Behind the Orange Curtain

This week’s post deals with an extremely current and poignant topic – the economy.  But more specifically, the economy and how our businesses are being affected in the film, TV and advertising communities.  I don’t know of any business in our industry that has not been affected, many significantly, by the current, unprecedented crisis.  In the current economic environment, the phrase “runaway production” has become an understatement.   The production is gone and we will now have to battle to get it back.

Production in the Los Angeles area dropped to an all time low in 2008 as companies looked out of California for cheaper solutions.  It is, in fact, off fifty percent from the high in 1996.  I attended the National Association of Television Production Executives show in Las Vegas last week.  One of the sessions that I attended dealt with the challenge of shrinking budgets and skyrocketing production costs.  During the panel discussion Emiliano Calemzuk, president of Fox Television Studios, declared that they had solved the production cost problem – they are now saving almost 50% on their budgets by sending their productions to Europe!  I about fell out of my chair.

In order for production to start returning to California, those fine folks in Sacramento need to not only complete a realistic budget, but one that has substantial incentives to bring production back to the state.  Many other states have such incentives and they are significant.  For instance, by filming a feature in Connecticut instead of Los Angeles, producers could save $21 million dollars out of a 110 million dollar budget – a 19% savings.  What would you do if you were a producer?  While California’s government contemplates things like a 10% sales tax, I would be packing my bags.

For just one example of a state that cares about production and getting as much of it as as it can, look no further that the fine state of Michigan.  I have a friend who works in our industry out of Detroit.  He said the business there is booming.  Take a look at the following link about a motion picture production facility in Pontiac, Michigan.  Many other states are looking to get production work as well. 

What will we in California do to get it back?

While the causes of runaway production are many (unfriendly production environment, out of control union costs, difficult and costly permitting process, etc.), we will all have to work together to solve this problem.  It will be much, much harder to get the work back in the face of the new competition from other states and even other countries.  

On top of this, we are all dealing with the current madness brought on by the economic meltdown.  This is the most challenging time I have seen in my more than twenty years in business.  There is plenty of work out there, it is just a matter of reminding companies that they still need to market their products if they are going to survive and getting them to commit to spend.  We can do it, but we will have to work together and work a lot smarter to get our share of the work than ever before.

Let’s find a way to get it done.