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The early part of the year is typically the slowest period in the Canadian film industry. Of course "the Canadian film industry" is a vague term at the best of times. These days a cynical observer might ask, "What industry'" In December, Alliance Atlantis completed the final phase of its gradual "production reduction" strategy, halving the number of employees in its production arm, axing its two most senior production executives, and shuttering subsidiaries such as Halifax-based Salter Street Films, producers of Michael Moore's Oscar winning documentary Bowling For Columbine. The company said the cuts were based on its view that the downturn in international demand for dramatic television was "permanent".

The more optimistic observer will see in this bleak situation an opportunity to blaze a new trail. Alliance Atlantis cast a broad shadow across the production landscape; without them around, other companies will have the opportunity to shine, not to mention access public financing that would otherwise have gone to AAC. But the cynics have the upper hand: in Montreal medium size production companies such as Cinegroupe are cutting staff while smaller ones like Productions Pascal Blais are closing.

"What industry'" Is also a question Los Angelinos might ask, given that most of the feature films shot in Canada are US projects tapping Canada's generous labour-based tax subsidies and favourable exchange rate. Toronto is now entertaining four proposals for a massive studio complex to be built by 2005, one of them backed by LA-based studio operator Raleigh, another by the UK's Pinewood-Shepperton Studios. If built it will be the largest facility in Canada; but it's a safe bet none of the four business models relies on locally-financed production to drive revenue.

Meanwhile, Montreal is now a one-stop town when it comes to studio space. Late last year, studio complex Cinecite was placed in receivership only to be swallowed by its only rival, Mel's Cite du Cinema, which played host to some major US productions in 2003, including Martin Scorsese's The Aviator and the Halle Berry psychological chiller Gothika. The monopoly situation may give pause to US producers, that is if the rising value of the Canadian dollar doesn't do it first. With the loonie expected to top 80 US cents by the end of the year, the film industry - at least what's left of it - is holding its breath.

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