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The Globe and Mail

Astral feels heat from Canadian film distributors

At $20-million, the 2007 film Passchendaele is the most expensive Canadian movie ever.

CHRIS BOLIN FOR THE GLOBE AND MAIL/chris bolin The Globe and Mail

Astral Media Inc. has built its pay-TV business on movie channels such as Mpix and The Movie Network. But the company is about to find itself under fire from some of Canada's major film distributors, who say recent moves by Astral threaten the health of the industry.

The Montreal-based company is participating in an continuing hearing in Montreal to ask the Canadian Radio-television and Telecommunications Commission to renew the licences for its television channels. English-language film distributors, including Alliance Films, as well as industry group the Canadian Association of Film Distributors and Exporters (CAFDE), have travelled to Montreal to appear at the hearing on Thursday. They are there to argue they are facing a crisis as broadcasters cut their spending on the homegrown movie industry.

In a submission to the regulator, CAFDE wrote that its members have reported that The Movie Network has cut the fees it pays to license movies for broadcast on its channel. The group is also objecting to Astral's request to change its Canadian content requirements for Mpix, so that it does not have to broadcast Canadian films. The channel would still be required to air Canadian material for no less than 20 per cent of the broadcast day, but its new licence would not specify, as the old one does, that the majority of that time must be given to domestic movies.

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"The potential repercussion here for the whole business to fall apart is very real. That means no more money for films like Passchendaele," said Mark Slone, a senior vice-president at Alliance Films.

Pay-television channels market their services by buying a licence to broadcast movies exclusively during a certain window of time after they leave the theatres. (Secondary premium services such as Mpix buy slightly older movies.) These broadcasters represent an important second source of revenues for movies. Alliance and CAFDE will argue to the CRTC that Canadian films need the support of broadcasters to be financially viable.

While those distributors do not object to Astral supporting Canadian TV series such as Call Me Fitz, they are concerned with the proportion of its required Canadian program spending that the company could shift away from films. A partnership Astral has with HBO has resulted in an increasing amount of pay-TV series on The Movie Network. Mr. Slone is concerned the same could happen with Canadian TV series, but at the expense of films.

But Astral disputes the claim that its spending on Canadian film is slipping. According to spokesman Hugues Mousseau, the request for Mpix to drop its movie requirement would simply bring it in line with its equivalent in Western Canada, Corus Entertainment Inc.'s Encore channel, which had a similar change approved during its licence renewal in the summer.

Further, he said the distributors are relying solely on data from a single Telefilm Canada fund – the Canada Feature Film Fund – to prove the company is spending less, and are not counting Astral's financial contributions to Canadian productions and script development through other vehicles such as the Harold Greenberg Fund.

"Our commitment to Canadian feature film has not diminished," Mr. Mousseau said. He added that in the past eight years, the average licence fee the company paid per Canadian theatrical film increased to $158,000 from $113,000 in 2002.

Meanwhile CAFDE's members, which also include distributors such as Entertainment One and Mongrel Media, claim they've seen licence fees drop precipitously. That's a problem because other than Super Channel – which has far less buying power with just over a quarter of the subscribers The Movie Network has – and alternative services such as Netflix, there are no other buyers on the market, which is divided between Corus in the west and Astral in the east.

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"The message we're getting is, 'Well, go shop it [your movie]to the other guy,'" Alliance's Mr. Slone said. "But oops, there is no other guy."

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