Public subsidies have always been a big part of the Canadian feature film industry. So the declining financial fortunes at federal funding agency Telefilm Canada and its provincial counterparts pose a major threat to the future health of the film biz in the Great White North. But despite public funding woes, Canuck film producers remain surprisingly upbeat, and they have hefty production slates to back up their optimism.

Canadian film can be divided into two camps: The arty auteur fare from such helmers as Atom Egoyan, Denys Arcand and Jean-Claude Lauzon, and the genre-driven indie pix from veteran production outfits like Montreal-based Allegro Films and Toronto’s Norstar Ent. Clearly, the auteur helmers are more dependent on government support, but the recent B.O. success of Egoyan’s “Exotica” – which grossed $714,000 (almost $C1 million) in Canada for Alliance Releasing – offers a glimmer of hope for the country’s better-known indie directors.

The companies producing more market-driven Canadian films continue to do well with international sellers, and Allegro, Norstar, C/FP Distribution of Montreal and North American Pictures of Vancouver will all have pix at the American Film Market likely to generate strong sales in foreign territories.

These companies rarely rely on funders such as Telefilm to finance their projects, instead using pre-sales and internal financing to drum up cash. Allegro, for example, has its busiest-ever production sked in 1995, with two French-language features, one French-lingo TV series, and five English features. Allegro’s highest-profile pic is “Screamers,” an $11 million sci-fi adventure starring Peter Weller and penned by Dan O’Bannon (“Total Recall,” “Alien”). Shooting just wrapped in Montreal for the pic, set to be distributed in the U.S. by Triumph, and in foreign territories by Fries/IAC Films. Allegro prexy Tom Berry says the company can’t afford to rely on Telefilm to get its pix made.

“We needed to have a certain volume, and we realized to get that volume, we had to rely not on agencies with limited funds, but on the marketplace,” says Berry. “If you’ve made a superior movie, the market is going to come to you and (the film is) going to make money. I’ve never believed the theatrical movie business is as risky as publicists make it out to be.”

Alliance Communications is the only producer in Canada that’s consistently active in the production of big budget, commercial, auteur-type pix – with long-term relationships with directors including Egoyan and Arcand – and genre fare, through its subsidiary, Le Monde Entertainment. Alliance recently inked a three-picture deal with Universal, and the first project under the agreement is “No Other Life,” directed by Costa Gavras and written by Brian Moore from his own novel.

While Alliance will continue to produce bigger-budget pix like “Johnny Mnemonic” and “Never Talk to Strangers,” Alliance Productions president Steven DeNure remains committed to lower-budget, less obviously commercial films financed in Canada and directed by “filmmakers who preserve a unique, quirky vision.”

“If there’s a change in funding, I still believe we’ll be able to finance those films out of Canada,” adds DeNure. “It’s part of our ambition to work with (these filmmakers) and, where possible and practical, to try to put together bigger projects with them.”

Norstar Entertainment has been very active in feature production over the past year, and several of the company’s productions will be screening at AFM, including “Jungleground,” an action pic starring Roddy Piper, and “First Degree,” a thriller featuring Rob Lowe. Norstar is close to completion on “Iron Eagle IV” and will lens its first family feature, “Salt Water Moose,” this June. Norstar’s budgets tend to be in the $2.5 million to $4 million range. Cuts in public funding won’t have much of an impact on Norstar, says general manager Andy Myers.

“We’ve managed to work with the private sector quite successfully,” says Myers. “We don’t produce that many feature films that would be of interest to the funding agencies. We have the financial resources to cash-flow these films ourselves and often do. But the (public funding) reduction will have an adverse effect on production nationwide.”

C/FP Distribution has upped its film production activity since buying out Famous Players’ stake in the company last year, producing four pix in 1994, including “Ski School 2,” “Law of the Jungle,” and two Michael Caine pix, “Midnight in Moscow” and “Bullet to Beijing.” C/FP plans to shoot six to eight pix annually, and this year’s slate includes “No Exit,” “Mask of Death,” and ski film “Kamikaze Run.”

“There’s a good opportunity in production,” says C/FP senior veepee Jeff Sackman. “It’s better in the sense that the (Canadian) dollar is low and your foreign sales are in U.S. dollars. You get more bang for your U.S. dollar in Canada.”

North American Pictures topper Lloyd Simandl will be pushing several North American productions at AFM this year, including World War II romance “Heaven’s Tears” and “Dangerous Prey,” which he’ll be pre-selling.

“At AFM, we’ll do 50% of our business for the year in sales and pre-sales,” says Simandl. Montreal-based Richard Sadler produced the top B.O. grosser of the year in Canada – the French lingo comedy “Louis 19” – but he complains that he has been unable to garner funding support for his next project.

“It’s not going too well,” says Sadler, president of Les Films Stock Intl. “In any other country, I’d have produced another film. For sure, we depend on the institutions. For a French language film, it’s impossible to make without the funding agencies.”