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On today’s episode of “Daily Variety” podcast, in our Cover Story segment, Variety’s Gene Maddaus unpacks the brawl that has erupted as Hollywood’s systemic problems become a pivotal political issue in the race for
L.A. mayor and California governor. The attention now being paid to the prolonged production slump and the exodus of production and white-collar executive jobs has had the effect of galvanizing Hollywood to lobby hard for a federal production tax incentive program.
“The key thing here is these trends about production going overseas and tax incentives being offered in other states and other countries like that is not new. That’s been going on for thirty years,” Maddaus says. “What is new is the post-peak TV slump which has much more to do with business models and interest rates and the pivot to profitability that Netflix and all these other companies have been doing for the last three or four years. That has led to this dramatic decline in jobs and this perspective from the unions, particularly of what can we do to keep the jobs that remain. That’s where the focus came on how can we not just get a California incentive, but get a federal incentive to compete with all these other incentives?”
The issue of Hollywood’s lost jobs became a flashpoint in the electioneering that flooded the airwaves in the first half of this year as the city of Los Angeles prepares for a mayoral election and state voters weigh in on a successor in Sacramento for Gov. Gavin Newsom.
“What can what can politicians do? The state of California has already done quite a lot in terms of doubling its own production incentive. You could say, ‘Well, that hasn’t been enough,’ but there is also a limit to what California even can do. And so that’s a lot of the reason people are turning to to Washington for a federal incentive,” Maddaus says. “At the end of the day, it really comes down to incentives in terms of what moves the needle on a production decision. And I should say, it’s not just that other countries offer lucrative incentives and the United States doesn’t. It’s also that it’s much cheaper to shoot in other countries, even if there weren’t incentives. So when you compound the fact that there’s not a federal incentive in the United States with the fact that it is also more expensive to shoot in the United States, it it explains a lot of why producers are going overseas.”
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