Cinema Canada (Nov 1976)

Between 800 and 900 first run feature films are shown annually in Canadian cinemas; over 90°o are foreign. Cinema box-office receipts total annually about $200 million of which $60 million in film rental revenue is drawn off by foreign-owned or foreign-controlled distributing companies... Canadian Film Development Corp: Options ... In my judgement, a number of steps taken since the 1972 Cabinet decision and other related factors, taken together with the changes in the CFDC Act proposed hereunder, weigh in favour of continued improvement in the feature film industry in Canada, and make the fourth option for the CFDC (Expanding the role of the CFDC) the only valid one... Proposed Legislative Changes Affecting the CFDC The CFDC Act as it stands limits the Corporation to investment in feature films on a film-by-film basis. If it were able to invest in projects of companies engaged in all classes of film production including industrial films, television commercials and films and videotapes for television programs, it would be ensured of a better rate of return because such films are not as high-risk propositions as are feature films. For companies producing feature films as well, the revenue earned from other film production can be used to cross finance part of the cost of feature films. The CFDC would be able to concentrate its investments in the production of those films which show greatest potential for viability and profit. This type of investment behavior represents the industry approach it is now believed would be the most effective way the CFDC can function in providing financial assistance to the film industry. I am proposing, therefore, that section 10 of the CFDC Act be amended by the deletion of the word “feature” wherever it appears and by eliminating paragraphs (1) (b), (1) (c), (1) (d), and (1) (e). (1) (b) authorizes the CFDC to make loans to producers and is recommended for deletion in line with the views expressed by the Department of Finance as mentioned below. The responsibility for carrying out the purposes of (1) (c) and (1) (d) would be assumed by The Canada Council. (1) (e) would be combined with (1) (a) in a new section as follows: ‘‘invest in the production and distribution of Canadian films in return for a share in the proceeds from any such productions, and to advise and assist producers of Canadian films in the distribution of such flms and in the administrative functions of film production.” The Board of Directors of the CFDC consists of six members, including the Chairman and the Government Film Commissioner (ex officio). I propose that the membership be increased to eight to facilitate better representation and that the selection of members reflect more in the future the commercial and industrial orientation of the CFDC role. I recommend also, that the Chairman serve at the same time as the chief executive of the Corporation and have supervision over and direction of the work and staff of the Corporation and preside at its meetings. This change would dispense with the present provision for the appointment of an executive director. Section 4 (2) and 12 would be amended accordingly... Other Considerations Consideration has been given to recommending amendments to the CFDC Act whereby the Corporation would be empowered to function as a banker and to deal with applica tions for loans from film production companies making all types of films or videotapes; and there have been strong representations from the industry favouring such amendments. The proposition was discussed with senior officials of the Department of Finance whose opinion is that the role of lender or guarantor of loans would be inappropriate for the CFDC since this would duplicate the function of existing government and private institutions. Instead, Department of Finance officials, while advocating the continuance of the Corporation as an equity investor, in a broader range of film productions as described above, believe that loans or loan guarantees for film makers ought to be the business of the chartered banks or other lending institutions, but that the CFDC, because of its experience and intimate knowledge of the film industry, could properly and effectively play the role of an investment broker, providing leadership, counsel and expertise, rather than that of a lender of funds. Finance officials visualize the Corporation collaborating with film producers or groups of producers and investors in assembling investment packages which banks and other lending institutions might be prepared to look at with a degree of interest which normally they do not evince when examining applications from film producers for lines of credit. Finance officials supported the notion of exploring with the Federal Business Development Bank the possibility that it might provide working capital loans or other forms of assistance to film companies able to meet its criteria. This possibility was discussed between CFDC and Secretary of State officials and the management of the F.B.D.B. The NFB, CBC and the Private Sector Sponsored Films ... The Sponsored Film Committee recommended in its report of March, 1976, to the Secretary of State that at least 50% of the money spent by federal departments on film production should continue to be directed to the private film industry, thus confirming a practice that had already been initiated by NFB and was encouraged by the Cabinet decision of May 11, 1972 on film policy. The situation is now that the private sector is getting about half of the business of a $4 million program. The BMC report on film markets indicates that certain federal departments and agencies have internal audio-visual branches and undertake direct procurement, and estimates that direct procurement expenditures outside the sponsored film program probably equal or exceed the $4 million handled by the NFB. Private filmmakers are still critical of the way the program operates, saying that the 50% they get are films the NFB is prepared to let someone else make. Moreover, they object strongly to the fact that under section 9 (b) the NFB is able to control the tendering by private film makers on films and prevent direct negotiations between the latter and client government departments. The private sector believes that through direct negotiations, it can encourage greater and more effective use of film by the government... Therefore, in recommending that the sponsored film program be opened up further to the private sector, I am not, at the same time, recommending NFB’s complete withdrawal from it. It is my belief that there are films which are of particular national and cultural importance that should carry the label of the government’s film agency. The combined cost of such projects should not in any one year exceed 30% of the total amount spent by sponsoring departments in the preceding year. November 1976/23