Unprecedented loss in industry, report finds

When the California Assembly’s Appropriations Committee begins consideration today of two bills that would provide incentives for film and TV production in the state, legislators will have at hand a bracing report on the damage already done by so-called runaway production.

The report, prepared by the Film & Television Action Committee — a grass-roots industry group formed to call attention to declining production in Los Angeles — was delivered Tuesday to committee members in Sacramento as well as to Assembly speaker Antonio Villaraigosa, Senate president pro tem John Burton and Gov. Gray Davis.

“Foreign film production threatens our local economy and is dismantling our film and television industry infrastructure,” FTAC chairman Jack De Govia wrote to legislators in a letter accompanying the report. Research shows, he said, that, given the right incentives, producers would return to the United States.

Getting competitive

“Making our community more competitive by creating tax rebates is the first step to bringing production back to our state and country,” De Govia wrote.

The first of the measures under consideration, Assembly Bill 484, would, in its present form, provide a 6% tax credit on labor costs paid under a collective bargaining agreement for work done in California on motion picture and TV productions budgeted under $5 million.

The second, AB 358, would provide a 10% tax credit against labor costs incurred on film, television and commercial productions of any size working entirely in California.

The report released Tuesday says, among other things, that:

Report findings

  • Feature film starts in California fell by 20% between 1997 and ’98, according to the California Trade & Commerce Agency. During the same period, film production starts in Canada grew by 55%, and in Australia by 29%;

  • Film permits issued by the California Film Commission so far this year show a 17% decrease relative to the same time last year. The decline in movies-of-the-week is even more dramatic, at 56%;

  • Between 1997 and ’98, the Entertainment Industry Development Corp. reports a decline of 2,655 production days in the city of Los Angeles and unincorporated L.A. County alone, a drop-off of 8% following four straight years of increases;

  • Since June last year, more MOWs and miniseries have been shot in Canada than anywhere else. In 1998, more than $800 million in U.S. funds were spent in Canada on film and TV production, with more than half that sum — $522 million — going to British Columbia; $123 million was spent in Ontario, and $106 million in Quebec.

Jobs lost

The report quotes statistics supplied by the L.A. County Economic Development Corp. showing that 11,000 jobs were lost from the ranks of so-called direct employees in the area’s film industry between 1997 and ’98. In what economists call indirect jobs such as catering, costuming and equipment rentals, another 11,400 jobs are projected to be lost by the end of this year.

“Such a loss in the industry is unprecedented,” the report says.

By applying the economic multiplier used by the Bureau of Economic Statistics, those job losses translate to more than 35,000 people in L.A. County affected in such workplaces as film labs, equipment rental houses, lumber yards, hardware stores, car and truck lessors, wardrobe suppliers, furniture and prop rental houses, dry cleaners, and special-effects manufacturers.

If an average picture employs 1,250 people, the report says, about 73,750 feature film jobs were lost to the 59 American movies shot in Canada last year. Under that same calculation, 18,750 U.S. jobs were lost to the United Kingdom, and 11,250 to Australia.

“Productions at the lower end of the budgetary spectrum have shown the greatest exodus,” the report says. Overall last year, approximately 122,800 jobs were lost in California in features and MOWs.

“We can currently say with a fair degree of accuracy that at least 35,100 jobs were lost in MOWs alone last year,” it continues.

Impact multiplied

At the same time, the report says, the loss of a TV series budgeted at $25 million “has a negative impact of $75 on the California economy.”

But not everyone is bearish on Hollywood. A study released in December by UCLA’s Anderson Graduate School of Management said that, despite there being “virtually no growth” in 1998 in entertainment employment, the school’s economists remained “bullish on the long-term prospects for the industry in California” (Daily Variety, Dec. 18, 1998). They predicted a gain of more than 17,000 jobs during the next three years.

An earlier report by the management school forecast a doubling of employment in the California-based industry by 2015, to 364,000, with a likely 437,000 workers five years later (Daily Variety, Sept. 18, 1998). The UCLA economists attributed much of the projected gain to the growth of digital media, such as computers and the Internet, and burgeoning television outlets.

“Something is going on in the motion-picture production industry that is not well understood,” said Jack Kyser, chief economist for the L.A. Economic Development Corp., in a report he issued in January. “The forecast for 1999 is for an acceleration in growth, as the majors get their houses in order and the cable industry continues to expand. However, the growth may not be evenly distributed.”

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