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Throwing cash at movieland

By Dan Walters
(Published April 23, 1999)
Sacramento Bee
Sacramento, Ca. U.S.A.

As California's economy roared out of recession in the mid-1990s, the entertainment industry -- especially movies -- was given much of the credit.

Economists cited huge increases in high-salaried movie industry employment as an offset to sharp drops in Southern California aerospace jobs. Film companies went on a construction binge to ease an acute shortage of sound stages; indeed, some new studios were converted aircraft production hangars.

As the decade draws to a close, however, filmdom is feeling a pinch.

The Wall Street Journal and other industry watchers describe it as the hangover from a binge. Production and promotion costs soared -- in large measure due to the ludicrously lucrative deals that production companies made with actors, directors, producers and screenwriters. The average cost of making a movie, the Journal reported in a recent industry survey, doubled from $26 million to $52 million in less than a decade.

Faced with anemic bottom lines, the industry is cutting costs. It's laying off workers, eliminating production deals and reducing the number of new films. From a peak of more than 150 major studio releases in 1996, production has dropped to under 140.

"We're in a recession in the film business, and it's having a broad impact on virtually every company in the entertainment business," the Journal quotes talent agent Tom Strickler.

Clearly, a very cyclical business has entered at least a mild downturn. It got carried away, let costs get out of hand and now must undergo a retrenchment. But is that any reason for California taxpayers to give film moguls multimillion-dollar subsidies?

This week, the Assembly Revenue and Taxation Committee said yes, approving four bills that would give movie producers generous state tax credits for in-state film production.

The committee heard tearful pleas from representatives of the industry's various behind-the-camera crafts. "Right now we're the canaries in the coal mine and we're starting to cough," said Jack DeGovia, an organizer of the Film and Television Action Committee.

As legislators and other advocates of the tax loophole bills described it, the industry's plight results from unfairly generous tax breaks being offered by Canadian governments for production north of the border and unfavorable currency exchange rates.

"This is an issue that speaks to the quality of life and a way of life," Assemblyman Scott Wildman, D-Los Angeles, told the committee.

But wait a minute.

When outsiders, such as the Wall Street Journal, examine the film industry's problems, runaway production isn't even mentioned. And advocates of the tax breaks never mentioned the industry's self-induced problems.

Wildman, whose San Fernando Valley district is a center of film production services, clearly is stroking his constituents. But there is absolutely nothing in his bill or the other tax breaks that would guarantee to do anything about runaway production. The tax benefits could easily be obtained by producers who have no intention of moving films out of the state. They could even be claimed for pornographic films or those glorifying the kind of mindless violence inflicted on a Colorado high school this week.

In effect, therefore, taxpayers would be subsidizing the film industry's profligate ways, adding millions of dollars more to the bank accounts of some of the state's richest residents.

And the reason why Democrats seem so anxious to do that? It may have something to do with the generosity of the liberal Hollywood community when it comes to writing campaign checks to Democrats.

DAN WALTERS' column appears daily except Saturday. E-mail: ; mail: P.O. Box 15779, Sacramento, 95852; phone: (916) 321-1195; fax: (916) 444-7838