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DGA/SAG Commissioned Study Shows
Total Economic Impact Of
U.S. Economic Runaway Production
Reached $10.3 Billion In 1998


Click here to go directly to the report

Los Angeles – The Screen Actors Guild and the Directors Guild of America today jointly issued a report showing that the total economic impact as a result of U.S. economic runaway film and television production was $10.3 billion in 1998, up more than fivefold since the beginning of the decade. Economic runaway is defined as U.S.-developed feature films, movies for television, TV shows or series which are filmed in another country for economic reasons.

The report, conducted by the prestigious international consulting firm, Monitor Company, also estimated that so-called runaway production has cost U.S. entertainment industry workers more than 60,000 full-time equivalent positions in the last three years alone. The report also confirmed that the vast majority of out-of-country production has gone to Canada, which has aggressively courted film and television producers with an array of NAFTA-exempted production incentives, including substantial tax rebates.

"This report bears out the seriousness of the problem of runaway production," said DGA President Jack Shea. "It is impossible to look at this study and say that this issue does not pose a grave threat to the future of film and television production in the United States. And it is important to remember that the people who are being hurt by this are the people who depend on steady work to feed their families and repay their loans and send their kids to college. In our internal discussions, we’ve heard from many of our assistant director- and unit production manager-members who cannot find work because so many productions are going to Canada, where the government mandates that their jobs be filled by Canadian citizens. The DGA is committed to doing whatever it takes to ensure that these jobs return to our members who helped build this industry."

"For SAG, the findings are truly disturbing, confirming our worst suspicions," noted SAG President Richard Masur. "Based on our own analysis and the substantial anecdotal information we have gathered, we are already engaged in a member-based educational effort. It is clear from the Monitor Report, however, that we are looking at no less than the erosion of the economic foundation of our industry, the export of proprietary technology and a profound threat to our members’ livelihoods. This issue is an absolute priority for the Guild."

Among the highlights of the report:

The direct production expenditures lost from the U.S. due to film and television economic runaway production was $2.8 billion in 1998. This figure has increased almost sixfold from $0.5 billion in 1990.

The total economic impact of U.S. economic runaway productions was $10.3 billion in 1998. This figure has increased over fivefold from $2.0 billion in 1990. Total economic impact is defined as: Direct production expenditures, minus the portion of wages and other costs recaptured by the U.S., plus the U.S. Bureau of Economic Analysis multiplier effect of direct spending lost, plus tax revenue lost by the U.S..

In 1998, 27% of U.S. developed film and television productions were economic runaways (285 out of 1,075): this represents an increase of almost triple the number (100) and double the percentage (14%) of economic runaways in 1990.

In 1998, 45% of U.S. developed movies for television were economic runaways (139 out of 308).

In terms of the total economic impact of U.S. economic runaways, movies for television account for $2.7 billion, followed by feature films with budgets over $25 million at $2.4 billion, and feature films with budgets under $25 million representing a $2.3 billion impact.

Canada has captured the vast majority of economic runaways, with 81% of the total. In particular, Canada secured more than 90% of economic runaway movies for television in 1998.

Although U.S. domestic feature film production grew 8.2% annually from 1990 to 1998, U.S. features produced in Canada grew 17.4% annually during the same time period. Similarly, U.S. domestic television program production grew 2.6% annually from 1990 to 1998, but U.S. television production in Canada grew 18.2 % annually during that time period.

The Canadian government has engaged in a comprehensive and aggressive, long-term strategic campaign to attract U.S. producers. This program includes government incentives and tax rebates, which, coupled with lower production costs, have made it economically attractive for producers to film in Canada. This successful Canadian approach could become a model internationally.

In addition to the substantial impact on DGA and SAG members - directors, unit production managers, assistant directors, principal and supporting actors, stunt and background performers - by far the greatest impact in terms of lost employment opportunities has been felt by the men and women who work in below-the-line production positions.

The total employment impact of U.S. runaway production on entertainment industry workers rose 241% from 1990 to 1998, with the number of full-time equivalent positions lost rising from 6,900 in 1990 to 23,500 in 1998 – a cumulative total of 125,100 positions. Over the past decade, these losses increased 200% for the DGA and 479% for SAG over the 1990 figures.

The DGA and SAG are currently developing a joint strategy to respond to this crisis at the local, state and federal levels. In April, the DGA publicly announced their engagement of Washington Counsel, a prominent Washington D.C. tax consulting and lobbying firm, with senior partner Dick Meltzer leading the team as the DGA’s chief lobbyist in Congress.

In January of this year, Screen Actors Guild retained the Washington D.C. firm of Smith, Dawson & Andrews, to represent their interests in Congress, with corporate tax and financial services specialist Susan Riley taking the lead in developing and lobbying for legislative remedies on SAG’s behalf.

"It is essential that we find ways to improve the competitiveness of America’s film and television industries, so that producers and studios recognize the benefits of keeping their productions in the United States," DGA National Executive Director Jay D. Roth commented. "The Monitor Company study will be an important tool in assisting the DGA and SAG in formulating policies that will help us combat runaway production. The DGA will closely examine the trends indicated in this report to develop legislative and other strategies that will attack the causes of this complex problem."

"We will be continuing our successful partnership with the DGA as we move forward in developing a comprehensive strategy," said SAG National Executive Director Ken Orsatti. "Having built key national alliances with our 26 branches nationwide, SAG will continue to support remedies at the local and state levels while focusing our attention on a federal response. I want to make it clear that we do not regard our sister unions in Canada and throughout the world as our adversaries. We are not talking about protectionism, but rather a pro-business approach to leveling the playing field."

For more information about the report, please contact:

DGA
Chuck Warn
Andrew Levy
310-289-5333

SAG
Katherine Moore
Rafe Greenlee
323-549-6651

Click here to see the entire report.

 

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