One shakes up market with heavyweight pacts

MONTREAL — The tectonic shifts in Canadian film began with the entry of Entertainment One into the theatrical market here last year. The well-capitalized Toronto-based company bought Montreal niche distrib Seville Pictures and then beefed up the Seville slate via deals for product with Summit Entertainment, Yari Film Group and ThinkFilm. For the first time, longtime distrib champ Alliance Films has a serious competitor with deep pockets.

At the same time, Alliance, which has hot Sundance title “Hamlet 2,” lost one of its major output deals for Canada when Warner Bros. shuttered New Line. Alliance also shifted its base from Toronto to Montreal after the Quebec government’s investment arm bought a majority stake in the company.

Veteran producer Robert Lantos also returned to the distribution game last year with Maximum Films, which recently inked a deal to set up a joint venture with Entertainment One to release pics in Canada. Meanwhile, Montreal’s Christal Films faces a financial crunch and has had to delay the release of several films. Canada also lost one champion player with the departure of Jeff Sackman from the top job at ThinkFilm, essentially ensuring that the company will be now be a solely U.S.-focused distributor.

“What we’re seeing right now in Canada is a realignment of the players, with a few more active players, like us,” says Patrice Theroux, president of filmed entertainment at Entertainment One. “We saw there was an opportunity in the marketplace, and we’ve succeeded in becoming a major new player on the Canadian landscape in a very short period of time. And I don’t think we’ve seen the end of the turmoil.”

The big change in Canada in terms of production financing has been the increases in tax credits for foreign filming in the main production-oriented provinces. Late last year, both Quebec and Ontario hiked their tax credits to 25% of labor expenses, and British Columbia followed suit early this year. They felt they had to increase the credits given the surging Canadian dollar, which makes it less attractive for Americans to shoot north of the U.S. border, and the increased tax-credit competition from elsewhere, notably from a number of U.S. states.

One of the big issues for domestic filmmakers is the lack of new resources at Telefilm Canada, which is stretched to the limit with way more demands for cash than there is money available. This problem is particularly acute in French Canada, where local films are booming but the Quebec producers can’t get enough public coin to keep a healthy volume of releases coming.

“The cost of production has increased and the number of filmmakers has increased,” says producer Denise Robert (“The Barbarian Invasions”). “If we want to keep filmmakers in this country, then we need the funds to keep them here.”

The other thing that has Canuck filmmakers seeing red is the federal government’s plan to introduce a law that would allow a government committee to withdraw tax credits from a film — even if it had already been shot — if the bureaucrats rule that the film has too much sex and violence and is not in the public good.

Total film production spend in 2007:
$995 million
Anticipated spend in 2008: Expected to be roughly the same

Direct funding from Telefilm Canada:
Only available for domestic films and treaty co-productions.
Federal tax credit: 16% of labor expenses for foreign productions shooting in Canada. Most provinces have similar tax credits, which can be taken in conjunction with the federal credits.

Telefilm Canada:
Canadian Film and Television Production Assn.:
Canadian Audio-Visual Certification Office (administers tax credits):
British Columbia Film site:
Ontario Media Development Corp.:
Quebec funder SODEC:

Top film:
“Harry Potter and the Order of the Phoenix,” $32.5 million
Total B.O. in 2007: $853 million
Total number of releases: 501

“Splice,” Entertainment One/Seville Pictures
“Sunshine Cleaning,” Maximum Films
“Town Creek,” TVA Films
“Hello Sagan,” Equinoxe Films
“Young People Fucking,” Maple Pictures
“Hamlet 2,” Alliance Films

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