Eric Garcetti, the new mayor of Los Angeles, has declared the loss of film and TV production in Los Angeles a state of “emergency,” and he’s determined to try to bring the sinking ship afloat.
Much production has simply moved out of state because the incentives offered by other states are greater than California’s, prompting Garcetti to go hat-in-hand to the California state government in search of largesse that will keep Los Angeles the entertainment capital of the world.
As Chris Baugh, location manager for Oscar winner “Argo,” which shot in L.A., explained, “I am starting to see people who have never made a feature film in Los Angeles. In fact, they are afraid to. They are concerned that it is too expensive and too difficult.” The huge budgets for major motion pictures, the shrinking DVD market, and the decline in cinema attendance are crippling the film/TV industry, so every incentive becomes far more important. Iron Man 3 (North Carolina), The Lone Ranger (New Mexico, Utah), and The Great Gatsby (Australia) were all shot outside of California.
The California Film Commission (CFC) recently admitted that the state “continues to experience a pronounced erosion of this signature industry.” Network TV dramas and feature films have fled the state; businesses that support production have shut down or downsized, and trade unionists are looking for work.
Garcetti promised in his inaugural address on June 30 to appoint a film czar who would try to make productions run more smoothly with City Hall. Earlier this year, the City Council approved plans to waive fees for TV drama pilots. Garcetti said:
Tomorrow we are not going to wake up with an unlimited cap on credits. But we have to show forward progress, and I am going to be like a dog with a bone on this and stay with this. I can’t single-handedly move Sacramento, but I think we will do what works to educate our lawmakers… that this is a huge shot in the arm for our economy to land a lot of this back.
California already has a $100 million-per-year incentive program, and the state is in dire financial straits. The program, renewed twice and in place until 2017, threatens to drain California’s depleted coffers. Conversely, New York offers about $420 million in incentives. Garcetti claimed his conversation with California Governor Jerry Brown was a positive one, saying:
We had a great conversation. He doesn’t suffer fools lightly, and you better bring your data, but I did. I showed him the impact, the multiplier effect, the benefit to the state treasury. Some studies have shown, at worst, some small debit to the state treasury, which is then multiplied many times over in economic activity. And I underscored the importance that this is a signature industry.
Garcetti said that the worst estimate of the cost for incentives shows the state would lose seven cents on every incentive dollar. He argued, “But maybe that dollar is multiplied five times (by the economic activity spurred by production). If you told me I could spend seven cents and get five dollars of economic activity, or to put this in real numbers, that I could spent $70 million and get $5 billion, that is a pretty good deal.”
Kish Rajan, director of Brown’s office of business and economic development, said they “will be working with industry leadership to enhance the business climate in California so this critical economic sector continues to thrive.” But the side fighting for incentives, including the MPAA, the Directors Guild of America, the Teamsters, and IATSE, is battling the California Teachers Association, which has seen its own budget suffer cuts.
The CFC report asserts that losing feature films “has had the most damaging effect on California’s infrastructure.” But Garcetti believes that other film/TV options should be considered as seriously as features, arguing that he wants to see the issue “in a larger statistical manner. I want to look at how many jobs did we bring back here, how many jobs did we have and get ahead of the curve. We lost feature films. That’s sad. They may come back to some degree, but probably by and large they won’t. We have to be smart about what we chase. Maybe it is not the $200 million movie. Maybe it is the premium cable and the commercials. Maybe it is the videogaming as well as the smaller commercials.”
Payroll service Entertainment Partners found that from 2004 to 2011, California’s share of the country’s total production wages fell from 68% to 59%. In 2005, 89% of network hour-long dramas were filmed in California–in 2012, 37%.
California set up a lottery system for those who wanted incentives; there is a $1 million minimum to $75 million maximum on features. Drama series have tougher restrictions. Because of the lottery, producers do not know how to budget their films.
Garcetti owes Hollywood; celebrities helped enormously in his mayoral campaign. Sony exec Eric Paquette was his finance chairman, Jimmy Kimmel hosted events, and Will Ferrell shot a campaign web video. The arts and entertainment industry invested roughly $1.4 million in both direct contributions and an independent committee that backed Garcetti. Garcetti said:
It is not in some people’s interest to see California win. They may benefit from this competition being in as many places as possible, because it has been a race to the bottom. And I certainly won’t lead a race to the bottom. We are going to fight a lot of fights. I know we are not going to win every single one of them. But if we don’t put a lot of strength toward winning a couple of battles in this war, we are just going to continue to be left behind on the battlefield.