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Canada Rolls Credits on a Slump

HOLLYWORLD: Fourth in a series of occasional articles on how globalization is changing American filmmaking.

October 23, 2005|Richard Verrier | Times Staff Writer

VANCOUVER, Canada -- There's probably no better barometer of Hollywood's presence here than Lynne McNamara.

Her thrice-weekly column, "The Backlot," chronicles filming and celebrity sightings around town in the Vancouver Sun. There's Halle Berry and Nicollette Sheridan dining at Gotham Steakhouse. Lucy Liu with friends at Savory Coast. Robin Williams sampling tapas at Bin 941. Burt Reynolds singing "Pennies From Heaven" at Rossini's, accompanied by Michael Moriarty on piano.

Just a year ago, soundstages here were half empty. Production in a city whose vibrant movie business earned the nickname "Hollywood North" had plunged to its lowest level in six years. A sagging U.S. dollar had erased many of the cost advantages enticing studios. Seizing the opening, other countries and states used incentives to poach work.

So British Columbia and other Canadian provinces answered with a fresh round of sweeteners layered on top of an already generous package. Now, studio lots are jammed until well into next year.

"As soon as the new credits were announced," McNamara said, "things just started to go crazy. It's nuts."

In the borderless world of movie making, the scramble over Hollywood's production dollars is a financial arms race of government subsidies. Eager to get the best deals, Hollywood skillfully pushes the ante up by playing off one another the myriad countries and states hungry for the dollars and glitz a film production generates.

"It used to be Canada and America," said Randall Emmett, a producer of "The Wicker Man" with Nicolas Cage and "88 Minutes" with Al Pacino in the Vancouver area. "Now, everybody is competing for the film business."

Added Ron Haney, executive director of the Directors Guild of Canada, Ontario: "Everybody can compete with tax credits now.... It's absolutely frightening."

For Los Angeles, global outsourcing could turn the city into something of a general contractor for feature films. Projects are often conceived and financed at studios in Southern California. But increasingly the actual moviemaking is delegated to such countries as Canada, Romania and Australia or states such as Illinois and New Mexico that actively court film work.

A brisk TV business and a rally this year in movie production are blunting the effect on the Southern California entertainment work force. Still, unions and film executives don't want to keep ceding the movie business that made Hollywood famous, and they are pushing state lawmakers to adopt a financial incentive program. Last week, Los Angeles Mayor Antonio Villaraigosa proposed waiving filming fees on city-owned locations to help stem runaway production.

If any country proved what a magnet government incentives are for Hollywood, it's Canada. The country has been the U.S. entertainment industry's foreign back lot of choice as producers discovered they could save as much as 30% with the right mix of favorable currency rates and government incentives.

"There's no doubt the tax incentives are definitely a carrot for us," said Spyglass Entertainment co-Chairman Gary Barber, whose company shot the film "The Pacifier" in Toronto and is now producing "The Invisible" in Vancouver.

Nathan Kahane, production president of Mandate Pictures in Los Angeles and an executive producer of the coming Columbia Pictures horror movie "The Messengers," said the film received tax credits totaling 50% of what was spent on local labor and materials in Saskatchewan.

"On a film in the $20-million range, seeing $3 million is huge," he said.

For Vancouver, the Canadian film resurgence has solidified its place as North America's third-largest center for U.S. productions, behind Los Angeles and New York. In the last two decades, the city has used its financial advantages first to attract TV series and then films. Producers found the U.S. dollar was worth as much as $1.60 in Canadian currency. British Columbia topped that with a rebate of 11 cents for every Canadian dollar spent on local labor.

One of the first studio complexes was built by a Hollywood producer, Stephen J. Cannell, who shot 1980s TV shows such as "Wiseguy" and "Stingray" in Vancouver. As more film and TV producers discovered Vancouver, the city further strengthened its hand by developing the skilled crews and production facilities Hollywood needed.

To the east, Toronto was using financial sweeteners to lure productions to build its own vibrant film business, with the city serving as a stand-in for New York in such movies as "Three Men and a Baby" and "Moonstruck." Nearly all of Hollywood's made-for-TV projects, which survive on thin profits, set up shop in Canada.

By 2003, production in Vancouver alone totaled more than $1.2 billion in Canadian dollars, or $950 million in U.S. currency then. Hollywood labor groups complained that $3 billion in production fled the U.S. annually, mostly to Canada, although Canadian officials called the number exaggerated.

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