Hit Play for Vertical Integration

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.

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