Toronto Film Company Gets 'Southern Exposure' : Entertainment: Debuting Thursday, "Due South" will be the first Canadian-produced series to appear on an American television network in prime time.

TIMES STAFF WRITER

The cast of the new CBS action-comedy series "Due South" perches precariously in a canoe floating, incongruously, in a set built to represent a Chicago sewer tunnel.

Series co-star Paul Gross and guest star Leslie Nielsen are suited up in the red-jacketed ceremonial uniform of the Royal Canadian Mounted Police. The other series co-star, David Marciano, sits in mid-canoe, playing a brash, sarcastic Chicago cop.

In the rapid-pace dialogue of the scene, Marciano's character worries about rats in the water, while Gross' frets about scuffing the borrowed boat on the sewer wall.

Here, in 15 seconds, is the central joke in "Due South"--the cultural collision of the naive, ramrod-straight Mountie from the Far North with the gritty American urban-scape.

"Due South" was cooked up by former CBS Entertainment President Jeff Sagansky and Robert Lantos, chairman of Canada's largest film production and distribution company, Alliance Communications.

The program is a landmark here, not only for Alliance, but also for the entire Canadian film industry. When "Due South" debuts Thursday it will be the first Canadian-produced series to appear on an American network in prime time.

"Selling a prime-time television series to a U.S. network has pretty well been the exclusive domain of a relatively small number of companies, all of which are Los Angeles-based," Lantos said in a recent interview. "Reaching that point (for Alliance) . . . was something that has been under way a long time."

But it is only part of a rising American profile for Alliance, a Toronto-based diversified entertainment company founded by Lantos in 1985.

The company, which went public a year ago, has three more series and 10 movies-of-the-week in development or production at American networks and cable channels, said Michael Weisbarth, senior vice president for television at the company's Beverly Hills office. (Alliance also has offices in Montreal, Vancouver, Paris and Shannon, Ireland.)

The company just wrapped up four television movies based on the mega-selling Harlequin romance novels published by Toronto-based Torstar Corp., which CBS will counter-program to Fox's Sunday NFL broadcasts this fall.

Alliance has an exclusive arrangement with Torstar and envisions a string of Harlequin films, eventually repackaged as videos that can be sold next to the books at retailers across North America.

Alliance Releasing, headed by longtime Lantos business associate Victor Loewy, is the leading Canadian-owned film distributor here. It recently cut a deal to distribute Miramax films in Canada, giving it Canadian rights to Robert Altman's upcoming "Pret-a-porter" and Quentin Tarantino's "Pulp Fiction," among many others.

In February, the company and Miramax will release the Alliance-produced "Exotica," written and directed by Atom Egoyan. The film, typical of the low-budget, director-driven projects the company long has been associated with, made a splash at this year's Cannes Film Festival, winning the International Critics Prize. Another Alliance production, "Whale Music," opened the Toronto International Film Festival on Sept. 8.

In partnership with American companies, Alliance is moving into bigger budget movies, as well.

"Johnny Mnemonic," a futuristic adventure based on a novel by cyber-fiction author William Gibson, is in post-production, and at $23.4 million is the most expensive Canadian movie ever made. "Johnny Mnemonic" stars Keanu Reeves and is a co-production with TriStar.

The company recently launched a new division to produce low-cost action movies mainly for the cable and video market and in January will go on the air with its own cable channel on Canadian television, Showcase.

"It's very informal, very high energy, very demanding and very exciting," chief operating officer Gord Haines said of the company he joined two years ago. "It's like being in the middle of an explosion."

About the only thing that hasn't exploded is the stock price, which has only recently begun to rise after months of staying close to the $13 a share sold at offering. Alliance stock closed down 12.5 Friday at $15.625 on the Toronto Stock Exchange. Revenue was up 45% for the year ended March 31, with after-tax profits of $5.36 million on revenue of $79.56 million.

Roger Dent of the brokerage firm Wood Gundy Inc., one of the few analysts who focus on entertainment companies here, is very high on Alliance and attributes the slow rise in the stock price to cautious Canadian investors unfamiliar with the industry.

Alliance is very much the creation of the Hungarian-born Lantos, 45, described by "Due South" executive producer Paul Haggis as "a real character, a larger-than-life producer."

Lantos, the company's largest shareholder with a 21% stake, began in the early 1970s as a distributor and independent producer. Working in a Canadian environment dominated by the major American studios, Lantos has prospered by pursuing projects eschewed by the studios, by perfecting the art of international financing--mainly through pre-sales to foreign markets--and by building a lattice work of mutually supportive divisions within Alliance.

For example, Alliance's distribution rights to movies from Miramax and New Line Cinema and to popular European films give it the clout with exhibitors to assure screen time for its own productions. Other Canadian film producers have a notoriously difficult time getting exhibitors to show their movies rather than American films.

One company division, Alliance Equicap, specializes in arranging production financing to take advantage of subsidies and tax breaks offered by many countries for films and television meeting national content rules. A movie featuring a Canadian writer and producer and a French director and star might qualify for subsidies and tax breaks in both countries, for example.

This approach has been crucial to Alliance, and allows the company to take on a personal film like "Exotica," which Egoyan describes as a "perversely romantic" movie he made for less than $1.5 million. With its success at Cannes, the film is pre-sold to a variety of markets and is profitable before its release.

"The relationship has been very important to me," said Egoyan, who has made two films with Alliance. "They've given me access to a higher budget than I was used to and a lot of freedom. And they're very adept at selling the films."

In producing "Exotica" and similar "art films," Alliance keeps a firm grip on the budget, generally less than $3 million, and only steps into the creative process more or less when asked.

"There's no point in backing someone with an eccentric vision and then trying to interfere with that vision," Lantos said in explaining his philosophy. "I don't believe we have ever lost money on one of those director-driven low-budget films. . . . We only finance them in part and our investment is on a favorable basis, but we've never lost money."

With "Johnny Mnemonic" and others, Alliance is stepping into a different arena, but Lantos argues that the company's approach is similar.

"None of these films is what you would call a mainstream Hollywood movie, including 'Johnny Mnemonic,' " he said. But "at that level financially, production makes no sense unless there is a significant guaranteed revenue coming out of the United States. So we work with the U.S. distributors as partners on the more ambitious films, but still we pick the projects that are out of the norm."

Egoyan observed that "what's ultimately interesting about Alliance is that it's able to embrace contradictions. They're able to pursue a number of different types of projects and give equal attention. I've never felt I've been less important to the company than their television work, and yet I know television is the financial fuel for the company."

If Alliance made its way into the film world by backing eccentric little visionary films, it took quite a different road to success in television.

The company entered American television with such late-night fodder as "Night Heat," a CBS action-adventure series. (To be fair, Alliance also has long produced critically acclaimed series for Canadian television.) And Lantos said the hands-off attitude he takes with the director-driven films is the "exact opposite" of his approach to television.

Alliance built its credibility with the networks with successful movies-of-the-week and miniseries.

Beverly Hills-based Weisbarth points to the ratings-successful "Family of Strangers," starring Patty Duke and Melissa Gilbert, as an example. The film, about an adopted woman searching for her birth mother, was based on a true story, but Alliance moved the action from Indiana to the Northwest and filmed in Vancouver. Canadians wrote and directed and Canadian William Shatner co-starred with Americans Gilbert and Duke.

With "Due South," Alliance has penetrated what Lantos referred to as the innermost concentric circle of the television business, the prime-time series.

Whether the show sticks can't be foretold. But both Lantos and Weisbarth say even a quick cancellation would not be fatal to Alliance's future with the U.S. networks. There are already too many other projects under way.

"If it does get canceled, it would be a disappointment, but not a setback. It's maybe two steps forward and one-half step back," Weisbarth said.

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