Entertainment Biz in a Slump

v>The booming box office is deceiving - movie studios are topping the $1 billion mark earlier this year than in years past and movies like Harry Potter continue to break opening-weekend records. But behind all those upbeat numbers, the industry is struggling.

Studios are pulling back spending to compensate for declining ad revenues and DVD sales. The 100-day writers strike and the year-long fear of an actors strike resulted in the loss of $3 billion plus of economic activity, and freelancers especially are feeling the effect.

Perhaps worst of all, rich tax incentives in states like Connecticut and New York are stealing


movie and TV shoots worth billions of dollars of economic activity. California state started offering tax incentives for certain productions on July 1, but with the state's economy in crisis, experts are now warning that those incentives are too restrictive, too little, and too late.

The Los Angeles Economic Development Corp's Jack Kyser says that the industry is still struggling, and that the state should do more to keep productions in-state and lure more business back.

Over the next 12 years the LAEDC projects a .8 percent increase in film and TV employment, but of that growth, TV and radio jobs are expected to drop 8.4 percent while film production rises just 1.6 percent.

Kyser tells me that the entertainment industry in California generates as much as $40 billion in annual economic activity, and as many as 300,000 jobs, including freelancers. The multiple on that entertainment industry is two or three, which means that each dollar a studio spends on a shoot translates to a impact of two or three times that, thanks to everything from hotels and restaurants to florists. The state's budget is such a disaster there doesn't seem to be any room for more film tax incentives. But from Kyser's perspective, it would be well worth it.

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