Small, blue-collar businesses that sustain California’s entertainment industry — prop houses, studio equipment shops — fight for business as film production migrates to incentive-rich states.
By Richard Verrier
July 12, 2009
In an industrial yard behind Burbank’s Bob Hope Airport, dozens of orange forklifts and 135-foot-high booms stand idle, gleaming in the afternoon sunlight. As recently as two years ago, the yard was largely empty because the equipment was busy being used to hoist cameras, rig lights and build sets for “Iron Man,” “Get Smart,” “The Curious Case of Benjamin Button” and other movies shooting throughout Southern California.
“I’ve been doing this for 25 years and I’ve never seen such a sustained downtime,” said Lance Sorenson, president of 24/7 Studio Equipment, who recently had to lay off two of his drivers and has imposed three- and four-day workweeks for the rest of his 44 employees.
Across town in Culver City, at the landmark studio where “Gone with the Wind,” “Citizen Kane,” “The Adventures of Ozzie & Harriet” and “The Andy Griffith Show” were filmed, there’s a similar story. Now an independent production facility known as the Culver Studios, the soundstage complex just lost one of its largest tenants, the syndicated game show “Deal or No Deal.” That program will tape future episodes in Waterford, Conn., a suburban town known for its nuclear power plant, large state park and assortment of shops and family-owned restaurants. The chief draw: Connecticut’s 30% production-tax credit.
“It’s a huge blow to us,” said James Cella, president of the Culver Studios.
Others also have been hard hit by the outflow of production to other areas, known as runaway production.
At Modern Props, also in the Culver City area, nearly half the employees have been laid off, and those remaining are on 20- to 40-hour workweeks. John Zabrucky, the company’s founder, thought he’d gotten ahead by opening a satellite office in Vancouver, Canada. But now so many states are offering tax incentives to film and television producers that he can’t keep up.
Hundreds of small blue-collar businesses like these sustain Southern California’s entertainment industry. Many are struggling amid a sharp drop in local film and TV production triggered by the recession, a rise in runaway production, and the fallout from a writer’s strike and a yearlong contract dispute between studios and the Screen Actors Guild. According to the state Employment Development Department, jobs in movie and television production were down 13,800 in May compared with a year earlier.
On-location feature film production in the area has fallen to its lowest levels on record. Student films generated as much activity on the streets of Los Angeles in the first quarter of 2009, when only a few movies, including “Fame” and “Alvin and the Chipmunks: The Squeakquel,” were shot there.
California’s share of U.S. feature film production dropped to 31% in 2008 from 66% in 2003, according to the California Film Commission. That largely reflects a falloff in the Los Angeles area, where feature filming activity in 2008 was nearly half what it was at its peak in 1996.
Television production, which recently has been a more reliable source of jobs in the region, is also declining. A recent survey from FilmL.A. Inc. found that 44 of 103 TV pilots this year were shot in such disparate locations as Canada, Illinois, Georgia, New York, Louisiana and New Mexico.
More than 30 states have sought to outbid one another with tax credits and rebates aimed at luring productions away from California. Sacramento has responded with its first-ever film-tax credit program, but most analysts think the credits are too small and restrictive to have much effect.
“L.A. is at risk of losing a good part of one of its signature industries, just like it did with the aerospace industry in the early 1990s,” said Jack Kyser, chief economist for Los Angeles County Economic Development Corp.
Few know that better than Cella, of Culver Studios. He previously ran Steiner Studios in Brooklyn, N.Y., and was tapped to run Culver in 2006 after a group of investors including Lehman Bros. acquired the 14 soundstages from Sony Pictures Entertainment for $125 million.
But the studio’s business took a big hit recently when NBC Universal and Endemol USA opted to move “Deal or No Deal” to Connecticut.
The show brought in more than $1 million in rental income to Culver Studios, Cella said, adding that there was little he could do to keep the producers from leaving.
“I could give them this space for free and it still wouldn’t compete with Connecticut,” he said.
The studio, which still hosts “The Bonnie Hunt Show” and others, has seen its occupancy rate slide to 46% from 85% in the last year.
Most of “Deal or No Deal’s” 250 crew members lost their jobs in the move.
“It’s a crying shame,” said Lindsay Hovel, an associate producer on the prime-time version of the game show hosted by comedian Howie Mandel. “There are so many talented people, and they’re just not able to work in the [entertainment] capital.”
The relocation was doubly bruising for Cella because it was announced just after California approved its film-tax credit program, which Cella lobbied heavily for and helped craft. The credits, however, don’t cover game shows.
Still, Cella predicts that the tax deal will attract some TV shows back to California.
“If we don’t do something now, there’s going to be nothing left,” he said.
Sorenson, of 24/7 Studio Equipment, also is pinning his hopes on the state tax credits to spur business. A major studio film can generate $75,000 in rental income for a company like Sorenson’s. But this year, 24/7 has worked mostly on a few low-budget films such as Screen Gems’ “The Roommate.” His company’s feature film business has plummeted 50% since 2007.
Sorenson made up for the shortfall by renting out equipment to TV shows, but even that is no longer a sure bet.
One of his customers, the HBO series “Hung,” filmed three months in L.A. and two months in Michigan, which offers a 42% tax credit. Another customer, the TNT series “Leverage,” has opted to film its second season in Portland, Ore., which offers a 20% cash rebate on qualified expenses.
“It would be a lot different if we were smoking busy,” he said. “But . . . every rental right now is like a precious jewel.”
Local prop houses also are struggling from the downturn. Some have recently closed and others have cut their payrolls.
Modern Props laid off 17 workers last month. The company owns a 120,000-square-foot warehouse that contains 80,000 props.
“I was in shock,” said Luis Peniche, 21, a former sales assistant who lost his $25,000-a-year job after two years at Modern Props. “I really loved working there. It was like family.”
Unable to pay his rent, Peniche moved into his sister’s apartment in Van Nuys. He also stopped taking classes at Santa Monica College because he couldn’t afford the books and tuition. “I’d love to work in the entertainment industry, but it’s just so bad out there.”
Zabrucky launched the company 32 years ago, specializing in leasing furniture, lights and electric control panels to sci-fi TV shows such as “Buck Rogers in the 25th Century” and eventually to some of the biggest movies in Hollywood, including “Die Hard,” “Ghostbusters” and “Men in Black.”
Modern Props became one of the largest prop houses in Hollywood, employing 50 people in its heyday in the late 1990s. But the business has eroded through much of the last decade, squeezed by the growing use of digital effects; the growth of reality television, which spends little on props; and especially the departure of shows to other locales.
“We know how to do what we do very well,” Zabrucky said, “but we can’t fight the fact that everything is just being sold right from underneath us.”
Last summer, Modern Props lost one of its clients, the ABC series “Ugly Betty,” to New York. “Their set decorator was in every week placing orders. That’s $14,000 a month we lost,” lamented Ken Sharp, vice president of sales and operations for Modern Props.
To highlight the plight facing his business and others, Zabrucky recently designed skateboard decks that show a pictograph of the country, with California highlighted, and distributed them to hundreds of Hollywood executives as well as city and state politicians. The deck shows arrows pointing away from the state and the words “don’t run away.”