Entertainment production in Los Angeles has always been feast or famine. When times are good, they’re great. But when times are bad… To those running Hollywood production facilities these days, words like “dead,” “barren” and “apocalyptic” are being thrown around frequently. Things aren’t just bad, they’re industry-ending.
The film and TV industry in Southern California employs 618,000 individuals, across several different professions, contributing $115 billion annually to the area’s economy, Ellen Goldsmith-Vein, producer and CEO of the Gotham Group and chair of L.A. mayor Karen Bass’ Entertainment Industry Council, tells Variety. Over the last year and a half, local film and TV production in the state has been on a steady decline. FilmLA’s 2023 Scripted Content Study, released on Oct. 9, said production declined 19.3% last year.
But on Oct. 27, during an event at the famed Raleigh Studios, Governor Gavin Newsom took the first step to reinvigorate Southern California production, announcing a proposal to increase the California film incentive to $750 million, more than double the current $300 million dollar subsidy. If approved by the Legislature next year it would take effect in July of 2025. It’s hoped that this is just the beginning to hit on several elements many have cited as reasons for the lack of filming in the city, including expanding eligibility for the subsidy to more varied types of production.
“Many productions are becoming more budget-conscious,” says Jason Jones, President of Key Locos, a location broker for productions. “Studios are bringing stuff on the lot and eliminating stuff outside of the lot, which is really impacting these businesses.”
Notes Brian Boehner, CEO and owner of Fat Eye Studios, a 24,000-square-feet soundstage and studio, “I thought by starting my own brick and mortar business it would give me a bit of financial security.”
Over the past year, Boehner has seen his studio’s revenue decrease by nearly 70%. Relationships with long-term clients have kept the studio afloat, but with high overhead and a quarter million-dollar investment over the last two years upgrading the HVAC and power, Fat Eye won’t be able to hold on much longer. “We have maybe four or five months stored and then that’s it.”
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It’s a marked contrast to how many independent studios were just 12 months ago: hopeful post-COVID and after the conclusion of the strikes to utterly defeated. Jacqueline Carroll, co-founder and owner of Studio Eleven43, was fueled by the uptick in production and sold her Long Beach company, Thunder Studios, to move to L.A. in the hopes of finding more opportunities closer to the studios. Over the last year, she’s witnessed the big production soundstages that the main studios rent go unused. “If Paramount is empty, if Universal is empty, if Sunset Bronson [Studios] is empty, that’s a big problem for somebody like me because they would be booked with shows first,” she says. “And then if someone wanted to shoot a commercial, there wouldn’t be room for them there so they would have to come to a space like mine.” Studio Eleven43, which once employed at least 10 people, is now down to a crew of three.
“It is all about competing for a smaller piece of a smaller pie,” says Paul Audley, President of FilmLA.
Ironically, soundstage investment is booming. In the last five years, both Warner Bros. Discovery and Universal invested millions into expanding their individual campuses; Worthe Real Estate Group invested in a $500 million development that will include 16 soundstages and a 320,000-square-foot office complex on the former Warner Ranch lot, and Hackman Capital and MBS Group invested in a $1 billion dollar upgrade to the Radford Studio Center.
Investing in more buildings is an element of Bass’ Executive Directive 8, meant to inspire productions to come back to L.A. and film locally. “We’ve got over 8 million square feet of new soundstage production and supportive creative office in the pipeline moving through various stages of entitlement,” says Rachel Freeman, deputy mayor for business and economic development. But independent soundstage owners don’t believe the problem can be solved with more soundstages. “Investment in space is important [but] it’s gonna be a little bit difficult because there’s plenty of studios. There’s just not enough work,” says Carroll.
Soundstage owners currently struggling point to the lack of financial enticements to get studios to produce locally versus outside the state. California’s tax incentive program is cited as the main culprit for driving creators outside of the city to more hospitable locations like Georgia and New York, as well as Australia and European locations like London. “It’s not any cheaper to go to New York or London than L.A., but they’re offering a lot more money to go there than we are,” says Audley.
The California tax credit caps out at $330 million a year, which puts it at a disadvantage compared to other states. “The productions that California turned down either went to a different locale or did not go to production at all,” Goldsmith-Vein says. “These lost film and TV productions send ripples throughout the entire economy, impacting vendors and our small businesses, not to mention the working families directly employed by the industry.”
Boehner notes, “My wife is an actress, and she’s working on a shoot that takes place in Whittier … and she’s in Vancouver right now.”
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FilmLA called for a “vast expansion” of the California tax credit which, according to Evan Thomason of the Santa Clarita Film Office, saved things back in 2009 when the economy was in a similar situation. Bass and her Entertainment Industry Council are on a mission to entice productions to return to Southern California.
“If California offers a more robust tax credit program, [production] will come back because a decision about where to film is based on money,” says Audley.
At the local level, Bass’ Entertainment Directive, signed in August, seeks to take a “holistic” approach to solving the crisis. “It asked the city of Los Angeles to look internally [and] take a more customer-service -focused approach, under the ethos of [if] you choose to do production here locally, if you choose to film here and keep jobs here, how can the city best support you? How can the city help be a problem-solver, work through solutions and create the best sort of experience possible?” says Freeman.
Part of that includes the 19-member Entertainment Industry Council, led by various industry leaders, to identify problems and create a film liaison in each city department. “This industry is truly the cornerstone of our local economy,” says Freeman. “It drives billions of dollars in local GDP, hundreds of thousands of jobs, and what it impacts is not just isolated within the industry. There’s this incredible ripple effect which helps support all of the small business community.”
But soundstage owners feel they don’t have time to waste as the bureaucratic process moves forward. “By the time the task force has finished tasking, and have looked at their results and have issued the numbers, too much time passed,” says Mary Claypool, rental manager for Laurel Canyon Stages.
In hopes of trying to right the ship until the state government can help, soundstage facilities are trying to pivot into different facets of the industry and keep content flowing. For Carroll, a content producer herself, she’s utilizing her own production team to keep things afloat. The studio is also transitioning into virtual production and live shows. Boehner would love to start using Fat Eye for live events but cites the restrictions to get permits approved for a non-sanctioned venue are proving problematic. Some facility owners are ready to just sell everything. In the city of Santa Clarita, with a rich history built on film production, the historical Sable Ranch is currently up for sale due to the economy.
“I call up someone to see how they’re doing, and the phone is dead. They went out of business,” says Claypool. “Survive till ’25” is the mantra for soundstage operators today, but who will survive to the new year is the question.