Good morning, Chair and members. Thank you for having me here today.
My name is Emily Harris. I'm president of the Canadian Association of Film Distributors and Exporters, or CAFDE, which represents the Canadian film distribution industry and its members on matters of national interest. We're pleased to be here today to present to this committee on its work related to supporting our artists and creatives, who are the backbone of the Canadian film industry.
CAFDE is a non-profit trade organization that serves to represent a variety of businesses, from small independent film distributors to large global media organizations. Our current members include CropGlass; D Films; Elevation Pictures; Entertainment One and Les Films Séville, which is the company I work for; KinoSmith; Métropole Films; Mongrel Media; Pacific Northwest Pictures; levelFilm; LaRue Entertainment; and mk2 Mile End. It's a diverse membership that represents independent films as well as large-budget features.
CAFDE members provide Canadians with the vast majority of theatrically released films in Canada, two and a half times more theatrical releases than the six major Hollywood studios combined. Our activities include government consultation, outreach and engagement, with an aim to bring attention to the challenges facing the film distribution industry and the cultural, social and economic repercussions of our changing landscape.
As it relates specifically to artists and creatives, my remarks that follow will focus on the essential role that we believe Canadian film distributors play in maintaining the current Canadian film ecosystem. It is CAFDE's perspective that without the regulatory framework that has existed for decades, the Canadian feature film industry would not be what it is today. Artists and creatives can only thrive and grow if their work is seen and discovered. The work of our members tries to bring that to the forefront.
Canadian films, as I'm sure you know, attract audiences at home and abroad. Canadian creatives are celebrated on the international stage. Most importantly, the Canadian film industry provides a unique platform for Canadian creatives to share Canadian stories. All Canadians benefit from a system that showcases and supports this diverse and important work.
The Canadian film distribution industry provides consumers with access to feature films. Our industry as a whole contributed $1.9 billion in revenues in 2017. However, in order to demonstrate the dominance of non-Canadian ownership in our industry, we need look no further than current box-office numbers. In 2017 box-office revenue was over $999 million, but of that amount, 87% of the market share went to non-Canadian distributors.
The industry includes 464 Canadian enterprises involved in Canadian film distribution, with profits of over $330 million and contributions of over $162 million to wages. The industry also employs over 1,300 Canadians across the country. However, all of these figures are a drop in the bucket compared with what non-Canadian companies are taking out of the industry. To maintain these jobs and opportunities and to retain talent in Canada, there is a need for a revived regulatory framework that deals with modernization of the film industry in light of digital changes and the declining commissions of Canadian content in our broadcast ecosystem. Without strong Canadian film distribution companies, we posit that there would be no Canadian feature films, which would impact all facets of the industry, including artists and creatives.
To that end, there are three key pillars that we think are essential to ensuring that the film industry in Canada is positioned to employ, empower and fund our feature film creatives—modernization of the existing film distribution industry policy, creation of a fair playing field for all parties, and specific film mechanisms included in our broadcast regulations.
In respect of the first pillar, the existing Canadian film distribution policy has established and allowed the film sector in Canada to thrive, which is essential for creatives to work and thrive in Canada. In 1988 the Canadian government attempted to put in place protections for the Canadian film distribution sector for fostering and growing the Canadian film industry in the face of foreign competition. To do so, it announced the creation of the film distribution policy. Until recently, this policy framework protected the 13% of the Canadian theatrical marketplace not controlled by Hollywood. For the most part, this policy was adhered to, but as technological shifts impact the industry, unfortunately this is less and less true.
You may be asking why it is important for artists and creatives to maintain this 13% ownership. Ensuring that the Canadian distribution sector exists ensures that funds remain within our cultural ecosystem. It keeps revenues inside Canada, with companies that contribute to funding and programming, and supports the systems that allow Canadian content and Canadian content creators to thrive. With this revenue, Canadian distributors are able to invest in and fund Canadian feature films and ensure that homegrown jobs for creatives continue to exist.
It is CAFDE's opinion that we must formalize and modernize the existing policy framework. In the absence of legislation, it has been difficult to enforce the stated intent of the policy, leaving the door open to circumventions of that policy.
To preserve the long-term viability of the Canadian film distribution sector and ensure jobs and funding for creatives, it is crucial that the government prioritize and promote the policies that have existed to date and have built the feature film industry. These Canadian-owned taxpaying companies reinvest in Canadian production and content, ensure the public's access to Canadian films and employ Canadians.
The second pillar, levelling the playing field, relates to the regulation of OTTs. If the development, production and distribution in Canada's ecosystem and the creative sector jobs associated with it are to be maintained and grown, we need to ensure that our regulatory framework provides a level playing field for all participants. Non-Canadian broadcast undertakings, like foreign-owned over-the-top players, need to be required to contribute to the cultural ecosystem to ensure Canadian content is discoverable by Canadians. As the vertical integration of our broadcast system intensifies and new digital platforms emerge, the government must take steps to ensure that a diverse representation of Canadian content continues to be commissioned and acquired by all entities exploiting content within our borders.
CAFDE recommends that the OTTs, which increasingly make up the services Canadians are using to consume culture, commit to buying and streaming Canadian content, and in particular, Canadian feature films. We are also looking forward to the results of the broadcast and telecom act reviews to see whether there is broad support for companies that act as BDUs, broadcasting distribution undertakings, with more than 2,000 subscribers to contribute a percentage of revenue into the ecosystem, as is currently required of our Canadian-owned broadcasters.
The third pillar is that Canada has long supported the tool kit that prioritizes exhibition of Canadian content, both within Canada and around the world, and we need specific mechanisms to support film on broadcast. Content creators and distributors require broadcaster support to ensure Canadians can access films beyond the traditional theatrical window. I would note the theatrical window is becoming more limited with respect to the digital era. Unfortunately, support of Canadian feature films by broadcasters has been eroding over time.
Specifically, in both pay and free television, our members have seen a substantially reduced commitment to Canadian films by Canadian broadcasters over the last five broadcast seasons. This trend has been consistent across all broadcasters and appears to represent a change in strategic direction, with a direct impact on content creators and distributors in this country who focus on feature film.
To reverse the trends of decreased commitment to Canadian film and to strengthen the ecosystem for Canadian cultural productions, CAFDE recommends the government continue to create a home for Canadian feature films on television by reinforcing existing mechanisms that encourage the exhibition in prime time of feature films made in Canada.
This can be accomplished by mandating that Canadian broadcasters devote a given amount of their schedules and thus part of their required CPE, or Canadian program expenditures, spend to a new specific category 7(d) that is earmarked for Canadian theatrical feature films. To date, broadcasters have had the latitude to program within this category as a whole, and without any specific requirements for feature films, we have seen films get less airtime than television series.
CAFDE also proposes that the Canadian Broadcasting Corporation, CBC, as the national broadcaster, update its commitment to Canadian feature film and reaffirm a commitment to licensing a minimum number of Canadian theatrical feature films. Ideally, this would be at least one new film monthly, aired during prime time, for Canadians to discover and enjoy.
On the whole, we also urge this committee to ensure that the certainty inherent in existing copyright legislation be maintained. The ability to set budgets and have structure around residual and profit payments ensures stability for distributors in a vastly changing landscape.
Thank you again for having me here today and for considering CAFDE's recommendations, which will not only benefit Canadian creators, Canadian film distributors and the economy but will also ensure Canadian content is seen widely, here at home and around the world.
Thank you.