Cablegate: Ontario Film Industry Reels From High Loonie, Fears Loss Of

DE RUEHON #0273 2562005
P 122005Z SEP 08 ZDK



E.O. 12958: N/A
SUBJECT: Ontario Film Industry Reels From High Loonie, Fears Loss of
Federal Funding

Sensitive But Unclassified - protect accordingly.

1. (SBU) Summary: Despite local incentives and new filmmaking
facilities, the strong Canadian dollar and Ottawa's arts funding
cuts threaten to further cripple an already weak Ontario film
industry. End Summary.

2. (U) Toronto's strong film and television industry has suffered as
the Canadian dollar has risen against the U.S. dollar. The Toronto
films and television industry peaked in 2000, with C$1.3 billion in
on-location shooting. It fell to C$704 million in 2006, rebounding
slightly to C$755.8 million in 2007. New U.S. incentives, such as a
35% tax credit in New York on filmmakers' expenditures, make
shooting in Canada relatively less attractive to producers than
before. In addition, a months-long strike in 2007 by the Alliance
of Canadian Cinema, Television and Radio Artists also furthered
industry woes. The resulting dearth of productions has taken its
toll on Ontario's film and television industry. In 2007, Toronto's
Cinespace Studios was forced to close, reducing the city's
production space by 20 percent.
3. (U) In addition to relying heavily upon American productions,
Ontario's film and television studios depend on a steady stream of
smaller Canadian productions to remain profitable. Canadian content
laws and federal arts subsidies have helped to keep these Canadian
productions coming. However, local media analysts fear that federal
funding cuts will dry up these Canadian productions. The Harper
government announced in early August that it would cancel Heritage
Canada's C$9 million Trade Routes export support fund as well as the
Department of Foreign Affairs and International Trade's PromArt
program, a C$4.7 million artist travel support fund. In addition,
Bill C-10, introduced in Ottawa in February, would allow Canada's
Heritage Minister to deny tax credits to productions he deems
contrary to public policy. Local arts personalities have decried
these moves, fearing they will cripple Toronto's film industry and
defund its annual HotDocs international documentary festival and the
Toronto International Film Festival.

4. (U) The governments of Ontario and Toronto have moved to attract
more productions. The Ontario Media Development Corporation (OMDC)
offers a tax credit to Canadian or foreign-controlled production
companies equal to 25 percent of their Ontario labor expenditures.
In addition, Ontario gives local Canadian-controlled corporations
tax credits worth 35 to 45 percent of their Ontario labor
expenditures. The Toronto Film Board has begun offering U.S.-based
productions incentives such as free location permits, a reduced rate
on city services and free use of all City of Toronto-owned
facilities and properties. Finally, on June 17, OMDC announced a
C$2 million initiative that would award early-stage film, television
and other Ontario-based media companies up to C$100,000 each.

5. (SBU) Investors in a new film production complex hope to lure
American producers back north. On September 8, econoff and PAO
toured Filmport, a C$80 million, 47 acre film studio on Lake
Ontario. When completed, Filmport's seven sound stages will cover
120,000 square feet and include a 46,000 square foot sound stage,
the largest soundproof sound stage in North America. Filmport is
largely funded by private companies and individuals, who invested
their own money and also borrowed C$24 million from GE Capital.
Filmport is on the site of a remediated industrial site acquired by
the Toronto Economic Development Corporation for a token amount.
The first phase of the complex opened on June 5, and its grand
opening was on August 20. As of July 8, the complex had lost C$3
million. According to executives at Filmport, it can host up to
four major productions at any given time, as well as a number of
television series. Only one feature film is currently scheduled to
shoot at Filmport.

6. (SBU) Comment: Provincial and municipal incentives and
increasingly desperate local studios may make filmmaking in Ontario
slightly more attractive to American producers in the short term.
However, despite the optimism of Filmport's investors, Ontario's
film industry will suffer as long as the Canadian dollar hovers near
parity. End Comment.


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