Montreal: Canadian television producers use the CRTC coventure formula to do deals with U.S. production partners and broadcasters, otherwise they quickly find themselves offside on a content basis, says International Film Financing president Laura Polley.

A wide cross section of the industry - producers and professional associations like the DGC, ACTRA and WGC - is pushing for more Canadian drama production, but there is another, smaller group of producers who believe the spectrum of CAVCO- and CRTC-supported content drama should include productions that are not identifiably Canadian and are aimed squarely at the international marketplace.

Park Ex Pictures president Kevin Tierney says the Canadian production scene can be divided into four categories: 100% Canadian, coproductions, foreign productions that access tax credits, and content productions aimed at the international marketplace that are not identifiably Canadian but qualify as Canadian with both CAVCO and the CRTC.

There are concerns the content for the export category could be on the chopping block as the Heritage Canada-sponsored content review wraps up.

The official support phase for this important category has ended. The paradigm has shifted to a perspective that sees the production industry as "mature." But while the Canadian industry has matured, so have the demands of the international marketplace.

"A mature industry from the perspective of the authorities doesn't necessarily address the demand of the international marketplace," says Heenan Blaikie lawyer Arthur Evrensel. "As Canadian producers become more versatile and understand [the international marketplace] better, I think the authorities should have enough versatility to allow a spectrum of productions...and not be limiting ourselves to 10 out of 10 production. Yes, I agree there should be more [public] resources to promote pure Canadian production, however, that doesn't mean we should ignore the other spectrum in the international marketplace and even within our own country."

Coventures stand between "Visibly Canadian" 10/10-type production and the reduction of everything and everyone else to service status. If the category is not officially encouraged, producers say the industry is throwing in the towel in terms of qualified content production for export.

'Good guy, bad guy'

CAVCO isn't playing good guy, bad guy, even as it actively promotes the PSTC (service credit) in the U.S.

Rather, says Evrensel, the certification agency has to be vigilant with so-called borderline productions and ensure they can't readily access the higher Canadian-content credit.

"I have had this discussion with [CAVCO director] Robert Soucy and his staff and I think they do a great job. The only thing is I think they have to be more aware of the international marketplace and spectrum of possibilities and to adjust to that accordingly," says Evrensel.

The desired "adjustment," adds Evrensal, relates to "productions which are not necessarily Canadiana. There is demand for [strictly content drama], but there is also a demand for [product] between a production service deal and 10 out of 10. As we go forward, we find ourselves trying to define what that is because I don't think it can be quantified very easily," says Evrensel.

(The difference between the labor-based service and content tax-credit benefits is approximately double, 8% to 10%, compared to 16% to 20% as a percentage of the production budget.)

The fine print on coventures is submitted to certification tests meant to gauge the actual control of a production and its ownership, including both "the nominal or bare possession" of a copyright and beneficial ownership concepts such as financial benefits and exploitation rights.

"I think when we refer to 'control and ownership' it's too pure a designation, and somehow the legislation and the authorities have to take into account the fact that ownership now is typically spread over several parties. Each financier in different countries wants an ownership stake. And so how do you allow for Canadian producers to be flexible enough to work with a German fund or Australian tax credit or the English sale and leaseback?" asks Evrensel.

Doing business in the U.S. once was a laudible, officially supported goal. But while it's still an important precondition for sales to other markets in Europe, producers question what the future holds. Is the Canadian industry just too insecure, or is it in fact naive and too risky to open the door a little more to the powerful American industry?

A poor 10% cousin

Producers with export goals hope the Francois Macerola-chaired content review process will legitimize and strengthen the "industrial" program category. The overriding fear is that the Canadian market is too small, a poor 10% cousin to the U.S., and fundamentally indefensible in the context of a more open spectrum of international and U.S. production partnerships.

"It's only under CRTC rules that an official coventure can exist," says Michael Prupas, president of Muse Entertainment Entreprises.

Among other options, CRTC coventures allow a Canadian producer to work with U.S. partners, qualify their show as Canadian content (six points and 75% expenditures in Canada in projects with the U.S.) and avoid dealing with CAVCO's rules on producer control and back-end rights. "One of the things CAVCO insists upon, for example, is that the project be developed by the Canadian company," says Prupas.