While job growth in the entertainment industry has been on the upswing since 2005, California has actually lost employment while other cities like New York have reaped the gains from increases in production activity.
That was one of the conclusions at the Hollywood Chamber of Commerce’s State of the Industry Conference on Tuesday in Hollywood, where a series of speakers and experts presented a generally sobering picture of the problem of production flight from the state and region.
FilmLA’s Art Yoon, presenting statistics gathered by the Milken Institute, said that since 2005, California has lost some 4,500 jobs, while areas like New York have added 13,000 positions. The Milken Institute’s Kevin Klowden plans to publish a full report on employment in January, but Yoon noted that the loss of employment has been especially notable in areas like one-hour network drama series and big budget feature films.
That dire sentiment was reflected in the comments of several speakers who participated in a panel on California’s incentive program.
Randy Baumberger, president of the studio group at Paramount Pictures, said that when the studio plans for production shoots, “L.A. is not even in the selection set some times.”
He and other speakers warned that the loss of jobs to other states with larger incentive programs was worrisome because some cities, like New Orleans and Atlanta, are building up their “production ecosystem,” including soundstages and a base of crew talent.
Eileen Ige-Wong, senior vice president of production finance at 20th Century Fox Television, noted that the differential in costs is significant between Los Angeles and other cities. A budget for a one-hour drama that is $3 million per episode in Los Angeles will be $2.5 million in North Carolina and $2.4 million in Louisiana. The latter states have had more aggressive incentive programs.
Advocates of expanding California’s incentive program are preparing for a legislative push that is expected to focus on expanding the eligibility to network and premium cable dramas as well as movies over $75 million.
But Amy Lemisch, executive director of the California Film Commission, was blunt in what it would take to make the state more competitive. “We just need a bigger pot of funds,” she said,. California provides $100 million per year in tax credits to producers, but “we run out of those funds in one day.”
Asked what the prospects were for convincing lawmakers to adopt such legislation, and to get Gov. Jerry Brown to sign it, she said, “I think we will get attention…I am hopeful we will be successful.”
Assemblyman Adrin Nazarian also added to the chorus calling for expanded incentives, but he also outlined some of the potential political pitfalls. Among them is the perception, particular prevalent in Sacramento a decade ago, that such incentives were bailouts to billionaires. And North Carolina, which has had a generous incentive program, is set to end it in 2015 after the newly Republican-controlled legislature questioned its benefit. He also drew some audible challenge from the audience when he said that he was “not completely convinced we need to match New York dollar for dollar” to remain competitive, and that a lesser expansion of the tax credits would be enough to convince producers to keep their productions in California.
Others noted that what is missed by such perceptions is that tax credits produce additional spending in their communities as well as jobs that have a multiplier effect.
The conference was held at Loews Hollywood Hotel, and sponsored by Variety and other companies.