Archive for July, 2007

Hit Play for Vertical Integration

Monday, July 30th, 2007

TEDCO now has a “vertically integrated” studio, called the Filmport.

In business, vertical integration is an approach used to increase the level of control which a firm has over its inputs or outputs. A simple example occurred when Pepsi purchased several restaurant chains. This ensured exclusive control over the sale of soft drinks within these establishments.

Likewise, in another piercing move to impede competition, TEDCO has allowed Peter Bronfman, the owner of Comweb, and William F. White, to enter into an equity partnership of the Filmport studio.

With Bronfman already controlling a variety of the industry-leading companies within the movie business the degree of corporate concentration has increased again. Bronfman’s equity position without question makes the Filmport a vertically integrated corporation.

Once again, Jeff Steiner has approved or allowed another controversial backroom deal with one of his friends.

Play the tape and look down the road a couple of years. Do you really think that Ken Ferguson will allow other equipment suppliers on the site to compete against one if his equity partners? Not a chance.

Ferguson’s Machiavellian business practices are infamous in the film industry. Let me give you one little example. An hour or so before the Filmport signing ceremony Ken arrived and noticed that Absolute Locations was a supplier on site. Ken was furious to see this because Absolute’s owner had been a disputant at a City of Toronto council meeting opposing the closure of the 629 Eastern studios. Absolute supplies were ordered off the site immediately.

Looking back when the Filmport deal was first announced many competing film studio operators were justifiably upset to learn of a non-compete clause. Essentially other studio operators were cut-out from utilizing any of TEDCO’s Portland property for film studio use.

The R.F.P. for the alleged world wide competition that TEDCO put forward apparently awarded the contract to an entity that had the adequate financial footings to carry this project through to completion. Since then, there have been 3 new partners added to shore up the financing.

And this is just the first phase. Who else will this Filmport group bring into the fold in the latter phases?

It would be nice to see what control TEDCO, or the city, has over these financial partnerships. But we can’t. Why? Because David Miller ordered a judicial review of a “freedom of information” request which bars anyone from viewing this deal.

It is obvious that TEDCO was not diligent in ensuring that the Rose Corp was committed to provide adequate financing. Also obvious is that Robins, Appleby and Taub did not have the adequate wording in this secretive contract.

The fallout from these collusive deals is disastrous.

First, the 629 Eastern closing will reduce studio space. Second the replacement, Wal-Mart, will surely dummy the poor merchants and the walking community of Leslieville and the Beaches.

Now with Bronfman as its newest partner, other support companies will without question have an uphill battle to supply equipment at the new Filmport. It’s no fluke that when the Toronto film community was thriving it was based on a competitive entrepreneurial spirit.

Furthermore, TEDCO has stabbed one of their very own long term tenants, Production Services – a direct competitor of William F. White – in the back, by allowing Bronfman’s companies to gain this competitive advantage.

If the City of Toronto wants to move toward competitive efficiency, which is without question needed to draw producers in an ever increasing global film market, it must avoid such monopolistic or oligopolistic practices.

Because when the tape stops we all loose.

The Dirty Truth

Tuesday, July 24th, 2007

There are many pieces put out by Christopher Hume of the Star that I have admired.

But not today.

He claims that the city’s financial woes are not Miller’s fault. I would beg to differ.

Looking at the city’s budget from a macro level, prior to Miller, the official budget depicts graphic lines that were very stable. Since then the spending in particular has climbed on a dramatic 60 % incline.

On a micro level I would like to give one example of how one mere political decision Miller made will impact our city’s finances for generations to come.

Leading up to the last municipal election Miller thought Toronto needed a “right-now” solution to its waste needs. But in truth all he wanted was a needed boost to his campaign.

So he put a “down stroke” on the purchase of the $220 million Green Lane landfill.

Take note that Toronto does not own Green Lane. It’s not paid for. All Miller did was make a partial payment and sign a purchase and sale contract.

After this Miller instructed city staff to bring forth a business plan to figure out how to pay for this landfill. I have to tell you they presented about 5 different clueless options that all came up with this miraculous zero balance cost to taxpayers. To an astute business person the numbers are comically sad; they pass for a business plan written by a first year undergrad.

Coupled with this issue is a big ticket $125 million budget line for landfill monitoring that noooobboodddyyy mentions. This money covers the 50 plus old and dated landfills the city must maintain forever. And this is an exponentially growing big-time drain. The cost for Keele Valley Landfill alone was $6 million a year last year.

He should be forced to resign for the the price he paid for the landfill. Miller’s political quick fix will cost $44.00 per ton to dump before closure costs at Green Lane.. Meanwhile, you can pay $9.00 per ton to dump in Michigan with no liability.

Did I mention Toronto is still contractually obligated to send its waste to Michigan for several more years?

Buying a landfill is far from prudent. In the year 2007 only an idiot would do so. The environmental risk is way too high – even if the landfill was built with today’s engineering.

Green Lane, on the other hand, opened in 1978. Miller has committed us to pay for a landfill that already has 30 year old technology. And to pay for the liability. And pay for the lifetime monitoring.

Did you know Toronto filled three larger landfills alone since 1978?

Miller should have just leased this landfill. The owner ol’ man McCaig did not have any real suitors.

At the end of the day his new user fee waste system is, in reality, needed to pay for a political boost in his last campaign.

So Mr. Hume I have to disagree.

By the way, Mr. Hume, if you live in Toronto remember when putting out the garbage in your new “Miller cans”, call it “Miller Time”. The large can is the “King Can”, the medium the “Bubba” and the small is one is the “Miller Light”.

A Marching We Will Go….

Monday, July 23rd, 2007

Well it’s maybe that I spoke too soon.

Apparently, no less then three different contracting companies sent executives goose-stepping into a meeting with Jeff Steiner at TEDCO’s offices on Friday regarding the project symphony.

Demolition on MT-28 is slated to start this week.

So while Miller trumpets his fear-mongering hack and slash financial cuts, his grand ego-driven goals along the waterfront are indeed moving forward.

David Has a Diaper Attack

Friday, July 20th, 2007

David has a diaper attack.

It’s no fluke the miller is having a melt down in the wake of the Toronto tax vote loss.

It’s called, the “only child syndrome”.

In making all these petulant pronouncements to cuts like the Sheppard line I noticed that there was no mention of cutting Miller’s pet projects.

So if there is noooooo money where is Miller going to get the funds to build Tedco’s project symphony? It appears that this $150 million project is already taking longer than planned.

TEDCO’s rush to evict Cinespace from mt28 was a foolish and costly draconian economic move. Once again the Toronto film industry and the City of Toronto as a whole have lost the benefits of valuable production money this summer because of poor political ego-driven policy decisions.

The outstanding questions regarding this piece of real estate will need to be answered.

How long will MT28 remain standing? What if the project symphony is not built? What will be the litigious fallout out between Corus and TEDCO – and thus the taxpayer’s of Toronto?

Dark Clouds in Miller’s Forecast

Wednesday, July 18th, 2007

There are a few questions to consider in the wake of Miller’s tax defeat.

First why would he attempt to pass these new taxes without first ensuring that he had all the needed votes and then some?

Talk about a rookie move.

You have to believe he was aware of the possibility of a motion to defer.

Why would he put all his credibility on the line and not be 110 per cent sure all his ducks were in line?

If this were a federal vote we would be looking at the fall of a government and thus an election.

Further, this is the first real test of power under the new City of Toronto Act.

Miller dropped the ball on the goal line.

Any power that the Act was suppose to give him now will be challenged.

In all likelihood, not only will the service cuts be drastic and forthwith but the bonding agencies (as I mentioned in previous postings) will be forced to meet in their respective board rooms -very soon.

Remember Toronto’s credit rating is as low as it has ever been at AA. Now if or when it drops below this level the Act will forbid the City from borrowing any short term money.

And so let it be said that no one can predict the future, but we can anticipate.

Toronto City Council Defers Tax Debate

Tuesday, July 17th, 2007

Far more compelling to the left wing loss of the yesterday’s tax vote was the first real stinging political defeat as Mayor of Toronto for David Miller.

Many will historically view this as the turning point in Miller’s political fortune.

But in my view this turning point came when he usurped the Toronto Waterfront Revitalization Corp and inserted his campaign co-chair Jack Diamond as the architect for TEDCO’s “project symphony”. This indisputable unethical patronage appointment was done despite a 20 million dollar world wide competition. The TWRC committee had made a decision and it was not Jack Diamond.

In Millers mind I really think he believes that Toronto needs this revenue.

But you can’t suck and blow.

And now.his fellow councilors have forged a team, drawn the battle line, and served a dish of odium that he will eat for the last of his term as Mayor of the City of Toronto.

Be Careful of What you Wish For

Monday, July 16th, 2007

When Harris downloaded, in particular, social services, onto the city there were legitimate cries for help from city council.

Every year the city cried and every year the province was there to bail them out.

Low and behold came the provincial legislation called The City of Toronto Act.

Miller clicked his heals when this act was made law; for now he had the power to levy new taxes and thus generate needed revenue.
I’m not sure he realizes how much he was sucked in by the province.

Without question as Toronto City Council debates these new taxes many of its voting members are playing “Russian Roulette”.

Vote “yes” and stay in Miller’s good books for the balance of this term but then run the risk that this issue may ultimately cost you your seat come election time.

I know if I was an opponent of a “yes” incumbent during the next election I would be all over it during the campaign.

A “no” could cost a committee chairmanship.

Indeed the province in no longer the bad guy for the city’s financial woes.

Now the dirty work of taxation is in the hands of Miller.

From what I am hearing about the rancorous opposition at city hall today I am sure Miller is wishing someone else had his job.