Canadian Film Digest (Nov 1972)

Page 4 The Canadian Film Digest is published monthly by Film Publications of Canada Ltd. Editorial, Advertising, and Production offices are located at 175 Bloor St. East, Toronto 5, Ontario. Subscriptions: $7.50 per year (including the yearbook) or 35c per individual copy. Individual copies of the yearbook are available for $5.00 per copy from the above address. Second Class.Mail. Registration Number 2587. Postage paid in Oshawa. The Canadian Film Digest. Serving the Canadian Film Industry since 1915. Encompassing the Canadian Moving. Picture Digest, founded in 1915, and the Canadian Film Weekly, founded in 1941. Publisher: Garth Drabinsky Editor: Stephen Chesley Advertising Sales Director: Barry Silver EDITORIAL: Why We Are What We Are Now Yes, The Canadian Film Digest has changed again — changed management, format, and, starting with this issue, outlook. It’s more than a change for the better, we feel; at this point in the development of the Canadian Film Industry, it is a necessary change. Never before has the industry expanded at such a rate. To provide an informational service and a place for discussion is essential at this time. The Digest is now able and willing to assume this role. Our boundaries have been broadened to encompass all facets of film, from idea to production to distribution to exhibition. In day to day affairs each relies on the others and is completely linked to the others, and Canada now has a level of activity in each sector to warrant extensive coverage. What the Digest must also do is extend coverage to include the entire country. We are a Canadian publication, which means we discuss what is happening in Canada’s film world. This issue seems to us to be too Torontoorientated; future issues will correct this problem. Future issues will also involve our readers to a greater extent. ‘““News’’ originates with you; your activity supplies the events and ideas which influence the industry. So we want to hear from you, about anything you feel is important. The Canadian Film scene is thriving and expanding. We want to be there so that you can be there. It’s too exciting to miss. | Digest Classified Selling? Buying? Renting? Looking for work? Need Assistance? Facilities available? Going away for the Season and you Want to rent your house? Digest Casting Looking for Actors? For Plays? Films? In Canada? Abroad? Tell the world what you need by placing a notice on this Advertise HERE! Cheap! mobile casting board. For only 80 cents per line (minimum three lines) you can reach the people who are interested in what you’ve got to say. Just send your notice to: Casting Canadian Film Digest 175 Bloor East Address: Canadian Film Digest Toronto 5 175 Bloor East Vout listing is hee Toronto 5 Boxes Available. November 1972 DOLLARS AND SENSE: When is more less? BY HERBERT J. YATES “But it’s supposed to be low-budget. What do you keep looking for to put into the budget more things?”’ Ladislav — sorry, Lawrence — is beginning to lapse back into Czech translations of his ideas. I’m not really trying to get him upset, but the F.A.M.U. Prague Film School doesn’t include the concept of leverage in their curriculum. As a matter of fact, I’m not sure any school does. It occurs to me that my attempts to educate Lawrence (nee Ladizlav Polonyi — but now sufficiently de-ethnicized to no longer feel guilty using the name) are not assisted by our current cultural concept of simplicity — the Miles van der Rohe doctrine of less is more. It’s certainly difficult to convince anyone that there are times when more is less. ‘In film financing, if the budget is more — not the cash budget — just the budget — we’ll come back to the cash budget later, Lawrence,” I say, “it can mean less trouble getting money. I know that sounds peculiar but the reason is leverage and income taxes.”’ Polonyi is now starting to foam at the mouth and I feel I’d better explain quickly. “I know you feel that you deserve support for your first feature, Lawrence, and you do. The ‘| question is, who from? The CFDC (Canadian Film Development Corporation — Canada’s version of film lend-lease) is giving you money, right?” Now he’s purple. Apparently I’ve touched a particularly tender nerve. It may have something to do with the fact that the script for “Raw Edges’’ had to be re-written three times before ‘those CFDC readers (as mysterious, feared and legendary as the Sasquatch and the Abominable Snowman) agreed it was acceptable. In fact, I suspect the CFDC felt it could not turn down the winner of the CBC Wilderness Award — an award given to Polonyi for a ninety-minute drama which he wrote, produced and directed and in which he used four separate camera crews torecord the saga of an assistant curator of the Art Gallery of Ontario tracking down a forger of Eskimo sculpture in a snowstorm on Baffin Island. I carried on, ‘‘But you know, Polonyi, that the CFDC money is not enough. That’s only $90,000. You’ve got another $50,000 from Stellar (a Canadian film distributor) and $25,000 from Famous Players. The budget you’ve given me shows you need another $100,000 to make up the balance to $265,000. The budget looks okay — as far as it goes — but that’s the problem. It doesn’t go far enough.” “I’m sure,”’ I said, ‘‘you’ve got an uncle ora third cousin wandering around the earth somewhere who is absolutely salivating at the .| chance to invest money in your film — but only because he is your uncle or third cousin. All of Letters to Us and You Tired of the way suppliers treat you? Speak out! Do you think a comment in the Digest was stupid? Inaccurate? Speak out! This is your forum, a place where you can tell the rest of the film world what you really think. Anonymously or publically. Just send your comments to: Letters The Canadian Film Digest 175 Bloor St. East Toronto 5 We’ll publish the best right here. the other people around who haven't already invested money in Broadway shows, Arizona real estate or glib-tongued inventors recognize that films area highly speculative investment. If they hit, the returns can be enormous. But, bearing in mind that something like one in ten even earns back its original cost, anyone choosing films as an investment usually needs some additional incentive — or what my broker refers to as a hedge against the downside risk.”’ “So, Lawrence, they look for a little insurance — and that’s where income taxes come in. You’re probably not aware of it, but our Canadian Income Tax Act permits the owner of a motion picture film to write off, for tax purposes, sixty percent of the cost of the film he owns. If the film costs $265,000, that means a write-off of about $160,000 the first year. If the owner is paying taxes at the rate of fifty-four percent, the tax savings are about $86,000 that year. Well, I suppose that sounds pretty good — but, remember we're up against stiff competition — all those shows, lots and inventions. Our typical prospective investor wants more than just eighty-six percent of his investment protected — it’s one hundred percent or zero — more, not less. And that’s where leverage raises its convoluted head. Our investor has to have a cost of $300,000 which produces a $180,000 tax write-off and with that fifty-four percent tax rate, a total tax saving of just about the same $100,000 as he put up to make up the balance of the cash budget. The leverage is in the fact that he has ended up with a cost base of $300,000 by only investing $100,000. The balance of the $200,000 is coming from the other sources and will, of course, have to be repaid (if there are ever any proceeds from distribution).”’ “And now, Lawrence, I hope you are getting a glimmer of why more, not less may be the credo of the 70’s. To get the $100,000 from investors, you need a $300,000 budget — and to get the budget up to that level we have to increase a few items — producer’s fee, director’s fee, some cast salaries — but all deferred; that is, payable only after the investors get their money back. That’s how we have a $300,000 budget but only a $265,000 cash budget.’’ I’ve seen Polonyi as calm as a hurricane’s eye on a set Swarming with grips, gaffers, best boys, assistant directors and assorted other technicians, not to mention cast — never flustered — always in control. But now he’s obviously on the verge of paralysis. I realized that enough is enough and that I had better delay to a subsequent lesson some of the more intricate ramifications such as how the investors put their money in; what happens if some of the investors are American; the way money comes back to the investors — if ever; distribution problems; and fun and games with the CFDC, among other delightful conundrums. Coming Soon Some thoughts on theatre architecture for the future. Where are the scripts to be found? An untouched source revealed. Studios across the country: advantages and disadvantages of each. Actors talk about casting in Canadian movies — and American movies made in Canada. The visual arts schools: where are the jobs for the graduates? The lost art of the short may not be lost. Why can’t award-winning Canadian actors and actresses find enough work, or thank God for Commercials. Plus a special issue in January 0 technical arts in close-up. .