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Monday, April 20, 2015

John Risley benefitted from those media tax credits he hates

(Just not in Nova Scotia)

Posted By on Mon, Apr 20, 2015 at 11:01 PM

Promo shot for Fuel Industries' Pretty Little Liars "alternate reality mobile experience."
  • Promo shot for Fuel Industries' Pretty Little Liars "alternate reality mobile experience."

Looks like the critics were wrong in thinking John Risley doesn’t know anything about the film industry.


Last week, the Clearwater seafood baron let loose on Nova Scotia’s film tax credit system. According to Risley, the soon-to-be-slashed fund is nucking futs.

But in all that chitinous tough talk Risley failed (or forgot) to mention his Clearwater Fine Foods group of companies has dipped its sea legs into the world of digital media.


Fuel Industries is an Ottawa-based online interactive and marketing agency founded in 1999. It has offices in Los Angeles, and creates “brand experiences” in animated, live action television, gaming and digital formats.

In 2009, Risley's CFFI bought a majority stake in Fuel, and Michael Risley (John’s son) became Fuel’s chairman. The investment firm sold those holdings earlier this year, and Michael’s no longer with Fuel.


Media productions in Ontario are eligible for some egregious incentives of their own. The province’s digital media tax credit covers up to 40 percent of eligible expenditures. The Ontario Media Development Corporation also offers an interactive digital media “export fund,” which covers up to $12,000 for “targeted sales trips.” Fuel has been a recipient of the export fund twice in the last four years.

The OMDC won’t say how often Fuel Industries has applied for or received the digital media tax credit, stating that’s privileged information under the province’s privacy legislation. But given that in 2012/2013 alone the OMDC approved—not received, but approved—over 1,000 applications for a total handout of $75 million in tax credits, it’s probably a safe assumption that Fuel received some monies.


Fuel’s clients include LucasFilm, NBC Universal, Google and HBO. This page claims they take in about $25 to $50 million in revenue.


Risley, who has a net worth of over $1 billion, defended Fuel’s practices and his own tax credit criticisms today to the Chronicle Herald’s Brett Bundale.

“We did invest in this company,” Risley said in an interview Monday. “I wasn’t really intimately involved.…I want to say that I don’t think they got any particular tax credits, but I may be wrong. They may have been entitled to some credits.”


Regardless, Risley said it doesn’t change his position on Nova Scotia’s generous film tax credit.

“If we still owned our stake in Fuel Industries, I would have taken the position I did, notwithstanding the fact that it was getting whatever credit it was getting. In fact, if I had a business here in Nova Scotia that was getting this credit, I would still say what I said because I just don’t believe in it.”


If there’s any tax credit system that’s unsustainable, it’s probably Ontario’s digital media strategy. The basic requirements of having “media” that’s “digital” and “interactive” has been exploited by banks, newspapers and insurance companies. So many people apply for the damn thing that it takes a minimum of 18 months before being approved. A recent episode of the podcast Canadaland neatly explained just how bloated and uncontrollable the system has become. 



But Nova Scotia, as Mr. Risley knows, is very different than Ontario. And tax credits here are apparently very different than tax credits there. For all the criticism he's received over his tax credit remarks, Risley isn’t stupid. You can make a strong argument that the tax credit system is a loser’s game. But it’s hard to take advice from someone telling you to do as they say, and not as they do.


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