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Hollywood Seeks Government Help Amid Coronavirus Shutdowns, but Industry Bailout Unlikely

Hollywood Seeks Government Help, But Industry
Reed Saxon/AP/REX/Shutterstock

The members of Congress who represent the entertainment industry are trying to make sure the next coronavirus relief package includes aid to freelance workers.

But while there is sympathy for the theater business — which has almost entirely shut down — there appears to be little appetite for an industry-specific bailout package.

Congressional Democrats are seeking to avoid corporate “bailouts” in general, or to attach conditions that would preclude stock buybacks or executive bonuses. Congress is still scarred by the backlash to the financial bailout of a decade ago.

“From my point of view, we ought to put the individuals first and families first,” said Rep. Adam Schiff, “and only look at large industry players, like aircraft manufacturers or airlines, through the prism of what is most beneficial to employees.”

Few sectors have been as ravaged by the economic downturn as the entertainment business, which depends on large groups of people to produce and present much of the content that it makes. That’s no longer possible given the highly contagious nature of COVID-19.

In a little less than a week, productions have ground to a halt, movie theaters have closed and Broadway has shuttered. In the process, tens of thousands of jobs have been lost, many of which were held by freelancers with little protection and no means of making any income. But that’s also true of many other sectors of the economy that have been upended by the fast-spreading disease. The restaurant, tourism, hospitality and retail industries are also facing mass layoffs and a veritable shutdown.

“It doesn’t seem to me that the industry is going to be a standout for relief over and above other industries that were hit as hard by the pandemic,” said Brian L. Davidoff, chair of Greenberg Glusker’s bankruptcy, reorganization and capital recovery practice. “I’m sure the entertainment industry will lobby for their own needs, but any relief is going to be more generic and will apply to other groups like the airlines and the hotels that are also reaching out to Congress.”

The exhibition industry has been among the most vocal in seeking government assistance. This week it called on President Trump and Congress to include their business in any upcoming stimulus package and asked for help with tax benefits and loan guarantees as they struggle to remain solvent. Theater owners are also looking for assistance with paying workers who have been furloughed.

“This business will come roaring back when people can go out again,” said Patrick Corcoran, vice president and chief communications officer of the National Association of Theater Owners (NATO), the exhibition industry’s main lobbying arm. “We just need help getting over this hump when there are no revenues coming in. Our members need cash flow to pay expenses, but that can’t happen when people can’t go see movies.”

Corcoran said roughly 150,000 people are employed in the industry, many of whom have been let go. He also pushed back at suggestions that the government shouldn’t intervene because movie exhibition isn’t an “essential industry.”

“Essential has many different meanings,” said Corcoran. “It’s not just things like shelter. It’s also things that have an economic impact and a cultural impact like retail, casinos, bars, and restaurants. We’re not privileging ourselves above any of those things. We just think that this should be treated broadly.”

Some in Congress are sympathetic, but the politics of such a bailout would be challenging.

“Of course I empathize tremendously with the situation of the theater owners,” said Rep. Judy Chu. “The impact on the theaters can be part of the discussion. Right now our huge focus is on workers.”

On Thursday, Senate Republicans released a plan to give out $1,200 per taxpayer to stimulate the economy. The benefit would be capped based on income, with a phase-out starting at $75,000 per taxpayer. Some of those who represent Southern California say the cap doesn’t reflect reality in high-cost areas.

“Clearly the dollar caps reflect a Wichita rather than Los Angeles cost of living,” said Rep. Brad Sherman. “If you’re making $75,000, you’re not rich in L.A.”

Schiff authored a letter on Thursday, signed by 37 members of Congress, calling for consideration for freelance workers in expanded unemployment or paid leave benefits.

“They’ve got to change the rules on unemployment for the entertainment industry for this problem,” Sherman said. “Just because your work is periodic doesn’t mean you’re not unemployed now.”

Unions, such as IATSE, SAG-AFTRA, and Associated Musicians of Greater New York, are also pushing for federal and local assistance in the form of enhanced unemployment benefits and direct payments as they hustle to help crew members, performers, and musicians who have suddenly found themselves out of work. The Motion Picture Association of America, the main lobbying arm of the studios, has not been as public in calling for assistance, but is playing a key role behind-the-scenes.

Even though these different lobbying groups and guilds are urgently concerned with getting some kind of relief for their members, and they’re not necessarily asking for it to be specifically targeted for people in the entertainment industry. It’s possible when production resumes after several months, Hollywood may call on the federal government to provide some kind of economic relief in order to help with the costs associated with ramping up filming. Those may come in the form of film tax incentives.

“You’re going to need some kind of cash infusion to get productions re-started,” said Joe Pichirallo, a producer and a professor at NYU’s Tisch School of the Arts. “A lot of these studios operate on thin margins, as is, and these producers and companies haven’t been getting paid while nothing is shooting.”