Biz without borders

ICM topper Berg sees globalization growing

Hollywood will remain showbiz’s financial and administrative center, but film production will continue fleeing the region in coming years due to forces of globalization, ICM chief Jeff Berg asserted Wednesday.

“Artists are now global artists; they don’t necessarily live here anymore,” Berg told an audience of 300 during his keynote address, “The Cluster We Call Hollywood,” at UCLA’s quarterly Anderson economic forecast conference.

As an example, Berg noted all five contenders for best picture Oscar were shot outside California — with “A Beautiful Mind” in New Jersey, “The Lord of the Rings: The Fellowship of the Ring” in New Zealand, “Gosford Park” in England, “In the Bedroom” in Maine and “Moulin Rouge” in Australia. So it’s a fallacy, he added, to believe that Hollywood has a permanent franchise as a production center.

The long-held image of Hollywood as the sun-splashed center of the industry began changing two decades ago, Berg noted, amid heightened financial pressures, with studio ownership shuffled and shifting to mega-congloms. As a result, the term “Hollywood” now evokes a set of expectations about films rather than a specific geographic location.

“Studios today are principally sources of financing, marketing and distribution,” said Berg, adding that those functions have grown far more complex. Financing, for example, increasingly requires a “micro” approach due to the wider array of entities tapped for funding.

With average production and marketing costs hitting $70 million per pic, Berg noted, every major movie essentially becomes its own IPO.

The agency topper told the audience in his 30-minute talk that he strongly favors Hollywood maintaining its supremacy as headquarters, but noted the local region has managed to do so without significant government aid, unlike many foreign centers. He cited evolution of alternative centers, each with their own artistic communities, as a key factor in pulling business away from Hollywood, meaning the 50 telepics shot each year in Toronto and Vancouver won’t be heading back to Southern California.

Additionally, increased use of digital technology has reduced the need to perform post-production in Hollywood. “It’s no longer necessary to start, shoot and finish your film on the studio lot,” he noted.

The UCLA forecast found that Los Angeles County’s entertainment biz has lost nearly 18,000 jobs over the past year due to the combined effects of the de facto strikes (ramped-up production in anticipation of walkouts that didn’t occur), runaway production and the recession.

Picture production business fell 11.8% to 133,600 in February this year from 151,400 in March 2001. And the UCLA economists believe many of the eliminated slots will not be filled again, due to the continued move of feature production to lower-cost locales.

Berg also said to expect a major shift in exhibition toward digital projection soon, but admitted he could not forecast who will fund initial installation costs of $150,000 per theater.

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