I came across a disconcerting article in the Los Angeles Times the other day that detailed the next stage of Runaway Production. Runaway Production is the phenomenon in which film production — in search of tax breaks and cheaper labor/production costs — flee the Los Angeles TMZ (thirty mile zone; you didn’t think that the gossip-porn media outlet was original with its naming, did you?) for other states and other countries that offer below-the-line budget breaks (such as tax rebates, right to work status to skirt hiring film crews who are IATSE – the “union”).
Movie production in Los Angeles has dwindled to a sad, sad level over the past two decades (film director James Cameron famously said, after directing TRUE LIES, he would never shoot in Los Angeles again, and maybe not the US. He dialed that rhetoric back when he did AVATAR though), as states like Louisiana, New York and North Carolina passed legislation that provided massive tax rebates (like 20% and up to 40% in Michigan) on any and every dollar spent by a film crew on location. This is crucial, because savvy film producers can actually collateralize that rebate and use the money to pay for other aspects of a film’s production.
Canada has had such a robust tax incentive program that Vancouver is the home for nearly every special effects-driven TV show, and Toronto has doubled for New York so many times in recent decades that New York City finally had to pass some new tax laws so filmmakers could shoot New York for New York. (Although those tax breaks aren’t enough, and it’s one of the reasons why Woody Allen hasn’t made a film in his beloved NYC in close to a decade).
In recent years, many states have aggressively passed tax incentive legislation to lure more and more TV out of LA’s TMZ (and California in general). So much so, for the upcoming Fall 2012 TV season we’re about to hit a new low watermark. Only two of the 23 new drama shows (or 8%) will be shot in LA’s TMZ!!!
What does this really mean? To the local economy it’s a rusty shank in the back followed up by a spiked bat to the nuts. As the LATimes article breaks down, a one-hour TV drama costs about $60million (over the course of a season) to produce and all that money goes to local vendors, the writers and crew members (around 480 all told). All that money is being REMOVED from the LA economy.
I don’t know if people accurately remember how acutely damaging the 2007-08 WGA strike was for the LA County economy, but I do and it was fucked. All you’re favorite restaurants were teetering and 1000s of people took crippling financial hits, and right when the strike broke the economy for the whole country dove into a Red septic tank (courtesy of George W. Bush and the GOPs deregulatory policies, among other things).
But here’s the thing, LA has NOT recovered to pre-Strike levels of employment and economic activity (I’m by no means blaming the WGA, of which I’m a member, the Strike, because the Producers & Studios still rape the storytellers over residuals). With these more radical recent cutbacks in LA’s prime economic engine (real estate ain’t coming back, ever… too much shadow inventory) one has to wonder what is LA going to look like in two, three or five years? It will most certainly have a wider and more visually pronounced wealth gap (it’s already ugly-bad, but it WILL be worse).
You can already see the signs. Don’t believe me? Take a drive down Melrose Avenue from west of Fairfax to Doheny… lots of “For Lease” signs in the windows of those high-end boutiques.
If LA, or rather Hollywood, is precipitously no longer being a viable production center what does that say for the 100 years of the Hollywood Dream? That it’s on its death bed?
Yeah, I would say so. Think about all the people who move out to LA after high school and/or college with dreams of making a career in Tinsel Town… that needs to be radically re-thought. And staying here for many is quite untenable.
$60m PER SHOW is too much to suck out of the economy… multiply that by say 15 shows and you’re looking at close to $1b in money (i.e. taxable income for a city that already can’t pay its bills or provide adequate social services – drive down Wilshire Boulevard between Downtown and Beverly Hills and you’ll see what I mean, the roads in Bogota, Colombia are better!).
When I first moved to LA many, many, many (many!) moons ago, you couldn’t go a week without seeing some production set-up on the streets somewhere – that hasn’t been the case in years, I think you might see the production trucks once a month now (if that). I came to LA to work in the movie & TV business, to make movies and TV shows here – but it’s not a forgiving city by any stretch of the word, and the so-called cultural and natural beauty can be found elsewhere… particularly where the productions seem to be heading (like Sydney, Australia for example… and I wouldn’t have to hear Congressman Darrell Issa’s mouth any more either).
Of course many might applaud this, because it ultimately removes the stranglehold that “Hollywood” has on the entertainment business . But only just so, because all of the creative, financial and marketing decisions will still be made in the stark white halls of the four major agencies and the studios. If you been a regular reader of the column, then you’ve gotten a sense that what’s Hollywood impactful is the power of the marketing departments. You know about (and then see) a film or TV show, because of the awesome force (and insane dollars spent) on the marketing of a given project.
What shocks the shit out of me is that when Hollywood action film star Arnold Schwartzeneggar was governor of the Golden State, why the hell didn’t he push for the kind of competitive tax legislation that the other states now have – I know that CA has perennial budget deficit problems (blame that on the ballot initiative system and the property tax rates) and that the face of Hollywood is the rich and famous (e.g. Brad Pitt, Angelina Jolie, George Clooney, Will Smith, Julia Roberts), but the rich and famous constitute probably less 5% of those working and want to work in the Dream Factory… just review the SAG/AFTRA, WGA and DGA data on the percentage of their members who work. IATSE probably can’t even strike anymore its Strike Fund must have been cannibalized by the dwindling amount of local union jobs.
Movies & TV are perhaps America’s biggest export raking in 10s of billons a year; this is an industry that should get some consideration – not get a bitten thumb, because it does generate such fantastical wealth and economic activity. I’m not saying throw a subsidy to the likes of Michael Bay or Ron Meyer or J.J. Abrams, I’m saying level the playing field… because as I said earlier, the high-paying creative and executive jobs are still going to be centered in Los Angeles, and those people are doing just fine, more than fine if you do the research. It’s the below-the-line artisans who are getting royally screwed.