Canada Replies to Alarmed U.S. Filmmakers Who Want It All

A recent study released by the Directors Guild of America and the Screen Actors Guild suggested that $2.8 billion of U.S. film and television production was going to other countries, mostly to Canada, in the form of so-called runaway productions.

This has fueled a growing hysteria. In a full-page ad placed in Variety, for example, members of the Screen Actors Guild said that “Canada is killing the television and feature film business in the United States.”

Can this be? Canada?

As a director who has worked in both Canada and abroad, I think it may be time for a reality check.

The U.S. study suggested that about $2.27 billion was spent in 1998 in Canada on runaway productions. But these numbers appear to have been generated largely by inflated references in the trade press. No audited numbers were used.

By contrast, the Directors Guild of Canada recently had the numbers reviewed by Price Waterhouse Coopers, an audit firm that conducts an annual economic profile of the Canadian film and television industry. The firm based its numbers on the budgets supplied to Canadian government agencies by U.S. and Canadian producers in order to get tax credits. Because there is an incentive to over-claim on those tax credits, the Canadian agencies generally require audited numbers.

Funny thing. When you look at the audited numbers, the actual money spent on foreign location shooting in Canada in the production year ending in 1998 was only $573 million. That represents a real increase in Canadian activity over the last few years. However, it is only a quarter of what the U.S. study estimated was being spent in Canada on runaway productions.

Why were the U.S. numbers so exaggerated? There are many reasons. First, the U.S. study appears to have relied mostly on press clippings rather than on audited budgets. The study also may have mischaracterized many Canadian content productions as U.S. productions. Finally, the study appears to have grossly underestimated the amount of money staying in the U.S. on productions shot in foreign locations.

That said, there are other reasons for the recent decline in Hollywood filmmaking. Some of it is cyclical, as studios cut back to compensate for their big-budget flops. And even with this cyclical decline, Hollywood production levels are still far ahead of what they were a few years ago.

Further, U.S. television networks have cut back their use of sitcoms and dramas in prime time. Instead, they have littered their schedules with cheaper self-produced newsmagazine shows.

This brings me to a final and probably the most relevant point. People who insist that U.S. film and television production must all be shot in the United States (or even more limiting, all shot in Los Angeles) fail to recognize that increasingly this production is no longer financed entirely by the United States.

The ad placed by members of the Screen Actors Guild makes a sweeping patriotic argument: “Let’s all stick together and keep American dollars in American filmmakers’ pockets.”

But what that ignores is that Hollywood’s output is not financed entirely by U.S. dollars. It is financed in part--often one-third or more--through export sales. Last year, for example, Canadian broadcasters spent almost $500 million in U.S. funds to acquire Canadian rights to U.S. programs. Add to that the dollars that were spent on U.S. films in Canadian theaters and on home video. By contrast, what did the U.S. commercial networks purchase from Canada or other countries? Almost nothing.

Is it any wonder that countries other than the United States look at these numbers and wonder why they are paying so much for U.S. programs when the trade in film and television is such a one-way street?

Filmmakers demean themselves in taking a “beggar thy neighbor” approach to international film and television production. Film and television are collaborative, and as these industries mature in countries around the world, we will see ever more collaboration across borders. These projects are not runaway productions; they are international productions and they reflect the simple fact that they are financed and sold around the world.

If cultural diversity is to have any meaning, and if the U.S. wants to continue to look to foreign markets for increasing sales, it should recognize that those countries are part of the solution, not part of the problem.