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Tuesday, January 21, 2014

Hollywood Loses Shine for Big Budget Projects

The Hollywood Sign is seen on November 16, 2005 in Los Angeles, California. (David McNew/Getty Images)

A recent report found that only 8 percent of the top 25 live-action movies were filmed in California in 2013. (David McNew/Getty Images)

Film and television projects are leaving Hollywood in droves as states and foreign countries offer financial incentives to lure projects away.

A recent 20-year overview reports that in 1997, 68 percent of the top 25 live-action movies were filmed in California. That number dropped to 8 percent in 2013.

And while the number of Hollywood reality TV and online productions have risen in the past few years, that’s been offset by the number of long-form TV and film projects filmed elsewhere.

David Cohen of Variety joins Here & Now’s Jeremy Hobson to discuss whether California is losing its place as the home of entertainment.

Guest

Transcript

JEREMY HOBSON, HOST:

It's HERE AND NOW.

And if you scanned the legislative agendas of statehouses around the country, you'll probably find the words "film tax credit." States from Virginia to Nevada to Missouri are either offering or considering offering tax incentives to film production companies, to try and lure business away from Hollywood. And a new study on the issue finds it's working.

According to FilmL.A., in 1997, 68 percent of the top 25 live-action movies were filmed in California; last year, just 8 percent. David Cohen is senior features editor at Variety, and he's with us now. And David, is California losing its place as the home of entertainment?

DAVID COHEN: It is certainly losing its place as the home of TV and entertainment production, and this is a cause for something akin to panic here in Southern California where this is a major industry and employer, and jobs are being hemorrhaged whether it's across the globe for visual effects and animation or to other states and nations who are offering generous tax incentives. The pursuit of tax incentives to support production is nothing less than an obsession here. You can't overstate how important that has become.

And what that really amounts to is taxpayers putting money in the pockets of large multinational corporations for the privilege of being able to have stars and camera crews come to their town or their city. And, you know, the thing is if you have a tax subsidy for something, you will get more of it. So we are getting more big, expensive movie productions; more television production in far-flung locations; whatever you can think of. It is distorting the market for better or worse.

HOBSON: And the proponents of it, of course, would say, you make a city like Baltimore look great on TV, people are going to visit. The tourism revenue will go way up and you get the money back in the end.

COHEN: The proponents of that always make those arguments, and yet at place after place and time after time, it has turned out that the economics don't really end up supporting those subsidies. That was the case in Michigan, and eventually they repealed them. There was a scandal about the subsidies in Iowa where it turned out I believe a producer was buying SUVs with the local subsidy and then reselling them at full price back in California.

And so place after place, has discovered these things are rife with corruption and they don't deliver the returns that they expect. But there's always another politician or another city that's willing to be seduced by Hollywood glamour. And so I'd - I would expect this to continue unabated for the foreseeable future.

HOBSON: And is California going to fight back in a big way?

COHEN: There's a lot of talk about it. But you know, the problem is in California that California is a very large and diverse state, and the Northern California lawmakers are unimpressed with the argument that they need to spend state money to - for the sake of supporting Warner Brothers. My thought is that there's a grand bargain here waiting to be struck, which is that there needs to be a deal with the Northern California marijuana producers and the Southern California entertainment industry...

(LAUGHTER)

COHEN: ...in that we get marijuana legalization for the North and subsidies for the South, it will all work out for everybody.

HOBSON: I thought you were going to say something about Silicon Valley and maybe a tech tax loophole.

COHEN: You know, Silicon Valley and Hollywood have this strange relationship because the business cultures are so different, and each, sort of, eyes the other wondering, how can I do what that guy is doing? But that union has yet to fully take place. I think some of what you're seeing with Netflix and Amazon entering television production is the beginning of that union. But I think that the real opportunity there is the marijuana guys.

HOBSON: David Cohen is senior features editor and columnist at Variety. David, thanks so much.

COHEN: Thanks for having me. Transcript provided by NPR, Copyright NPR.


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  • http://www.dpsinfo.com LaurieMann

    I have mixed feelings about David Cohen’s analysis. He seems to be saying, without actually saying it, that movies should only be made in one place, and that’s Hollywood. As a movie and TV fan since the early ’60s, I was always annoyed at a very young age how every TV show was shot on a back lot and everything looked the same. I like the fact that movies are now shot all over the country, so not every movie and TV show looks the same. Also, industries, frankly, are better for the country when they’re scattered around the country rather than wholly concentrated in one area.

    That said, while I am pretty much in favor of states giving tax credits for different types of development, including movie/TV development, I think the tax credits need to be structured more carefully so that independent films and documentaries can benefit from them, and not just big studios as is so often the case.

    Yes, I am biased – I’ve done extra work on a number of movies and love to watch movie making, even when the movies are full of people no one has ever heard of.

    • geargroove

      No one is saying that movies shouldn’t be made elsewhere. But recently a huge amount of VFX and animation has moved out of LA altogether leaving many without work. And the work isn’t going elsewhere for any reason other than subsidies. Pretty disappointing to think the only solution is a larger bribe aka subsidy offered by California. Is that what the world has become? A place where governments everywhere spend taxpayer dollars to bribe businesses to utilize their workers and resources? While workers and government argue over who cuts what next in order to continue subsidizing business?

  • Dave Rand

    Not only could stoner tax incentives counter the low tide in LA, but if they gave weed away at the theaters …well, just think of the concessions (currently the only way theaters make any money any way) ….there’d be a flood of munched out patrons.

    Even better put weed in the popcorn!

    Seriously, the artificial turf that has become the entertainment playing field is a money losing enterprise not only for the states and countries that become renters of a movie industry rather than owners, but for the studios as well.

    This should all be driven by talent and branding. Creative cultures take time to build as did the generations of talent in Los Angeles. That’s why there’s so much art and so dam many “beautiful people” in LA…flowering and breeding for over 100yrs.

    There should be true and lasting Woods growing. Maplewood, Englishwood, Kiwiwood, Ozwood, Chinawood.

    Bollywood seems to growing…the Canadians offered them 12 million to have their awards in Vancouver though, why? Because there’s tons of NRI’s (non resident Indians) living in Vancouver that may vote for the Canuck politicians surrounding themselves in the stars of India.

    Having talent flee from on green pasture to the next chasing the next taxpayer rip off is no way to build anything lasting for anybody. Grapes of Wrath revisited is all you’ll get, the product, the work, will reflect the washout.

    The term “tax” has so little to do with the “incentives” other than sugar coating the ever so sweet pill for the local taxpayer and making it go down all warm and fuzzy.

    Productions tax liabilities are very small so products like “transferable tax credits” have evolved, along with other fancy ways to get cash directly to the producers in return for allowing local politicians to bask in the technicolor glow and look bigger than life.

    It’s not a tax break folks..it’s a handout of your money and the only studies that show it’s a benefit to your local communities are done by the MPAA.

    You’re paying for the the production of the movie, then paying a premium to go see the movie, then paying 20 bucks for some popcorn and a soda…Hell’s bells ! You should get some PRIMO WEED with that !!

    Some of us are working to put an end to this warped creative culture. To find out more follow vfx soldier.

    • http://www.dpsinfo.com LaurieMann

      As I said, I concur that there are problems with the film tax credits; they are hardly a perfect vehicle.

      • Dave Rand

        Thanks Laurie, my comments were a reflection of the interview and not directed at your impressions. Sorry if it seemed that way. My views were underwritten by the immediate experiences I’ve had with companies like Rhythm and Hues (creators of the VFX for Life of Pi and in business in LA for 26 yrs) and the multitude of others now gone in my industry, visual effects, are unable to compete with the up to 60% cash handouts being given out. This breaks the World Trade Agreement which clearly states that no member, through the use of any subsidy should cause injury to the domestic industry of another or serious prejudice to their interests.

    • Frog

      Enjoyed reading this post.

  • Paul Horn

    “Seduced by Hollywood glamour?” ” Rife with corruption?” Expenditures merely “for the privilege of being able to have stars and camera crews come to a your city or town?” On an important public policy issue that deserved far more informed and thoughtful discussion, such as we’ve had here in Massachusetts, I was disappointed that hyperbolic comments like these went unchallenged and were allowed so much air time. Here and Now can, should (and usually does) do much better in covering controversial or complex subjects in an accurate and balanced fashion.

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