Early History – Government Film Bureaus

In the early years of the film industry, the regulation of the embryonic film sector in Canada was left largely to the provinces, which set parameters for film content, exhibition and distribution. At the turn of the 20th century, several provinces went beyond this and established cinema offices, producing films to boost tourism and entice immigrants.

The Ontario Motion Picture Bureau (OMPB), created in 1917, was one of the most successful provincial offices and the world’s first state-sponsored film organization. The OMPB was not only involved in producing films, but also in coordinating their distribution, which began under its first director, S.C. Johnson. These films — up to 1,500 reels per month by 1925 — were distributed for screenings at educational, public and religious institutions. The OMPB did not keep pace with the industry’s technological advances, and by the late 1920s, its distribution structure had edged toward inefficiency and irrelevancy. In the midst of the Great Depression, the OMPB was a victim of budget cuts and was officially closed in October 1934.

In September 1918, the federal government created the first national film production unit in the world, the Exhibits and Publicity Bureau, to produce films promoting Canadian trade and industry. The Canadian Government Motion Picture Bureau (the organization’s name after 1 April 1923) produced short informational films, such as the series Seeing Canada, and distributed them across Canada and abroad. In the 1920s, the Bureau had the largest film production studio in Canada. Bureau productions were distributed across the Commonwealth, to European nations like France and Belgium, the United States, Japan and China. Its success in distribution was found in non-theatrical screenings, though some of its films were shown in theatres.

While the Bureau succeeded in running a large production unit and distribution network, it was not interested in expanding its operation to establish a domestic film industry. Indeed, it discouraged such a move, instead supporting the view that Canada should be part of the American film industry. Raymond Peck, the Bureau’s director for much of the 1920s, had close ties with Hollywood, and worked to bring American investors and film companies to Canada. The Bureau was ultimately felled by its inability to keep up with technology (it didn’t produce sound films until the mid-1930s) and financial difficulties brought on by the Depression. It was absorbed into the National Film Board (NFB) in 1941.

Vertical Integration of the Film Industry

Distribution was the last of the three branches of the film industry to develop, yet it quickly came to dominate the industry's economic structure. By the early 1920s, the largest Wall Street-financed US distributors had acquired production companies and theatre chains. These acquisitions created vertically integrated combines that enabled the majors to dominate first the US and then the international film industry.

Why is Canada Part of the US Domestic Market?

Despite encouragement from such prominent Hollywood figures as director D.W. Griffith, who told a Toronto audience that Canada “should have [its] own films and exchange them with those of other countries,” the federal government did little to boost, or even safeguard, the nation’s nascent feature film industry. In fact, Canadian companies structured themselves after the highly successful, vertically integrated American industrial model, whereby production studios also owned distributors and exhibitors. For example, in the early 1900s, the Allen Amusement Corporation used their film exchange to obtain exclusive rights to films from Pathé, Independent Motion Pictures and later Paramount Pictures. As a result, by 1920, the Allen Theatres chain was the largest in Canada.

However, in 1923, American-born N.L. Nathanson, owner of the Toronto-based Famous Players Canadian Corporation (FPCC), bought all 53 of the Allen Theatres. This made Famous Players the largest theatre owner in Canada and gave it control of the Canadian exhibition market. Adolf Zukor, head of Paramount Pictures, then acquired direct control of Famous Players through a holding company.

In 1924, the Motion Picture Exhibitors and Distributors of Canada (MPEDC) was created as an instrument to protect American film industry interests. Known as the Cooper Organization, after its president, John Alexander Cooper, the organization took its direction (and funding) from the Motion Picture Producers and Distributors of America (MPPDA). The Cooper Organization ensured that US industry practices were introduced, and cemented, in Canada, particularly discriminatory methods (such as requiring cash in advance) aimed at curbing the success of independent exhibitors.

In short order, Canadian box office revenues were incorporated as part of the “domestic” profits of the American film distributors. Foreign companies overwhelmed the Canadian distribution and exhibition sector as the major Hollywood studios acquired direct or indirect control of the country’s two largest theatrical chains: Famous Players and Odeon Theatres (now merged under the name Cineplex Entertainment). This ensured a steady flow of Hollywood films into Canadian theatres.

American domination of the Canadian film industry meant that, as early as 1923, Canada had no real, viable film industry of its own. By 1930, American film distributors controlled the Canadian market under the umbrella of vertical integration, controlling almost 95 per cent of film distribution in Canada.

Investigation of the American Monopoly

An investigation into what was effectively an American monopoly in the Canadian film sector began in September 1930 under the Federal Combines Investigation Act. Prime Minister R.B. Bennett appointed Peter White to investigate more than 100 complaints against American film interests operating in Canada. White’s report concluded that Famous Players was a combine “detrimental to the Public Interest.”

The provinces of Ontario, Saskatchewan, Alberta and BC took FPCC and the American distribution cartel represented by the CMPDA to court in Ontario. After a lengthy trial, FPCC and other defendants were found not guilty on three counts of “conspiracy and combination.” The Cooper Organization re-structured in 1940, removing all exhibitors and re-naming itself the Canadian Motion Picture Distributors Association (CMPDA), which continues to represent American and Canadian distribution interests in Canada as the Motion Picture Association–Canada.

Establishment of the MPEAA

In 1946, the Motion Picture Export Association of America (MPEAA, now MPAA) was established to promote Hollywood productions in foreign markets. Although the original vertical combines of the majors were broken up in 1948 under US antitrust legislation, the basic operating principle continued. Most of Hollywood’s production is still controlled, and generally financed, by the major studios. The consecutive patterns of vertical integration and distributor-controlled production have continued to seriously impact the sustainability of the Canadian film industry.

National Film Board

The National Film Board of Canada (NFB) was established on 2 May 1939 under the National Film Act. Its mandate was to produce and distribute Canadian-made films aimed at aiding all Canadians in better understanding their country and fellow citizens. Originally created as an advisory board in the shadow of the Canadian Government Motion Picture Bureau, the NFB transitioned into film production (and quickly absorbed the Bureau) due to the national need for consolidated information dissemination during the Second World War.

Under the leadership of film pioneer John Grierson, the NFB ably took up and expanded the distribution system set up under the Bureau by centralizing the supply chain in order to reach the greatest number of viewers. Grierson was particularly interested in exploring the potential of having the organization’s films in the commercial distribution chain. He negotiated a distribution agreement for NFB shorts to screen as part of The March of Times newsreel series in the US, as well as in South American newsreels. Another had Famous Players Canada distributing NFB productions to hundreds of its theatres. The NFB also distributed its films through Canadian diplomatic embassies and consulates.

The main avenue for the domestic distribution of NFB films was its non-theatrical “circuits” system, which the Bureau had also used. The circuits system distributed films via rural, industrial and union contacts, and eventually resulted in the creation of film libraries, which would become the centre of the NFB’s postwar distribution system.

Canadian Cooperation Project, 1948–58

The NFB quickly drew the ire of the American film industry, which worked hard to protect its control over Canadian distribution. In 1948, the Canadian government announced the Canadian Cooperation Project (CCP), an agreement with American filmmakers who promised to increase the “Canadian” presence in their films and distribute more Canadian films in the US—so long as they had unfettered (i.e., untaxed and unrestricted) distribution for their motion pictures. The NFB’s new commissioner, Ross McLean, suspected that the Motion Picture Export Association of America’s (MPEAA, now the Motion Pictures Association of America) support for the CCP was merely a way to prevent the Canadian government from instituting film quotas, which had been discussed in Parliament. McLean also believed that a percentage of MPEAA member profits should be reinvested in the Canadian feature film industry.

The MPEAA began a campaign against the NFB, arguing it was monopolizing government funds to compete, underhandedly, with private companies and was too left-leaning on socio-political issues because of its employment of alleged communist sympathizers, a particularly potent criticism in the early days of the Cold War era. The NFB survived the MPEAA’s efforts and several lean periods of reduced government monies (and interest). For many Canadians, the NFB represents a viable symbol of what an alternative system for film production and distribution in Canada looks like.

The Bassett Report, 1973

Despite American domination over nearly all aspects of the Canadian distribution sector, Canadian filmmakers and producers have been fighting since the postwar years for a national film industry protected by pragmatic government policy. Government agencies such as the Canadian Film Development Corporation (CFDC) — created in 1967 and reorganized as Telefilm Canada in 1984 — approached the film industry as a cultural imperative, and worked to challenge American control over distribution and exhibition.

In the early 1970s, the CFDC came under public pressure to raise the visibility of the material it was funding, either by legislating the marketplace in order to guarantee the distribution and exhibition of Canadian films, or by employing foreign talent in conjunction with Canadians. The Ontario Ministry of Industry and Tourism appointed producer and broadcasting executive John Bassett to head a task force to study the Canadian film industry. The conclusion of the Bassett Report was that “a basic film industry exists. It’s the audiences that need to be nurtured through theatrical exposure. The optimum method of accomplishing this is to establish a quota system for theatres.”

In 1973, a group calling itself the Council of Canadian Filmmakers petitioned the Ontario government, urging it to follow the recommendation of the Bassett Report. Instead, in 1975, Secretary of State Hugh Faulkner negotiated a voluntary quota agreement with both Famous Players and Odeon Theatres: the chains were to guarantee a minimum of four weeks per theatre per year to Canadian films, and invest a minimum of $1.7 million in their production. Compliance with the quota was lukewarm at best, and within two years any semblance of it had evaporated.

Québec Cinema Act, 1983

In the 1980s, several legislative initiatives emerged in an attempt to combat US monopolies in the hopes of keeping Canadian-generated distribution and exhibition profits in the country. In 1983, the province of Quebec — which has its own effectively self-contained film industry, with a built-in, receptive audience — moved to challenge American control with the passage of the Québec Cinema Act. The Act stipulated that distributors not already operating in Québec before December 1982 must have their primary location in the province in order to receive a distributor’s licence. Moreover, all distributors doing business in Québec were required to reinvest a minimum of 10 per cent of revenues back into Québec-made film productions.

Anxious over the legislation’s precedent-setting protectionism, the Motion Picture Association of America (MPAA) pushed back, threatening to pull its pictures from the province’s screens. In response, the provincial government withdrew the reinvestment stipulation (deferring it to future negotiations). Members of the MPEAA with existing operations in Québec, including the Hollywood majors, received special standing under the Act, and were essentially “grandfathered” into the legislation. This “principal establishment” condition actually severely impacted Canadian film distributors; Canadian companies not primarily located in Québec were restricted from doing business in the province without a distributor’s license, which meant that to access Quebec screens, they would have to subcontract distribution to a Canadian firm previously based in the province.

Film Products Importation Bill, 1988

The federal government followed Québec’s initiative and took steps to address the long-standing problems faced by Canadian distribution companies. In 1987, Minister of Communications Flora MacDonald proposed that the Hollywood majors be allowed to distribute in Canada any films for which they owned world rights or in whose production they had participated. Canadian companies would be able to bid for distribution rights to independently produced films.

The proposals encountered stiff opposition from the MPAA, and generated intense lobbying in both Ottawa and Washington. When the Film Products Importation Bill (Bill 109) was tabled in June 1988, the original proposals had been weakened considerably and, during the free trade negotiations that followed, the federal government apparently agreed to abandon those as well. The bill was subsequently shelved.

In 1988, the Policy on Foreign Investment in the Canadian Film Distribution Sector used the essence of Bill 109 to establish Canada as a separate distribution market for independent films. It prohibited the takeover of Canadian-owned distribution companies and stipulated that takeovers of foreign distributors with Canadian concerns were permitted only if the interested party agreed to reinvest some of its Canadian profits into Canadian cultural industries. However, distribution companies established in Canada before February 1987, which included the Hollywood majors, were exempt from the policy and continued with business as usual.

American Conglomerates

In 2016, there were six foreign-controlled distribution companies in Canada: Walt Disney Studios Motion Pictures, Paramount Pictures Corporation, Sony Pictures Entertainment Inc., Twentieth Century Fox Film Corporation, Universal City Studios LLC, and Warner Bros. Entertainment Inc. They were all members of the Motion Picture Association – Canada, which had changed its name from the Canadian Motion Picture Distributors Association (CMPDA) in 2011. The organization describes itself as “the voice and advocate of the major international producers and distributors of movies, home entertainment and television programming in Canada.” Its new name was intended to more closely align the group with its parent company, the Motion Pictures Association of America (MPAA).

In recent years, Hollywood majors have flouted the 1988 policy, increasingly distributing small, independent films. Trade organizations, such as the non-profit Canadian Association of Film Distributors and Exporters (CAFDE, established in 1991), have called for renewed government attention to the distribution sector to combat the increasing encroachment of US outfits, urging more forceful application of the 1988 policy. Part of this push includes lobbying governments to expand the definition of distribution to include new digital platforms, and working to see better funding strategies for prints and advertising (key expenses in film distribution) that would encourage reinvestment in the marketing — and production — of Canadian feature films.

Independent Canadian Distributors

Lacking significant access to the two domestic theatrical chains and to major Hollywood films, independent Canadian distributors have traditionally emphasized the marketing of independently produced films, low-budget exploitation films and art-house films. They have also been the principal distributors of Canadian films. Many were, at one time or another, members of the now defunct Association of Independent and Canadian-Owned Motion Picture Distributors (1977–2015) and the CMPDA.

Companies such as eOne Entertainment, Alliance Communications (later Alliance Atlantis and now Alliance Films), Cinépix (now Lionsgate) and Astral Bellevue-Pathé (now Astral Media), have tended to follow the vertically integrated model, often by financing television production and/or marketing their films to specialty television channels. Other independent distributors include boutique operations such as Mongrel Media (established in 1994), the exclusive Canadian distributor for Sony Pictures Classics, and Ron Mann’s Films We Like (established in 2003).

The domestic market share of revenues from theatrical releases distributed by Canadian companies is minimal. In 2011, Canadian-owned and controlled distributors were responsible for distributing over 76 per cent of the films (Canadian and non-Canadian) released in Canada. However, that same year, foreign-owned distributors took 77 per cent of Canadian box office receipts. The Canadian distribution sector is further compromised by the fact that when territorial rights for Canada are sold internationally, Canada is generally included in a North American package paired with the US and bargained for in US dollars.

In 2015, all the top 10 Canadian box office spots were taken by American releases and Canada contributed $988 million to Hollywood profits. The state of film distribution in Canada is still very much an industry and government concern (the latest Parliamentary review occurred in June 2015). With the film industry’s power consolidated in distribution, the sector has accrued significant power to determine what films make it to the screen.