On today’s episode of the Daily Variety podcast, Cover Story Corner, Variety’s Gene Madaus breaks down the brawl that erupted as systemic problems in Hollywood became a pivotal political issue in the LA mayoral and California gubernatorial races. The current focus on the prolonged production downturn and the exodus of production and white-collar executive jobs has the effect of reinforcing the push for Hollywood to adopt federal production tax incentives.
“The important thing here is that there is a trend of production going offshore and tax incentives being offered in other states and other countries, and that’s not new. It’s been going on for 30 years,” Maddaus said. “What’s new is a post-peak TV recession. This has much more to do with the business model and the focus on interest rates and profitability that Netflix and all these other companies have been working on for the past three or four years. That’s led to this dramatic job decline, especially the ones that remain. That led to a union perspective on what we could do to maintain our business. The focus was not just on getting California incentives, but on getting federal incentives to compete with all the other incentives.”
As Los Angeles prepares for its mayoral election and voters from across the state vie to replace Gov. Gavin Newsom in Sacramento, the Hollywood job loss issue became a flashpoint in the first half of this year’s lively election campaign.
“What can politicians do? California has already done a lot in terms of doubling its own production incentives. Some might say, ‘Well, it’s not enough,’ but there are limits to what even California can do, and that’s a big reason why people look to Washington for federal incentives,” Madaus said. “At the end of the day, it’s a matter of incentives that drives production decisions. And it’s not just that other countries offer lucrative incentives and the U.S. doesn’t. Even without incentives, it might be much cheaper to shoot in another country. So when you combine the fact that there’s no federal incentive in the U.S. with the fact that it’s more expensive to shoot in the U.S., that explains a lot of why producers go overseas.”
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