Canada Cooks Up a Storm

June 29, 2009 World Screen

April 2009

Producers across Canada issued a sigh of relief in January, when the government announced that it would be maintaining the C$100 million annual funding for the Canadian Television Fund (CTF) for the next two years. Granted, the local creative community had been hoping for more, but in these challenging times, the allocated federal assistance was nothing to gripe about. And while the great majority of that financing goes to drama projects, the local kids’ content-production market had its share, with C$8.7 million secured for English-language projects last year.
The CTF, combined with local content quotas, tax incentives and international co-production treaties, have made Canada one of the world’s most vibrant providers of children’s content to the global market. It’s a position that has Canada’s independent children’s programming distributors feeling guardedly optimistic about the difficult economic times ahead.
Indeed, a strong domestic broadcast market, and the allure of tax credits on international co-productions, ensures that there will continue to be a flow of product out of the country. And many Canadian distributors point to the importance of having a well-stocked catalogue and a healthy development slate.
 
 

BIGGER AND BETTER

Cookie Jar Entertainment, for example, last year ramped up the size of its slate through the acquisition of another kids’ powerhouse, DIC Entertainment. “We’re in a really good position here,” says John Vandervelde, the company’s senior VP of business development and international co-productions, referring to a catalogue that includes preschool classics Arthur and Caillou, boy-targeted fare such as Magi-Nation and Johnny Test, and the girl-skewing Strawberry Shortcake and Madeline. “We’ve really rounded out our catalogue. We have over 6,000 half-hour episodes now.”
The company, whose offerings for MIPTV include an animated version of the preschool hit The Doodlebops, has a slate of titles in development. And in a bid to expand its client base, it is working on expanding into the tween and prime-time programming markets. Its first effort in the tween space is Tales from Cryptville, which has been picked up for a pilot by TELETOON.
Vandervelde notes that with the downturn putting pressure on license fees, it is more important than ever to ensure that a show is well-distributed globally. “You have to sell in every main territory. I’d hate to be a small producer right now without an in-house distributor; without that kind of capacity, it’s tough.”
Like Cookie Jar, DECODE Enterprises is benefiting from having a broad catalogue and a strong distribution infrastructure. It too has seen a portfolio grow from strategic acquisitions; DECODE’s parent company, DHX Media, also owns Halifax Film and Studio B, two of Canada’s leading kids’ producers. Output from those two outfits, as well as DECODE Entertainment productions and third-party acquisitions, will bring DECODE’s library to about 2,000 half-hours by year-end. Key MIPTV highlights include Martha Speaks, season three of The Latest Buzz, Animal Mechanicals, Mighty Jungle and Poppetstown.
Neil Court, the president of DECODE Enterprises, states that it is crucial to have a significant catalogue, especially a broad one that stretches from preschool to tween live action. And Court notes that DECODE is still filling holes in its slate; the company recently shored up the rights to the reality competition show Adrenaline Project, and padded out its tween portfolio with How to be Indie.
DHX is not the only Canadian company that is working to reap the benefits of consolidation. E1 Entertainment has been on a buying spree for the last year, acquiring Blueprint Entertainment, Oasis International and the U.K.’s Contender Entertainment Group, among others. Prentiss Fraser, the VP and head of sales at E1 Television International (formerly Oasis), notes that kids’ content “is a huge focus” for the multigenre distributor. “It’s a portion of the business that we’re focused on growing in the coming years.”
E1’s portfolio spans preschool fare from E1 Kids U.K. to new live-action offerings like Majority Rules from E1 Kids in Toronto. “Our whole strategy has always been to supply a broad range to our clients,” Fraser says. “We have family features, we have action, animation, shows for a tween audience, we have science shows, we have interstitials, and preschool as well. It does spread across nicely.”
While Canada has certainly been awash in consolidation activity as of late, there are numerous companies that have resisted that trend—at least for now. Nerd Corps Entertainment, for example, is adamant on keeping its creator-driven, boutique focus, specializing in distinctive CGI fare with an action and comedy bent, targeting kids aged 6 to 12. “You either have to be really big in this market or small and entrepreneurial,” says Ken Faier, the president of the company. “Our business model isn’t to do five or ten shows a year. We do one to two shows a year.”
 
 
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Nerd Corps has successfully rolled out Storm Hawks around the world, and Faier is now working on sales of the animated comedy League of Super Evil. “We’re positioning ourselves as a company that understands kids’ brands,” Faier notes, “but at the same time we’re not necessarily setting ourselves up to have a 30-person merchandising group. It’s going to be about partnering with companies out there that we can leverage their expertise. We try to keep the infrastructure in a place where we’re kind of a boutique but we understand the nature of big brands.”
Amberwood Entertainment has opted for a similar strategy, producing about 26 to 39 half-hours per year, according to Jonathan Wiseman, the company’s senior VP. “It’s a challenging time for everybody and we’re being forced to do things differently, but we’ve actually been very successful in putting in place a pretty strong production pipeline for this coming year,” he says.
Amberwood is currently working on a fourth season of The Secret World of Benjamin Bear and the first season of RollBots, which recently launched on YTV, and has secured the financing for the new show Rob the Robot, which is being co-produced with Singapore’s One Animation for TV Ontario.
Unlike many of Canada’s other kids’ distributors, Amberwood has focused on representing its own productions, as opposed to taking on third-party fare. Shaftesbury Films, too, has relied on its own production machine to deliver content to the global market. Among its biggest hits in the kids’ space has been the family comedy Life with Derek, and it is looking to replicate that success with the live-action tween comedy Connor Undercover. When asked about expanding the company’s kids’ slate, Shane Kinnear, the VP of sales, marketing and digital media, states, “We are more likely to look at distribution of co-produced or co-ventured shows where we have a seat in the writer’s room and can meaningfully influence the end product. That’s a more engaging way for us to work, and frankly it’s a lot more fun for our team!”
 
 

BUILDING A LIBRARY

Breakthrough Entertainment has been building its kids’ segment for the last few years. On the back of popular properties like Atomic Betty and Miss BG, Breakthrough is currently showcasing the Jetix Europe co-production Jimmy Two Shoes and two properties produced with Brazilian partners: Fishtronaut and My Big Big Friend. According to Nat Abraham, the head of distribution at Breakthrough, building a reputation for live-action fare is a priority.
The stop-motion animation facility Cuppa Coffee Studios is working across a range of target demos. Following the rollout of its preschool property Bruno and the Banana Bunch, the company has now set its sights on the 8-to-12 segment with Nerdland, and young adults with Life’s a Zoo.tv, both for TELETOON. And outside of its own properties, Cuppa Coffee maintains a healthy work-for-hire clientele, accounting for about 50 percent of the company’s business, says president and executive producer Adam Shaheen. “Ideally, all I’d ever do is proprietary stuff, but in this day and age that’s a little unrealistic.” And, Shaheen notes, with Cuppa Coffee’s expertise in the stop-motion market, there are certainly customers available. “We’re in the nice position—we do good work, so we’re a bit more picky and choosy in terms of the service projects we work on. We are now the largest stop-motion-animation company of its kind. It becomes a bit of a niche place to come.”
Cuppa Coffee is currently handling the representation of its own shows, but Shaheen notes that he has had conversations about working with third-party distributors. “We’re looking at it on a case-by-case basis. We may decide just to keep it internal, because we’ve got a bit of breadth now.”
The issue of size is a challenging one in the current economy, with capital for growth increasingly hard to come by. As Vince Commisso, the president and CEO of 9 Story Entertainment, says, once you’ve reached your production capacity, you have to look for expansion in other ways. “The market has room for small producers and distributors and the very large ones…in between is a very tough place to live, unless you have ways to take the core competencies you’ve created and build businesses around them. It becomes [about] changing your activity. Your activity is develop, produce, distribute, and now you have to say, What do I do before I develop and what do I do after I distribute? How do we extend the value chain?”
 
 

GROWING PAINS

For Arnie Zipursky, the co-chairman and CEO of CCI Entertainment, there are plenty of opportunities in this murky middle space between small- and large-volume producers and distributors. “A lot of really talented small companies that want to stay small are coming to us to partner with them, to executive produce and distribute. We really like wearing that hat. We have funding available for acquisitions. We’re not on hold here. Because we do have the ability to acquire programming, we’re really looking to bulk up the library. That could be acquisitions of finished shows, it could be acquisitions of a library, or it could be a merge.”
Whatever the size and scope of a library, it’s the quality of the content that will entice broadcasters. And for Canadian programming, making a good show is usually de-pendent on finding the right co-production partners. “I liken it to a marriage you can’t get out of,” quips Commisso of 9 Story. “It’s two years, three years of work together. If you’re not enjoying your relationship with your partner, it will definitely impact the show.”
Cookie Jar’s Vandervelde, a seasoned hand in negotiating co-production alliances, says that it is essential to “use each co-producer’s strengths. As an example, we have a show right now that’s boys’ action—we co-produce with Korea, because they’ve got some of the best action animation in the world. We’re using Germany for post-production—it’s state of the art, high-end post. We’ve got Canada in for our writing and preproduction.”
Vandervelde also stresses the very basic need to make sure you have a schedule that makes sense for all parties involved. “Your production people are scattered, so you need a schedule that’s going to be not so tight that it chokes each co-producer, but it can’t be so loose that you start getting inefficiencies and you start going over budget. That’s a killer in co-pros. If one [is behind schedule], then you’ve got crews sitting on the other side of the world doing nothing.”
The last ingredient for a successful co-production? “Each [partner] has to be able to recoup their investment and make money,” Vandervelde says.
 
 

ON THE AGENDA

With its successful co-production track record, Cookie Jar is seeking out new, nontraditional territories to 

work with, such as South Africa and Latin America, Vandervelde says.

Also on the planner is building its licensing and merchandising activities, now that it has acquired, through the absorption of DIC, CPLG (Copyright Promotions Licensing Group) in Europe. “We’ve bought ourselves a locomotive of licensing,” he says. “You’ve got to maximize any licensing opportunities because…now for some series it’s becoming a part of the core financing. You need that just to make the series.”
This is a view shared by CCI’s Zipursky, who points to the pressure on license fees, combined with the still high costs of production. Licensing, publishing and digital media are all part of the equation, not just the add-ons. “Convergence—we’ve talked about it for so many years—is now here, and it’s everywhere. Every show that we’re developing, we’re not developing it only as a TV platform.… We’re into distribution, into licensing, into production, into digital, [so] we’re able to weather this storm.”
Online, naturally, is a core focus for many com-panies in the kids’ space. “The online world is going to get more and more interesting,” says Nerd Corps’ Faier. “Not just for streaming content, but for engaging audiences online and giving them some reason to spend money.”
Continued global expansion is also on the top of many distributors’ mind. Breakthrough’s Abraham, for example, notes that while scoring a Canadian commission on a show is still a priority, “one of the things we’re starting to do is, if we have an idea that hasn’t been picked up by a Canadian broadcaster, [we’ll finance it] inter-nationally. If I get interest from Germany on a particular treatment, it may trigger it getting made.”
At DECODE, Court points to the need to “sell smarter” as buyers, coping with diminished budgets, get more selective about where their money is going. “The major channels have to continue buying the best shows. If they don’t, their ratings go down and they lose even more advertising revenue. They have to keep buying. They’ll order shows, but in smaller bites. They also may do more research. So the sell has to be more and more sophisticated. You have to show that there’s a reason why they should buy this. Every acquisition is under the microscope.”
Cuppa Coffee, meanwhile, is eyeing a new business line: feature films. “We do a ridiculous amount of work in television animation in a short amount of time,” Shaheen says. “We’re spending about 18 months doing 10 hours of animation for [The Tornante Company’s] Glenn Martin, DDS. With a feature, taking 18 months to do 70 to 80 minutes would be a dream come true.”
Whatever the medium, producing a steady output of top-quality content is on everyone’s agenda. “Our production schedule for the next year seems, at least for the time being, intact,” says Shaftesbury’s Kinnear. “We will continue to be nimble, lean, and continue working with the very best writers, producers, directors, cast and crews.”
For Faier, well-produced shows in this market may even have a better chance of being profitable, given the constant need by broadcasters to fill their schedules, while the number of new shows commissioned by many networks falls.
For Canada’s leading kids’ players, it’s clearly not all doom and gloom. Indeed, while bracing for the worst, distributors are doing all they can to shore up their businesses and seek out new opportunities.