CANADA ADVANTAGE: BUDGET TV

TORONTO — Shooting here and elsewhere in Canada is nothing less than a survival tactic for some Hollywood TV series producers.

Consider this scene on the set of the CBS late-night series “Adderly,” about a government operative whose injured hand gets him demoted to the do-nothing Miscellaneous Affairs department.

The setting is not some glamour-filled studio, but a dingy, vacant warehouse. The crew is minuscule by Hollywood standards and extremely young. And--horror of horrors--they’re filming series star Winston Rekert with a 16-millimeter camera, not a 35-millimeter.

That might sound like a behind-the-scenes version of the Not-Ready-for-Prime-Time Players, but for Orion Television and its partners, those characteristics represent big savings. Without them this series wouldn’t exist.

“You’re talking about shows that can be produced for a lot less money,” said Jerry Golod, one of “Adderly’s” executive producers.

That’s the Canadian advantage in the extreme: series made on the cheap for programmers who can’t afford prime-time price tags.

Cut-rate, made-in-Canada TV is turning up on late-night television, where “Night Heat” preceded “Adderly” as a model on CBS. “Adderly” is on cable, where the USA network soon will present low-budget sequels to former network series “Airwolf” and “Alfred Hitchcock Presents.”

And it can be found on PBS, which currently has Teri Garr and Ron Silver in front of the cameras in Vancouver for the comedy anthology, “Trying Times.”

Now, prime-time producers too are sending in the Mounties to rescue swollen budgets.

A survival move?

“Has to be,” said Stephen J. Cannell, who soon will have two series, “Stingray” and “Jump Street Chapel,” shooting in Vancouver. Cannell blames the high cost of Hollywood production along with the poor sales of action shows in syndication for pushing him out of the country.

Here’s how a show like “Adderly” trims its budget, Canadian style:

--Spending U.S. dollars in Canada means an immediate savings of nearly 30%, since the current exchange rate pays $1.38 Canadian for each American dollar.

--”Adderly” pays about $10,000 (U.S.) a month for Toronto warehouse space that it uses as a makeshift sound stage and offices. By way of comparison, Orion’s “Cagney & Lacey” spends about $25,000 a month for an L.A. warehouse-sound stage. Hollywood studio sound stages run $40,000 to $75,000 a month.

--The crew is not from the International Alliance of Theatrical Stage Employees (IATSE), the union that staffs most Hollywood crews, but from the Assn. of Canadian Film Craftspeople, which co-exists with IATSE in Canada. “An IATSE crew can go to war and you’d be well defended,” said Golod. “Adderly’s” crew is about half the size. Workers in most cases earn less than American counterparts.

--U.S. prime-time TV would snicker at 16-millimeter film, but Canada’s Global Television network bought “Adderly” for a prime-time run that starts next month. Global contributes to “Adderly’s” budget, and the production saves another $20,000 per episode on the smaller film stock.

--The Canadian production company set up by Orion, Golod and Robert Cooper, the other executive producer, secured about $150,000 per episode from Telefilm Canada, a government agency that invests $60 million annually in indigenous TV projects.

--Rekert, who appeared in “Agnes of God,” is a member of the Alliance of Canadian Cinema, Television and Radio Artists, which allows producers to “buy out” an actor’s future residuals up front. That comes to about half of what America’s Screen Actors Guild members would be paid for reruns.

Total up the savings, and “Adderly” is being made for about $450,000 (U.S.) per episode--half a U.S prime-time budget. With its Canadian subsidies, the series gets by with only $150,000 per episode from CBS, about all the network can justify in the low-viewership 11:30 p.m. slot. (The show is seen on Wednesdays.)

Canadian shooting cuts budgets even on full-blown prime-time productions that use IATSE crews and SAG actors--and don’t take any advantage of foreign financing or tax incentives.

“When you add in the additional cost of per diems and air fares and things of that nature, you’re still gonna come out with a 20% to 25% savings,” said Peter Katz, producer of the short-lived “Kay O’Brien” series, also seen on CBS.

CBS Entertainment President B. Donald (Bud) Grant was satisfied with that show as an experiment in shooting series out of the country. “ ‘Kay O’Brien’ was prime-time quality, no problem whatsoever in terms of physical production,” Grant said.

“As far as the future is concerned, we would not look unfavorably on any producer who said he would want to make a show someplace else.”

Pilots such as NBC’s “C.A.T Squad” and “Hennessy” both were filmed in Montreal, and ABC’s upcoming “Mariah State” series will film in Canada. Many of the movies of the week at all three networks are produced there too.

Now, the “fourth” network, the new Fox Broadcasting Co., has Cannell’s “Jump Street Chapel,” a youth-oriented cop show that will help kick off the network’s prime-time lineup on independent stations in the spring.

Cannell, whose company produced such series as “The A-Team,” “The Greatest American Hero” and “Riptide,” is not looking to Canada for bargain-basement projects, but simply to eke a profit from his prime-time series.

“The fact is, this is a terrrrible business,” Cannell said, puffing on a pipe in the sixth-floor office back at the Hollywood office building that carries his name.

Cannell refers to the fact that reruns of hourlong episodes are not selling well to independent stations. That’s the marketplace producers count on for profit, since the fees the networks pay for action series don’t even come close to covering their costs.

“Hunter,” for example, is a Cannell show whose budget exceeds by about $300,000 per episode the so-called “license fee” NBC pays for it.

Cannell normally would expect to make up the difference plus a healthy profit when the reruns are sold in syndication--except that the price hourlong shows command peaked out two years ago and has been falling since. “The experts in the field are saying, ‘Maybe we can get you $300,000 or $400,000 (per episode) for “Hunter.” ’ Well, I’m in a no-win position the moment they turn the cameras on,” Cannell said.

He hopes to cut his weekly deficit in half on the shows he’s taking to Canada. They still won’t show an immediate profit, but “it’s enough to dispel some of our fears,” said the company’s executive vice president, Michael Dubelko.

The deficit-financing issue relates to Universal’s two Canadian series too.

The 58 “Airwolf” episodes that aired on CBS were among TV’s most costly ventures, running a reported $1.2 million to $1.4 million per episode. If CBS was paying a standard license fee of between $800,000 and $900,000, Universal went about $500,000 in the hole week after week.

Universal, unlike Cannell, didn’t have a prime-time berth for “Airwolf” and “Hitchcock.” But by making new episodes for USA Cable, it can charge much more when it sells the shows in syndication. (Independent stations like series with at least 100 episodes so they don’t have to repeat them too often.)

Low-cost Canadian production not only increased the value of Universal’s shows with a minimum investment, it also gave USA Cable an exclusive on a new series it wouldn’t otherwise have.

“We have not, at least to date, been successful in attempting to produce these series in the U.S.,” said USA Cable chief Kay Koplovitz. Not even Universal’s supplying stock footage of the Airwolf super-chopper in flight brought the cost down low enough--but production in Vancouver via Atlantis Films Ltd. did.

On the first episode of the new show, “Airwolf II,” original series star Jan-Michael Vincent as ace pilot Stringfellow Hawke will be involved in a crash; the new faces of Barry Van Dyke (Dick’s son), Geraint Win Davies, Michele Scarabelli and Anthony Sherwood take over the series.

The latter trio’s Canadian citizenship is part of the cost-cutting move: The series will meet the government’s Canadian content requirements, and Atlantis will be able to take advantage of a lucrative tax write-off.

The U.S. tax man, meanwhile, is giving some Hollywood productions an inadvertent kick out of the country, adding to Canada’s tug northward. The reason is that tax reform as of Jan. 1 is eliminating the Internal Revenue Service’s Investment Tax Credit (ITC), which returned production companies 6% of the total cost of production. That could add up to $1.5 million or more a year.

Dubelko said that Cannell Productions earlier had resisted going to Canada because the company couldn’t claim the credit when producing outside the United States. Now, however, “to the extent that there’s no credit, it really isn’t a consideration any longer,” he said. “It frees people to go work elsewhere.”

That might crack wide open the floodgates of U.S. production pouring into Canada.

Katz, who acknowledged that he was “ready to come back to the warm weather” as “Kay O’Brien” finished up production amid temperatures in the low 30s, added that “I’d do it again in a minute.

“It’s a great place to shoot. You can get a lot of quality out of production up here. The look of the show isn’t any different than the look of any show shot in Los Angeles. It all made a lot of sense in the end.”