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Canada confronts crisis

Currency devaluation leads to production crunch

TORONTO — The Canadian film and TV industry is slipping into disaster mode as industryites scramble to battle a Canuck buck that’s surged to a 12-year high and shows no signs of backing down.

The cheap loony has traditionally been a key reason U.S. producers lens in Canada.

Of the C$4.93 billion ($4.12 billion) in production volume in Canada in 2002-2003, $1.6 billion was foreign location shooting. The Canuck buck has gained 30% against the greenback in the last two years, however, and in September crossed the startling 80¢ threshold. On Nov. 17, the Canadian dollar was worth 83.7¢

Industryites are sounding the alarm as currency creep threatens to gut the biz, already struggling after the SARS scare in 2003 put a 25% dent in the year’s production volume.

“People know that the industry is in free-fall now, and if something isn’t done, we’re heading for disaster,” says Paul Bronfman, chairman and CEO of the Comweb Group.

Early estimates indicate production could be down a further 25% this year.

“I think this year for a lot of people is worse than when we had SARS,” notes Ken Ferguson, prexy of Toronto Film Studios, “and we thought we had bottomed out.”

Currency fluctuations are only the latest and most pressing of a series of damaging trends to the industry — trends, Bronfman says, which include erosion of the international TV market; the downturn in TV dramas due to reality television, SAG Rule One and the rise of anti-runaway production sentiment

Most recently, George Bush pushed through a bill providing tax breaks for films with modest budgets.

“That’s going directly after the type of product that comes to Canada,” Ferguson laments.

Some Canuck service providers have been quietly quoting in U.S. dollars or discounting on a case-by-case basis, and last week,Toronto Film Studios announced it was pegging the Canuck dollar at 78¢, and would leave it there for the foreseeable future.

The move has drawn criticism from some quarters and praise from others.

The fly in the is labor.

“I don’t want to jinx what Ken’s trying to do, but it’s certainly not the remedy for us,” said Steve Waddell, national exec director of the actors union ACTRA.

Waddell estimates 2004 will resemble 2002 in production volume. “We have collective agreements that we negotiated with the industry that covers all production. Those are the published rates and we’re not about to deviate from those rates.”

The unions, in conjunction with other industryites, are lobbying government to increase incentives, both for foreign filming and for the indigenous industry, which is also suffering. With tax credits in B.C. and Ontario, traditionally two of Canada’s biggest filming centers, at 11%, industryites are calling for a rise in the federal tax credit from 11% to 16%, as well as an “all expenses” credit based on more than just labor costs.

The industry’s appeals run counter to recent hints delivered by Canada’s Heritage Minister that the feds are considering snipping the budgets of pubcaster CBC, the National Film Board and Telefilm Canada by 5%.

There’s no time for dithering, notes Sue Murdoch, a producer at Pebble Hut and a board member of the industry lobby group Film Ontario.

Murdoch is calling for quick industrywide action that may move faster than government. “Our clients, American producers, need something that’s immediate that they can understand. We all look to the government to solve these problems. There comes a time when we have to look to ourselves.

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