Media Money with Julia Boorstin

Stimulus Bill Dumps Movie Industry Tax Breaks


Good news at the box office in January means bad news for movie industry tax breaks.

Tuesday the House dropped a provision from the stimulus bill that would allow film projects in 2009 to qualify for 50 percent write-offs, worth some $250 million in tax breaks.

Senator Tom Coburn cited January's record box office numbers as a reason to drop the tax incentive. With additional support from Senator John McCain and senator Joe Lieberman, the Senate voted 52 to 45 to dump the amendment.

The boffo box office numbers may be deceiving.

The media conglomerates' studios share ticket sales with theater owners and box office doesn't correlate with profitability — studios often "buy" a big opening weekend box office with a huge marketing spend.

In the past 24 hours Disney and Time Warner reported weak earnings — so movie studios' parent companies certainly could use some help. That said, nearly every state is throwing its own incentives at movie production (more on Michigan's latest incentive plan later), there's no sense that the federal government really needs to jump in as well. It doesn't really make sense to attach this incentive to the stimulus plan.

Usually *more* amendments are added when a bill goes to Congress. This stimulus bill may be a rare exception—add-ons like this one are more likely to be stripped-away.

Questions?  Comments?