torontobased C.O.R.E. Digital Pictures, a 16- year-old animation and special-effects firm, closed its doors and laid off 150 people on March 15, even though it was in the middle of servicing several shows.
Cookie Jar Entertainment Inc., one of the country's largest animation companies, laid off 35 people, although many are from its merchandising division rather than its production arm, said Michael Hirsh, Cookie Jar's chief executive.
Also hard hit are the documentary producers. Not only was production in this genre down 12% in 2008-2009, but filmmakers also expect a further drop as a result of the CTV Television Network axing its documentary commissioning editor last year, and CBC Newsworld cancelling its documentary strand The Lens.
Also troubling to producers like Montreal-based Kevin Tierney is that Showcase and Citytv, which once bought Canadian feature films, no longer do. "We simply can't sell our movies past the theatrical window," says Mr. Tierney.
How the industry reshapes itself going forward depends on how the CRTC will handle television licence renewals in 2011 and how much cash there will be for producers within the revamped Canadian Media Fund (CMF) now new media players and broadcasters can dip into it for some in-house production.
Also at stake is whether or not Canadian producers will be able to monetize their shows online, and increase sales in overseas markets. While international sales rose to $2-billion in 2008-09, they have not returned to the heights of 2002-03.
Canadian producers, for the most part, are a small but vital contributor to the economy -- generating $2.3-billion of business and employing 58,000 people, according to the Canadian Film and Television Production Association (CFTPA). The figure hits $5-billion if foreign and in-house broadcast productions are included. Generous provincial tax credits -- and broadcast regulations, which until 1999, forced broadcasters to spend a certain amount of money on Canadian production -- helped the industry flourish in the 1990s with entertainment clusters emerging in Toronto, Montreal, Vancouver and Halifax. But the landscape is shifting.
While Ontario has bounced back, with a 23% rise in domestic production last year, the outlook across the country is less rosy. Overall domestic production fell 7% in 2008-09 due to a drop in Quebec and British Columbia, which saw Cancon (Canadian content) projects decline by 12%.
New credit systems adopted in Quebec, and most recently in Manitoba, should help, but there is still the troubling issue that English-language conventional broadcasters -- particularly in tough economic times -- continued to spend more money on acquiring foreign programming at the expense of Canadian producers. That, combined with an eroding advertising base and an increasingly cash-strapped public broadcaster, has created anxiety in the industry.
Short term, companies are finding strength in consolidation and mergers.
The vacuum left when the behemoth production company Alliance Atlantis stopped making shows is slowly being filled by other companies. E1 Entertainment snapped up Barna-Alper Productions, while Ottawa-based Chris Knight and Toronto-based Al Magee merged into KnightMagee Industries.
This may explain the Ontario statistics that indicate that, although production budgets for domestic product have increased, fewer TV series are being produced.
Another trend is the rapid diversification of firms such as Toronto-based Shaftesbury Films, which morphed from a modest feature film company to one with annual sales of $55-million in 2008, from increased international sales.
"We hedged against tough times," says Ira Levy, executive director and co-founder of Breakthrough Entertainment in Toronto. It used to be Canadian producers waited for a commission by a local broadcaster before selling the show outside the country. Now, rather than wait for Teletoon (Canada) to renew his show Jimmy Two Shoes, Mr. Levy got his renewal from Disney XC channel.
Most producers say the next 12 months will be trying. But there is light at the end of the tunnel. "The new rules the CRTC imposed on minimum spending on Cancon was important," says Norm Bolen president and chief executive of the CFTPA. In 2011, the CRTC will hold licence-renewal hearings for CTVglobemedia Inc., Canwest Television LP and Rogers Communications Inc. and will propose they spend at least 30% of gross revenues on Cancon.
Producers can expect an "uptick" in spending if conventional private TV stations get a fee for carriage from cable operations, as the CRTC has proposed.
As demand surges and advertising dollars come back, Mr. Bolen predicts producers can expect $200-million to $300-million more for production in the next few years.
© Saskatoon StarPhoenix
