Dialogue: David Zitzerman

A co-production expert discusses how Canada uses treaties to its advantage.

David Zitzerman, a partner in the entertainment group of Goodmans Llp. and one of the most prominent entertainment attorneys in Canada, has been involved with a number of treaty co-productions, including the Showtime miniseries "The Tudors" and the feature films "Being Julia" (2004), "Tideland" (2005), and the upcoming Ashley Judd starrer "Helen." He spoke with The Hollywood Reporter's Stephen Galloway about the complexities involved.

The Hollywood Reporter: Canada seems to take part in more co-productions than any other country. Why?
David Zitzerman: Canada is a bit of a treaty junkie. I am aware of no other jurisdiction that has more (film) treaties than Canada -- we have over 50 bilateral co-production treaties, compared to the U.K., where there are about eight. The thinking is, this is a smaller market and therefore it is sometimes difficult to raise sufficient financing to produce feature films; there are a lot of other countries with a similar situation -- so why not negotiate bilateral agreements to help get films made?

THR: The advantages are obvious. Are there any disadvantages, from a producer's point of view?
Zitzerman: The disadvantage is that you have to have a (foreign) partner with often equal decision-making power -- you need a co-producer from another jurisdiction and they have to be at arm's length from you -- that is, you can't control both sides. In a typical co-production -- say, with the U.K. -- it would not be unusual to have the U.K. co-producer make a sale to a British broadcaster and bring in the British incentive and then interim financing through a British financier; and at the same time, the Canadian producer makes a sale to a Canadian broadcaster and accesses that money through a Canadian bank. So now you might have two financing institutions involved, and a bonding company, and a couple of banks, and co-producers in two jurisdictions.

THR: Have there been any significant changes to the treaties recently?
Zitzerman: Canada is continually negotiating and renegotiating treaties. For example, the Canada-Spain treaty was recently amended to cover television as well as feature films. They are constantly being amended to cover new media, to change the minimum or maximum percentage.

THR: Most Canadian co-productions seem to be with just a few countries.
Zitzerman: Yes. Probably six or seven account for 95% of the activity. There may be a treaty with Senegal, and I believe with Estonia, but you can bet there are not that many Estonian-Canadian or Senegalese-Canadian co-productions. There is a huge number from Canada-France and Canada-U.K.

THR: The U.K. recently amended its own treaty requirements. Why?
Zitzerman: In the U.K. for many years the minimum (spend) was 20%, so there were many 80%-20% co-productions. The Department of Culture, Media and Sports (DCMS), the authority that used to administer (the treaty), perceived there was an abuse because there were too many 80%-20% co-productions favoring Canada. (So) they changed it to a minimum (spend) of 40%. Now (the balance) can be no greater than 60%-40%.

THR: In addition to requiring that a certain percentage of the budget be spent in each country, how do treaty co-productions deal with local point systems, like the one in Canada?
Zitzerman: This is something that is very misunderstood. You'll see there is an actual bilateral agreement with each country, and it says that you have to meet the criteria within the agreement. Domestic point counts are superseded by the rules of the agreement. So in Canada, where you have to get six out of 10 points to qualify as a local production, there is no points test for co-productions. You have to look at the rules for each separate treaty, but typically it might say a minimum of 20% of the budget has to be spent in one country, and there has to be at least one lead actor, one supporting actor and two or three technicians (from that country).

THR: How flexible are those rules?
Zitzerman: Each (treaty) is subject to the overriding authority of the body that administers it. So in France, you might go to the CNC (Center National de la Cinematographie) and say, "I have no French lead, but I have three (French actors) in support. Will you exercise your discretion and allow me to be certified?" The treaty is a starting point; it is not a firm rule, so it is quite different from the points test.

THR: Is it a headache to put these deals together?
Zitzerman: Typically, closing agendas are formidable and have a lot of documentation. It's a lawyer's dream.

THE TRICK TO TREATIES: International co-productions are saving millions
DIALOGUE: Co-production expert David Zitzerman
CONNECT FOUR: Projects made possible by complex treaties