Profile An Economic Report on the Canadian Film and Television Production Industry

Profile 2006 An Economic Report on the Canadian Film and Television Production Industry

Profile 2006 An Economic Report on the Canadian Film and Television Production Industry February 2006 Produced by the CFTPA and the APFTQ, in conjunction with the Department of Canadian Heritage. Production facts and figures prepared by Nordicity Group Ltd.

Profile 2006 is published by the Canadian Film and Television Production Association. The report is the result of a collaboration between the CFTPA, l Association des producteurs de films et de télévision du Québec, and the Department of Canadian Heritage. At the CFTPA: Guy Mayson President, CEO Susanne Vaas Vice-president, Business Affairs At the APFTQ: Claire Samson President, CEO Nathalie Leduc Director, Financing Ottawa 151 Slater St., Suite 605 Ottawa, ON K1P 5H3 Tel: 800-656-7440 (Canada only)/ 613-233-1444 Fax: 613-233-0073 Email: ottawa@cftpa.ca www.cftpa.ca Toronto 160 John Street, 5th Floor Toronto, ON M5V 2E5 Tel: 800-267-8208 (Canada only)/ 416-304-0280 Fax: 416-304-0499 Email: toronto@cftpa.ca Claude Lemieux Vice-president, Communications & Member Services Jeff Brinton Director, Communications & Media Céline Pelletier Director, Communications Vancouver 301-1140 Homer St. Vancouver, BC V6B 2X6 Tel: 866-390-7639 (Canada only)/ 604-682-8619 Fax: 604-684-9294 Email: vancouver@cftpa.ca At the Department of Canadian Heritage: Lynn Foran Manager Film and Video Policy and Programs Caroline Mallandain Senior Research Analyst Film and Video Policy and Programs Nordicity Group Ltd. Peter Lyman Dustin Chodorowicz Nordicity Group Ltd. (www.nordicity.com) specializes in business strategy, program and policy evaluation, and economic research. Nordicity continues to win major mandates in the film and television production sector, recently including the evaluation of the Canadian Television Fund, the Canadian Feature Film Policy and Telefilm Canada s Standard Recoupment Policy. 1450 City Councillors, Suite 1030 Montréal, QC H3A 2E6 Tel: 514-397-8600 Fax: 514-392-0232 Email: info@apftq.qc.ca www.apftq.qc.ca The Department of Canadian Heritage contributed to the funding of this report. Its content represents the opinions of the authors and does not necessarily represent the policies or the views of the Department of Canadian Heritage or of the Government of Canada. 25 Eddy Street, Gatineau, QC K1A 0M5 Tel: 866-811-0055 / 819-997-0055 TTY / TDD: 819-997-3123 www.canadianheritage.gc.ca

Contents Policy is the best policy 4 1 Introduction 8 2 National Indicators of Film and Television Production 9 2.1 Total Volume of Production 2.2 Real GDP Growth in Film and Video Production and Other Industries 2.3 Employment in Film and Television Production in Canada 2.4 Export Value of Film and Television Production in Canada 2.5 Volume of Production by Province 3 Canadian Television Production 16 3.1 Total Volume of Canadian Television Production 3.2 Canadian Broadcaster Spending on Canadian Programming 3.3 Direct and Indirect Jobs in Canadian Television Production 3.4 Types of Television Production 3.5 Television Production by Genre 3.6 Trends in Average Budgets of Canadian Television Production 3.7 Television Production by Language 3.8 Television Production by Canadian Content Points 3.9 Financing of Television Production 3.10 Top-Rated Television Programs in Canada 3.11 Top-Rated Canadian-Produced Television Programs 3.12 CTF-Supported Production 3.13 Canadian Television Production by Province 4 Canadian Feature Film Production 38 4.1 Total Volume of Feature Film Production 4.2 Direct and Indirect Jobs in Canadian Feature Film Production 4.3 Feature Film Production by Language 4.4 Trends in Average Production Budgets of Feature Film Production 4.5 Financing of Feature Film Production 4.6 Admissions and Screens 4.7 National Box Office Trends 4.8 Box Office Trends of Canadian Films by Linguistic Market 4.9 Top Ten Films by Language of Presentation 4.10 Canadian Feature Film Production by Province 5 Foreign Location Production 52 5.1 Total Volume of Foreign Location Production 5.2 Direct and Indirect Jobs in Foreign Location Production 5.3 Foreign Location Production by Province 5.4 Foreign Location Production by Type of Production 6 Broadcaster In-House Production 56 6.1 Total Volume of Broadcaster In-House Production 6.2 Broadcaster In-House Production by Segment 6.3 Direct and Indirect Jobs in Broadcaster In-House Production 6.4 Broadcaster In-House Production by Province 7 International Treaty Co-Production 60 7.1 Total Volume of Treaty Co-Production 7.2 Treaty Co-production by Country 7.3 Treaty Co-production by Province 7.4 Treaty Co-production by Language 7.5 Trends in Average Budgets of Treaty Co-Productions Exhibit Notes 67 Glossary of Terms 69 Notes 70 PROFILE 2006 1

Exhibits Exhibit 1 Total volume of film and television production 10 Exhibit 2 Total volume of film and television production, 11 share by segment, 2004/05 Exhibit 3 Total volume of film and television production, 11 one-year growth rate, 2004/05 Exhibit 4 Average annual real GDP growth by industry, 1998 to 2004 12 Exhibit 5 Annual real GDP growth by industry, 2004 12 Exhibit 6 Average annual growth of total jobs (full- and part-time) in 13 industry sectors, 1998 to 2004 Exhibit 7 Number of full-time equivalent jobs (FTEs) in Canadian film 13 and television production Exhibit 8 Export value of film and television production in Canada 14 Exhibit 9 Volume of film and television production by province 15 Exhibit 10 Total direct and indirect full-time equivalent jobs (FTEs) 15 generated by film and television production, by province Exhibit 11 Total volume of Canadian television production 17 Exhibit 12 Total hours of Canadian television production 17 Exhibit 13 Expenditures on Canadian independent production by 18 Canadian broadcasters Exhibit 14 Total revenues of private Canadian broadcasters 19 Exhibit 15 Number of full-time equivalent jobs (FTEs) in Canadian 19 television production Exhibit 16 Volume of television production by type 20 Exhibit 17 Volume of television production by genre 21 Exhibit 18 Number of hours of television production by genre 22 Exhibit 19 Total volume of Canadian television production by genre, 22 share of total volume, 2004/05 Exhibit 20 Total volume of Canadian television production by genre, 23 one-year growth rate, 2004/05 Exhibit 21 Trends in average production budgets of Canadian fiction 25 television production Exhibit 22 Trends in average production budgets of Canadian television 26 production, selected genres Exhibit 23 Volume of Television production by language 26 Exhibit 24 Volume of Canadian television production by language, 27 2004/05 share Exhibit 25 Television production by Canadian content points 28 (excludes international treaty co-production) Exhibit 26 Financing of CAVCO-certified Canadian television production 29 Exhibit 27 Financing of CAVCO-Certified Canadian television 29 production by genre, 2004/05 Exhibit 28 Top ten television series in Canada, 31 September 2004 to March 2005 Exhibit 29 Top ten Canadian television series in the French-language 31 market, September 2004 to March 2005 Exhibit 30 Top ten Canadian television series in the English-language 32 market, September 2004 to March 2005 Exhibit 31 Total Canadian television production activity with 33 CTF contributions Exhibit 32 Number of full-time equivalent jobs (FTEs) generated by 33 CTF-supported production 2 PROFILE 2006

Exhibit 33 CTF-supported hours of production by genre 34 Exhibit 34 Number of hours of CTF-supported high-definition 35 television production Exhibit 35 Average cost of CTF-supported high-definition 36 television vs. standard-definition production, 2004/05 Exhibit 36 Financing of CTF-supported production 36 Exhibit 37 Volume of Canadian television production by province 37 Exhibit 38 Total volume of Canadian feature film production 39 Exhibit 39 Volume of CAVCO-certified feature film production 39 by release window Exhibit 40 Number of full-time equivalent jobs (FTEs) in Canadian 40 feature film production Exhibit 41 Volume of Canadian feature film production by language 41 Exhibit 42 Average budgets of Canadian feature films 42 Exhibit 43 Financing of Canadian feature film production 43 Exhibit 44 Total number of movie screens and theatres in Canada 44 Exhibit 45 Number of theatre admissions in Canada 44 Exhibit 46 Canadian box office revenues by origin of production 45 Exhibit 47 Share of Canadian box office by origin of production 46 Exhibit 48 Number of films playing in Canadian theatres by origin 46 of production, 2003 and 2004 Exhibit 49 Canadian films share of Canadian box office in 2005 47 Exhibit 50 Canadian box office and market share by linguistic market 48 Exhibit 51 Top ten films presented in English-language market, 2004 49 Exhibit 52 Top ten films presented in French-language market, 2004 49 Exhibit 53 Top ten Canadian-produced films presented in 50 English-language market, 2004 Exhibit 54 Top ten Canadian-produced films presented in 50 French-language market, 2004 Exhibit 55 Volume of Canadian feature film production by province 51 Exhibit 56 Total volume of foreign location production 53 Exhibit 57 Number of full-time equivalent jobs (FTEs) in 53 foreign location production Exhibit 58 Volume of foreign location production by province 54 Exhibit 59 Total volume of foreign location production by type 55 of production Exhibit 60 Total volume of broadcaster in-house production 56 Exhibit 61 Broadcaster in-house production by segment 57 Exhibit 62 Number of full-time equivalent jobs (FTEs) in broadcaster 58 in-house production Exhibit 63 Broadcaster in-house production by province 59 Exhibit 64 Annual number of treaty co-productions 61 Exhibit 65 Total volume of treaty co-production with Canada 61 Exhibit 66 Volume of treaty co-production and number of projects, 63 by partner country, 2003 and 2004 Exhibit 67 Share of Canadian treaty co-production expenditures 64 by province, 2004 Exhibit 68 Share of the total volume of treaty co-production 65 by language, 2004 Exhibit 69 Average project budget of treaty co-productions 66 PROFILE 2006 3

Policy is the best policy As in any smaller market, Canada s film and television production sector depends on a consistent and practical subsidy system that maximizes potential while minimizing administration. The film and television funding system in Canada is good. But it could be better. Canada s film and television industry needs a new policy. Canada s broadcast industry needs a new policy. As do our partners in government, at Canadian Heritage, CAVCO, Telefilm Canada, the Canadian Television Fund and the CRTC. Together, we need to chart a new path forward in a changing media landscape. Over the past decade, production costs have been steadily rising, not just because of standard inflationary elements such as creative and technical services, facilities and infrastructure but increased costs in acquiring the underlying rights. As foreign investment and pre-sales have decreased, Canadian television production relies increasingly on Canadian broadcasters. At the same time, broadcast licence fees and public sector agency contributions have remained relatively static. As the gap has increased, producers have been forced to absorb the cost. This has meant deferring fees, reducing overhead and applying their tax credit into production budgets rather than re-investing the credit in their company and thus building corporate capacity. Producers are effectively forsaking their future sustainability in order to finance projects. The profit margin (earnings before taxes) of film and television production sector has dropped from 6.7% in 1999 to a low of 1.6% in 2002. In that year it stood at less than half the average of Canadian industries and less than one-third that of the other stake-holder in this industry: the broadcasters. After six years of increase, and a slight decline of 2% in 2003/04, the total volume of film and television production in 2004/05 decreased to $4.50 billion, a drop of 9% an indicator that a downward trend is beginning. Canada s independent production - production other than foreign location and broadcaster in-house - experienced a parallel decline in activity, dropping 10% since 2002/03. The cause is not new. The international market we once relied upon to buy and co-finance our productions has diminished considerably. Foreign financing of Canadian television production dropped from 28% to 13% between 1999/2000 and 2004/05. Foreign audiences are watching more of their own indigenous programming. Six years on, foreign producers are facing the same multi-media challenges we are: how to grab and hold audiences in a world of expanding entertainment choices. At home, the situation remains the same: there is less money 4 PROFILE 2006

available to produce the quality Canadian content that will keep the eyes of Canadian viewers where we all want them: on the channels of Canadian broadcasters. The impact on employment within the industry is tangible. In 2004/05, television and film production generated 119,500 full-time equivalent jobs (FTEs) in Canada 11% fewer jobs than the previous year and the third straight annual decrease. In the face of a funding crisis there has never been greater demand for Canadian television content. The increased demand has not been balanced by an increase in broadcaster contributions or indeed in public sector production subsidy dollars. Using the CTF funds as an example, an additional $95 million would have been required to better meet demand, including the production transition to HDTV. Let s not forget about Canada s filmmakers. While film represents a smaller portion of the production pie, it has been hit hardest. Foreign-location production, which accounts for 33% of total production activity, dropped by 23% to $1.46 billion. While both Ontario and Quebec bounced back from a decline in the previous year, a severe downturn in British Columbia erased their gains. Once again, the oscillation in the volume of activity illustrates the uncertainty of depending on offshore sources as an industrial base. Meanwhile, indigenous feature film production was down 31%, a $116 million drop to $253 million. Canadian feature film production now only accounts for 6% of total activity. In 2004/05 public sources, such as the Canada Feature Film Fund and federal and provincial tax credits, accounted for 51% of total financing of Canadian feature films. As a result it s never been so reliant on public sources of financing. That s not to suggest there are no bright points in feature film. In 2004, for the first time ever, ten movies grossed more than $1 million in the French-language market; in 2005, it happened again, with ten more films reaching that benchmark, lead by Jean-Marc Vallee s C.R.A.Z.Y. which earned over $6 million. In the English-language market, two movies in 2004 and two in 2005 earned more than $1 million, including Deepa Mehta s Water. As for Canada s broadcast industry, the outlook is robust even on the production front. According to the report in your hands, broadcaster in-house production was the fastest growing sector in 2004-2005, increasing by 5% to $1.09 billion and accounting for 24% of total production activity in the nation. While broadcasters increased their spending on Canadian independent production by $35 million between 2003 and 2004, 80% of that increase was directed to programming for specialty services. Producers need broadcasters and broadcasters need producers. But broadcasters could afford to pay higher licence fees for the Canadian programming they acquire. In terms of the overall distribution of financing in 2004/05, private broadcaster licence fees accounted for an average 20% of a production finance package for CAVCO-certified Canadian television production. As it stands, Canadian production is an incredible bargain. All of the Industry s stakeholders will need to reflect upon this reality. Canada s private broadcasters need broadcast licences to function and many of these licences are up for renewal in coming years. PROFILE 2006 5

Policy Policing In 1999, a CRTC policy change removed broadcaster expenditure requirements and altered the definition of what constitutes prime-time priority programming. In the English-language market, the net result was a sharp decrease in high-value, labour-intensive television drama the cornerstone of any national broadcasting culture. Some observers have argued that programming expenditures requirements should be reintroduced for conventional broadcasters. Airwaves are a public trust and broadcasters owe it to Canadians to ensure there is a Canadian option during prime time. Further, all broadcasters could be required to report development figures on a quarterly basis as a condition of licence an assessment beyond financial statements and content compliance. On the international front, a new policy could reflect the shifts in international co-production by revamping our production treaties, making them more competitive. Treaties could be more flexible in terms of the use of talent and financing. The current numbers speak for themselves: our traditional partners in the UK and France are finding other partners elsewhere. A new policy could help restore Canada s reputation as the go-to international co-production partner. Broadcasters who acquire content for exploitation through existing revenue streams are also looking down the road at potential revenue from podcasts, Internet downloads, mobile telephony and whatever else might present itself. Producers will be looking to retain a fair share of that action rather than cede future rights as a condition of a sale today. The opportunity is there for the CRTC to exert its influence by monitoring terms of trade agreements between the independent production community and private broadcasters. A possible course of action is for Canadian Heritage to amend the Broadcasting Act and thereby empower the CRTC by acknowledging the important role of Canadian producers in creating and maintaining diversity in Canadian content media. Considering the public sector resources devoted to independent production, not to mention the highly-regulated broadcasting environment which essentially guarantees the financial viability of private broadcasters, it makes good sense to enshrine independent production within the Act. More transparency and improved communication between Canadian Heritage and by association Telefilm, the CTF and the CRTC, will ultimately result in the more efficient use of available funds which is to say, more money devoted to investment and less to administration. A more responsive and flexible system can better adapt to a faster-changing marketplace. Canadian Heritage is currently assessing the renewal of the CTF and the Canada Feature Film Fund, which are among the important sources of production funding in the country. Stability in funding, money smartly spent and quickly paid out to producers are key. It comes down to one point: we re all in this together. After all, audiences have an ever-increasing number of media choices video games, the Internet, personal video recorders (PVRs), portable instruments such as ipods and video-enabled mobile telephones. The multiplicity of delivery systems and hardware serves only to highlight the importance of content producers. Producers and their production companies are the engines that will drive the development of ideas and the realization of those ideas as software for all that new hardware. But if producers are to engage this challenge as entrepreneurs they must be given the means to develop and sustain their business. Which means not using their entire tax credit to fund individual productions. 6 PROFILE 2006

Ready or not, the future is here The media landscape is changing so rapidly that the only reliable prediction one can make is that more change is on the way. People are now watching television in the palm of their hands. In October 2005, Apple sold over one million videos through its itunes Store in the first 19 days of the launch of programme sales, including episodes of popular series such as Desperate Housewives and Lost. In December, NBC Universal began offering for download a large selection of new and library programming. All of which can be viewed on a computer or on Apple s 5th generation video-enabled ipod. The price? US$1.99 per episode. In Australia, broadcasters have announced plans to launch television services aimed at the portable market by 2007. In the UK, subscribers to an online DVD retailer and renter can now download their selections to their computer hard-drive rather than wait for a DVD to arrive in the mail. It s pay-perview meets Mission Impossible: the buyer has five days to view the content before it expires from the hard-drive. The evolution away from bits of plastic CDs, DVDs to downloads continues apace. Yahoo! and TiVo have created a system that allows users to schedule recordings remotely. And it won t be long before those same subscribers will be remotely downloading those programmes to their handheld devices. Producers will need to engage the entertainment challenge of the future: the pursuit of increasingly brief moments of leisure as consumers buy into video-enabled hardware. Hollywood studios are shrinking the theatrical window of movies to such an extent that traditional cinema-attendance is under threat. The I ll wait for the DVD mentality extends into television. One visit to your local video store is all the confirmation you ll need. DVDs of television series compete with recent film releases in terms of popularity. The implications for advertising-reliant broadcasters seem dire. We all know that change is inevitable and unstoppable. Canada s independent producers have shown time and again ingenuity and flexibility in dealing with those changes. But the challenges we face now may be the greatest yet. We need a new policy structure that recognizes the demand for a Canadian presence, a Canadian voice in the new media world. In the midst of a burgeoning global media onslaught, such a policy could ensure that Canadians have a Canadian alternative by ensuring we have the corporate capacity to create it. Despite the odds, Canadian content television production is stabilizing. Television series a format once thought to be going the way of the dodo are recovering; MOWs are on the increase. Pre-sales are down but there is a growing international interest in Canadian content television for its own sake last autumn, the inimitable Da Vinci s Inquest was picked up for a second window on Bravo! in the US a far cry from the days when Canadian programs were valued as American-lite. We can do it. We can be a part of this future. But we need to work together to build a re-vitalized policy framework for production that will rebalance the relationship between independent producers and our broadcaster partners. A new policy will address the shifting landscape presented by new technology and new delivery platforms, and the looming conflict over the value of content rights those platforms represent. The only way to achieve that future is through improved lines of communication, streamlined decision-making processes, and by putting taxpayers dollars to even better use. That, and making programs Canadians want to see. No matter how or where or when they are watching it. PROFILE 2006 7

1. Introduction The Canadian Film and Television Production Association (CFTPA), the Association des producteurs de films et de télévision du Québec (APFTQ), the Department of Canadian Heritage, and Nordicity Group Ltd. have once again collaborated to prepare Profile 2006. Profile 2006 provides an analysis of economic activity in the Canadian film and television production industry from April 1, 2004 to March 31, 2005. 1 We have reorganized the presentation of production-industry statistics and added several new indicators that provide additional insights into trends in production activity. In Profile 2006, the production-industry statistics have been organized into the following four industry segments: 1. Canadian television production (i.e., CAVCO-certified and CRTCcertified/non-CAVCO television production) 2. Canadian feature film production (i.e., CAVCO-certified and CRTC-certified/non-CAVCO feature film production for theatrical and television release) 3. Foreign location production 4. Broadcaster in-house production Profile 2006 also includes statistics for international treaty co-production. In addition to the re-organization of data described above, Profile 2006 includes new statistics for the number of hours of original programming produced, and trends in the average budgets of television and feature film production. Also added to Profile 2006 are statistics for animation production and CTF-supported high-definition television production. 8 PROFILE 2006

2. National Indicators of Film and Television Production Highlights In 2004/05, total production decreased by 9% to $4.50 billion. The decrease was largely due to a 23% drop in foreign location production. The Canadian television production segment was the largest segment of the industry in 2004/05, accounting for 37% of total production. Real GDP in the motion picture and video production and post-production industry grew by an average annual rate of 5.0% between 1998 and 2004. However, it decreased by 3.7% in 2004. Film and television production generated 119,500 full-time equivalent jobs (FTEs) in Canada in 2004/05, including 46,000 FTEs directly in film and television production activities. The number of FTEs generated by film and television production activity decreased by 11% from 135,000 the year before. The export value of Canadian production was down by 24% to $1.76 billion in 2004/05. Ontario had the highest level of production activity in 2004/05, with an increase of 5% to $1.85 billion. Quebec was the second largest province, with an increase of 8% to $1.31 billion. The Canadian film and television production industry has, for last several years, been a major source of economic activity and jobs for Canadians right across the country. In this chapter, we review the overall national activity in the film and television production industry. In subsequent chapters, we examine activity in each of the four major segments of Canadian industry: Canadian television production, Canadian feature film production, foreign location production, and broadcaster in-house production. 2.1 Total Volume of Production After six straight years of increase, and a slight decline of 2% in 2003/04, the total volume of film and television production experienced a significant decrease of 9% in 2004/05. The total volume of production decreased to $4.50 billion in 2004/05. The decrease in total activity was largely caused by a sharp drop in the volume of foreign location production. In 2003/04, a $406 million increase in foreign location production in British Columbia offset decreases elsewhere in the industry to limit the overall decline in production in Canada to 2%. In 2004/05, it was a $669 million drop a decrease of 54% in British Columbia s foreign location production that largely contributed to the 9% decrease in overall Canadian production. Canadian feature film production also experienced a decrease in 2004/05. The decreases in these two industry segments were partially offset by increases in Canadian television production and broadcaster in-house production. Canadian television production increased by 3% and totalled $1.69 billion. The Canadian television production segment was the largest segment of the Canadian industry in 2004/05, accounting for 37% of total activity. Canadian feature film production decreased by $116 million, or 31%, to total $253 million. It accounted for 6% of total production activity in 2004/05. PROFILE 2006 9

Foreign location production dropped by 23% to $1.46 billion. It accounted for 33% of total production activity in Canada in 2004/05. Broadcaster in-house production increased by 5% to $1.09 billion. It accounted for 24% of total production activity in Canada in 2004/05. The statistics and analysis in Profile 2006 point to the following observations about the Canadian production industry 2004/05: The international marketplace for Canadian television programs remained weak in 2004/05. The export value of Canadian television production dropped for the fifth straight year in a row. In 2004/05, the export value of Canadian television production dropped by $34 million to a total of $270 million. Still, the rate of decrease in export value slowed in 2004/05. It was down by 11% in 2004/05, compared to 21% the year before. Foreign location production in Ontario and Quebec recovered strongly from a very weak 2003/04. In Ontario, foreign location production rose by 53%, after experiencing a drop of 38% in 2003/04. In Quebec, foreign location production increased by 35%, following a drop of 52% the year before. The sharp increases in both of these provinces demonstrate that Canadian service producers of foreign films and television programs were able to manage the effect of the increase in the Canadian dollar from 75 to 80 cents (U.S.), and compete with other jurisdictions for Hollywood-commissioned projects. Policy and regulatory developments in Europe and in the United Kingdom, in particular, started to significantly affect Canadian co-producers. Treaty co-production was down by 39% in 2004; the effect of this drop was felt particularly in the Canadian feature film segment, where treaty co-production contributed to a sharp drop in activity. French-language Canadian feature films made a large contribution to lifting Canadian films share of the domestic box office to 4.6% in 2004 and kept the box office share at 5% through most of 2005. Exhibit 1: Total volume of film and television production 6,000 Canadian Television 5,000 Canadian Feature Film Foreign Location Broadcaster In-House 4,609 4,750 4,759 5,073 4,950 4,495 $ millions 4,000 3,000 2,000 1,000 3,026 3,036 1,217 1,134 251 341 768 819 3,981 1,832 293 1,096 1,875 377 1,506 1,803 301 1,762 1,754 284 1,760 1,793 371 1,914 1,636 369 1,904 1,685 253 1,463 0 790 743 760 850 885 962 996 1,042 1,094 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Source: Estimates based on data collected from CAVCO, CRTC, CBC/SRC, and the Association of Provincial Funding Agencies. Some totals may not add due to rounding. See Exhibit Notes 1, 2, 3, 11 and 12. 10 PROFILE 2006

Exhibit 2: Total volume of film and television production, share by segment, 2004/05 Canadian Television, 37% Broadcaster In-House, 24% Source: Estimates based on data collected from CAVCO, CRTC, CBC/SRC, and the Association of Provincial Funding Agencies. See Exhibit Notes 1, 2, 3, 11 and 12. Canadian Feature Film, 6% Foreign Location, 33% Exhibit 3: Total volume of film and television production, one-year growth rate, 2004/05 Canadian Television 3% Canadian Feature Film -31% Foreign Location -23% Broadcaster In-House 5% -50% -40% -30% -20% -10% 0% 10% Source: Estimates based on data collected from CAVCO, CRTC, CBC/SRC, and the Association of Provincial Funding Agencies. See Exhibit Notes 1, 2, 3, 11 and 12. 2.2 Real GDP Growth in Film and Video Production and Other Industries The film and television production industry is included in the aggregate category, Motion Picture and Video Production, Distribution and Post-Production Industry. Real GDP in the motion picture and video production, distribution and post-production industry grew by an average annual rate of 5.0% between 1998 and 2004, outpacing the overall economy by 1.5 percentage points. In 2004, the motion picture and video production, distribution and post-production industry s real GDP decreased by 3.7%, while the overall Canadian economy s real GDP grew by 3.3%. PROFILE 2006 11

Exhibit 4: Average annual real GDP growth by industry, 1998 to 2004 All Industries 3.5% Goods-Producing Industries 3.1% Service-Producing Industries 3.7% Information and Cultural Industries* 6.2% Radio and TV Broadcasting + Pay TV, Specialty TV and Program Distribution Motion Picture and Video Production, Distribution and Post-Production Industry 4.2% 5.0% 0% 1% 2% 3% 4% 5% 6% 7% Source: Calculations based on data from Statistics Canada. * Based on the North American Industry Classification System, Information and Cultural Industries includes publishing industries (except Internet), motion picture and sound recording industries, broadcasting (except Internet), Internet publishing and broadcasting, telecommunications, Internet services providers, Web search portals, and data processing service and other information services. See Exhibit Note 3 Exhibit 5: Annual real GDP growth by industry, 2004 All Industries 3.3% Goods-Producing Industries 4.3% Service-Producing Industries 2.8% Information and Cultural Industries* 1.2% Radio and TV Broadcasting + Pay TV, Specialty TV and Program Distribution 3.0% Motion Picture and Video Production, Distribution and Post-Production Industry -3.7% -6% -4% -2% 0% 2% 4% 6% Source: Calculations based on data from Statistics Canada. * Based on the North American Industry Classification System, Information and Cultural Industries includes publishing industries (except Internet), motion picture and sound recording industries, broadcasting (except Internet), Internet publishing and broadcasting, telecommunications, Internet services providers, Web search portals, and data processing service and other information services. See Exhibit Note 3 2.3 Employment in Film and Television Production in Canada The film and television production industry has been an engine of job creation during the last several years. Its record of job creation has outpaced that of the overall economy and several related industries. From 1998 to 2004, employment in the motion picture and video industries 2 grew at an average annual rate of 2.6%. 3 This rate of growth outpaced the overall economy, which experienced average annual job growth of 2.1%. 12 PROFILE 2006

Exhibit 6: Average annual growth of total jobs (full- and part-time) in industry sectors, 1998 to 2004 All Industries (including unclassified) 2.1% Goods-Producing Industries 1.6% Service-Producing Industries 2.2% Motion Picture and Video 2.6% Broadcasting (except Internet) 1.2% 0% 1% 2% 3% Source: Calculations based on data from Statistics Canada. See Exhibit Note 6 The Canadian film and television production industry continued to employ thousands of Canadians in 2004/05. On the whole, the industry generated an estimated 119,500 full-time equivalent jobs (FTEs) in Canada. Direct jobs include persons employed by production companies and directly involved in the film and television production process. In 2004/05, the Canadian production industry generated 46,000 direct FTEs. The Canadian production industry s contribution to Canadian employment is not limited to direct jobs, however. The production industry acquires goods and services from other Canadian industries, and so generates jobs in these industries these jobs are referred to as indirect jobs. Each direct job created by the production industry results in the creation of an additional 1.6 indirect jobs. 4 In 2004/05, the Canadian production industry generated 73,500 indirect FTEs. Both the number of direct and indirect FTEs generated by film and television production activity decreased by 11% in 2004/05, as production activity itself decreased. This marked the second straight annual decrease in the number of FTEs generated by the industry. Exhibit 7: Number of full-time equivalent jobs (FTEs) in Canadian film and television production 200,000 Indirect Jobs Direct Jobs 150,000 139,900 140,500 136,400 141,700 135,000 FTEs 122,000 119,500 100,000 94,400 94,600 75,100 86,100 86,500 83,900 87,200 83,100 73,500 50,000 58,100 58,200 36,300 36,400 46,900 53,800 54,000 52,500 54,500 51,900 46,000 0 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Source: Estimates based on data from CAVCO and Statistics Canada See Exhibit Note 6 PROFILE 2006 13

2.4 Export Value of Film and Television Production in Canada Export value tracks the value of international financial participation in the Canadian production industry. The term export value as opposed to just export has been used to better reflect the nature of film and television production in Canada. First, this indicator acknowledges that film and television productions are intangible products that can be exported to foreign countries. Second, this indicator accounts for the budgets of productions shot in Canada, even when the copyright is held by a foreign entity. The export value includes foreign presales and distribution advances for all CAVCO certified projects; estimates of presales and distribution advances for non-cavco certified productions; and the total value of foreign location production in Canada. The export value of film and television production in Canada was $1.76 billion in 2004/05 a decrease of 24% from 2003/04. This decrease was driven by a significant drop in the largest component of export value foreign location production. Foreign location production dropped by 23% to $1.46 billion. The export value of Canadian television programs decreased by 11%, or $34 million, to a total of $270 million. 5 The export value of Canadian television production in 2004/05 was 56% lower than the peak level of $611 million in 1999/00. The export value of Canadian feature film production decreased by 72%, $78 million, to a total of $31 million. The decrease in the export value of Canadian television production can be attributed to two factors. First, data for Canadian television production indicate that the share of productions with nine or ten Canadian content points increased significantly during the last few of years (see Section 3.8). Productions with higher-point ratings typically have a lower share of foreign financing and therefore yield a lower export value. This move to higher-point productions is a response to weaker demand in international markets for foreign production and tight presale financing for Canadian productions. Exhibit 8: Export value of film and television production in Canada 3,000 Canadian Television Canadian Feature Film $ millions 2,500 2,000 1,500 Foreign Location 1,326 1,286 1,749 557 2,225 611 108 2,370 501 107 2,286 440 86 2,406 2,317 384 304 109 109 1,763 270 31 1,000 500 473 85 768 366 101 819 96 1,096 1,506 1,762 1,760 1,914 1,904 1,463 0 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Source: Estimates based on data collected from CAVCO and the Association of Provincial Funding Agencies Some totals may not add due to rounding See Exhibit Notes 2, 4, 11 and 12. 14 PROFILE 2006

2.5 Volume of Production by Province In 2004/05, Ontario and Quebec Canada s two largest production centres - experienced solid growth in terms of total volume of production, as did Saskatchewan and New Brunswick. British Columbia 6 the country s third largest production centre saw a sharp drop in its production volume. Prince Edward Island, Newfoundland and Labrador, Manitoba, Alberta and Nova Scotia also experienced declines in production levels. Exhibit 9: Volume of film and television production by province ($ millions unless 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Share One-year specified otherwise) 04/05 growth Ontario 1,347 1,243 1,548 1,755 1,874 1,939 1,978 1,768 1,853 41% 5% Quebec 846 948 1,188 1,286 1,245 1,218 1,413 1,216 1,309 29% 8% British Columbia* 569 589 847 1,084 1,175 1,172 1,152 1,553 909 20% -41% Nova Scotia 71 64 123 134 118 131 136 122 116 3% -5% Alberta 124 105 131 239 179 153 197 112 106 2% -5% Manitoba 35 35 62 44 69 74 85 111 92 2% -18% Saskatchewan 21 35 49 37 41 32 81 40 73 2% 85% New Brunswick 7 11 21 15 31 17 16 17 28 1% 70% Newfoundland and Labrador 5 4 9 7 11 15 6 8 6 0% -26% Prince Edward Island 1 1 2 8 6 8 10 5 2 0% -51% Total 3,026 3,036 3,981 4,609 4,750 4,759 5,073 4,950 4,495 100% -9% Source: Estimates based on data collected from CAVCO, CRTC, CBC/SRC, and the Association of Provincial Funding Agencies Note: Various provincial film agencies in Canada also publish statistics for film and television production activity using tax and marketing data in each province. Their statistics may differ from those in Profile 2006 due to such differences as data collection periods (fiscal vs. calendar year) and production activity reported on the basis of location of spend. Some totals may not add due to rounding. * Includes the Northwest Territories, Nunavut and the Yukon See Exhibit Notes 1, 2, 7 and 10 Exhibit 10: Total direct and indirect full-time equivalent jobs (FTEs) generated by film and television production, by province 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Ontario 42,100 38,700 47,300 53,300 55,400 55,600 55,400 48,100 49,100 Quebec 26,500 29,600 36,400 39,000 36,900 34,800 39,500 33,300 34,800 British Columbia* 17,700 18,500 26,000 33,000 34,800 33,500 32,200 42,400 24,200 Nova Scotia 2,300 2,100 3,900 4,200 3,400 3,600 3,900 3,400 3,100 Alberta 3,900 3,400 3,900 7,300 5,200 4,400 5,500 3,100 2,900 Manitoba 1,000 1,000 1,800 1,300 2,100 2,100 2,300 3,100 2,300 Saskatchewan 800 1,000 1,600 1,000 1,300 1,000 2,300 1,000 1,800 New Brunswick 300 300 500 500 1,000 500 500 500 800 Newfoundland and Labrador 300 0 300 300 300 500 300 300 300 Prince Edward Island 0 0 0 300 300 300 300 300 0 Total 94,900 94,600 121,700 140,200 140,700 136,300 142,200 135,500 119,300 Source: Estimates based on data collected from CAVCO, CRTC, CBC/SRC, and the Association of Provincial Funding Agencies Some totals may not add due to rounding. The sum total of jobs may differ from amounts in Exhibit 7, due to rounding. * Includes the Northwest Territories, Nunavut and the Yukon See Exhibit Notes 1, 2, 6, 7 and 10 PROFILE 2006 15

Highlights 3. Canadian Television Production Canadian television production increased by 3% to $1.69 billion in 2004/05. Canadian television production generated 44,700 full-time equivalent jobs in Canada, including 17,200 directly in production activities. Television-series production was the largest component of Canadian television production; it totalled $1.32 billion in 2004/05. Fiction television production increased by 15% in 2004/05, and totalled $801 million; children s programming production increased slightly to $260 million; documentary production dropped by 13% to $293 million; magazine-program production increased by 3% to $136 million; variety and performing arts programming dropped by 24% to $99 million. The average budget of an English-language fiction program was $1.3 million per hour in 2004/05; the average for a French-language fiction program was $259,000. The total volume of English-language television production increased by 4% to $1.16 billion; the total volume of French-language television production increased by 5% to $482 million; the total volume of bilingual production and production in other languages dropped by 30% to $47 million. The total volume of ten-point (or full-point) television production comprised 76% of the total volume of Canadian television production in 2004/05. Canadian television productions have, over the last several years, increased their reliance on financing from Canadian broadcasters, as financing from foreign sources has diminished. Financing from Canadian broadcasters rose from 18% in 1999/00 to 32% in 2004/05; while foreign financing dropped from 28% to 13% during this same period. Canadian television programs occupied only one of the top ten spots among the television series with the highest audience ratings in 2004/05. The Canadian Television Fund (CTF) made financial contributions of $251 million to support $841 million in production. CTF-supported production activity generated 22,400 full-time equivalent jobs in Canada, including 8,600 directly in production activities. The CTF provided financial support to 210.1 hours of high-definition television production in 2004/05. Canadian television production includes the production of television series, mini-series, movies of the week (MOWs), made-for-television movies, and short films made primarily for the television audience. It includes productions that are certified as Canadian content by either the Canadian Audio- Visual Certification Office (CAVCO) or the Canadian Radio-television and Telecommunications Commission (CRTC). The Canadian television production segment represents the largest single segment of the Canadian industry. It accounts for the largest share of spending and employs more people than any other industry segment. Canadian audiences continue to enjoy watching homegrown television programming. In Canada s French-language television market, several primetime television dramas attract large numbers of Canadian viewers. Programs such as Les Bougon, and Le Négociateur attract audiences in excess of one million viewers per episode. In the English-language market, television series such as Corner Gas, Monday Report, and Royal Canadian Air Farce have strong audience followings in primetime in spite of the competition they face from high-budget American series. 3.1 Total Volume of Canadian Television Production While Canadian television production increased in 2004/05, it was still 10% lower than the peak attained in 1999/00. In 2004/05, the total volume of Canadian television production increased by 3% to $1.69 billion. This amount was spent on the creation of an estimated 8,373 hours of original television programming. The increase in production was largely attributable to an increase in the volume of fiction production in 2004/05 (see Section 3.5). 16 PROFILE 2006

Exhibit 11: Total volume of Canadian television production 2,500 2,000 1,832 1,875 1,803 1,754 1,793 1,636 1,685 $ millions 1,500 1,217 1,134 1,000 500 0 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Source: Estimates based on data collected from CAVCO See Exhibit Notes 2 and 11 Exhibit 12: Total hours of Canadian television production 10,000 9,513 9,618 8,000 8,241 8,663 8,245 8,373 6,805 Hours of production 6,000 4,000 4,836 5,503 2,000 0 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Source: Estimates based on data collected from CAVCO See Exhibit Notes 2 and 11 PROFILE 2006 17

3.2 Canadian Broadcaster Spending on Canadian Programming The CRTC reports annual statistics on Canadian broadcasters expenditures on Canadian programming. These statistics provide another indication of broadcasters annual contribution to the financing of Canadian television programs. According to these data, during the 2004 broadcasting year (September 2003 to August 2004), Canadian broadcasters made expenditures of $517 million on Canadian television programs an increase of 7%. Most of the increase in 2004 can be attributed to the increased spending by Canadian specialty television services, accounting for 80% of the $35 million increase. Exhibit 13: Expenditures on Canadian independent production by Canadian broadcasters 600 Private conventional television 500 Pay television Specialty television 482 517 $ millions 400 300 200 191 194 76 72 215 87 283 97 15 324 100 26 357 101 23 426 109 30 287 122 34 326 126 38 354 100 0 15 101 17 106 12 116 171 198 233 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Data obtained from the CRTC Some totals may not add due to rounding. See Exhibit Notes 5 and 8. The total revenues of Canadian broadcasters increased by $188 million, or 5%, during the 2004 broadcasting year (September 2003 to August 2004). Each of the three broadcaster segments posted increases in 2004. Private conventional broadcasters saw their total revenues increase by $18 million, or 1% to $2.1 billion. The total revenues of pay-television services increased by $25 million, or 9% to $372 million. The total revenues of specialty-television services rose by $145 million, or 9% to $1.68 billion. 18 PROFILE 2006

Exhibit 14: Total revenues of private Canadian broadcasters 5,000 Private conventional television Pay television $ millions 4,000 3,000 2,000 1,000 0 Specialty television 2,424 2,270 1,707 1,605 123 127 542 590 2,667 1,825 125 717 2,905 1,867 157 881 3,151 1,880 214 1,057 3,394 1,903 286 1,205 3,593 1,890 333 1,370 3,968 2,087 347 1,534 4,156 2,105 372 1,679 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Data obtained from the CRTC Some totals may not add due to rounding. See Exhibit Note 5 3.3 Direct and Indirect Jobs in Canadian Television Production In 2004/05, Canadian television production generated an estimated 44,700 full-time equivalent jobs (FTEs) in Canada. Direct jobs in Canadian television production: 17,200 Indirect jobs in other industries: 27,500 80,000 Exhibit 15: Number of full-time equivalent jobs (FTEs) in Canadian television production Indirect Jobs Direct Jobs 60,000 56,200 56,900 53,300 50,200 50,100 FTEs 44,700 44,700 40,000 38,000 35,300 34,600 35,000 32,800 30,900 30,800 27,500 27,500 20,000 23,400 21,700 14,600 13,600 21,600 21,900 20,500 19,300 19,300 17,200 17,200 0 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Source: Estimates based on data from CAVCO and Statistics Canada See Exhibit Notes 6 and 11 PROFILE 2006 19

3.4 Types of Television Production Since 1996/97, the vast majority of Canadian television productions have been television series. MOWs and television movies, short films, and mini-series have accounted for a smaller share of Canadian television production activity. In 2004/05: Television series production totalled $1.32 billion. The production of MOWs totalled $173 million. Short film production totalled $114 million. The production of television mini-series totalled $76 million. Spending on television pilots totalled $5 million. Exhibit 16: Volume of television production by type ($ millions) 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Series 1,027 916 1,534 1,577 1,509 1,418 1,396 1,343 1,317 MOW 85 102 132 124 138 124 133 77 173 Short Film 53 51 87 103 91 112 116 130 114 Mini-Series 43 54 67 66 58 86 139 76 76 Television Pilot 8 10 13 5 7 14 9 9 5 Total 1,217 1,134 1,832 1,875 1,803 1,754 1,793 1,636 1,685 Source: Estimates based on data collected from CAVCO See Exhibit Notes 2 and 11 Mobile TV Mobile telephones and other mobile devices are quickly emerging as a new platform for video entertainment in Canada. Each of Canada s three cellular telephone carriers has launched some form of mobile-television service; many television networks now allow Internet users to download television episodes to their ipods. Mobile device users have the ability to download such content as television programs, movie previews, film clips or short films during commutes or other periods of time when they are away from traditional viewing platforms like the home television. At the 2005 Toronto International Film Festival, several emerging filmmakers shot short films using mobile telephone technology. Among the notable short films made by Canadians were Phone Call From Imaginary Girlfriend: Ankara, Phone Call From Imaginary Girlfriend: Istanbul, and Unlocked. 20 PROFILE 2006