- Friday, Feb. 25, 2011
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- LOS ANGELES
While filming incentives are being challenged and face deep cuts in several parts of the country (see separate, respective stories on health experts' objections to the feature/TV tax credits program in California, and Gov. Rick Snyder's proposed budget diminishing Michigan's incentives package), a Los Angeles County Economic Development Corp. (LAEDC) forecast regards motion picture, TV program and commercial production as key contributors to the prospects for an economic recovery in L.A.
The 2011-'12 Economic Forecast and Industry Outlook released by the Kyser Center for Economic Research at the LAEDC noted that on-location film permits jumped by 16 percent in Greater L.A. in 2010 after declining 23 percent in '09. This turnaround was great news for motion picture and TV production which was hit hard during the recession by cutbacks in advertising, film production flight and studio belt-tightening. Feature film production permits rose by eight percent, TV show permits by 12 percent and commercials by 28 percent.
LAEDC further reported that employment in the industry started to rebound at the end of 2009 and in 2010. The motion picture and TV production sector added nearly 16,500 employees, a 13.4 percent increase, making entertainment one of the county's fastest growing segments in terms of employment. Furthermore the outward migration of film production was slowed by the state's program of film tax credits, which took effect in 2009. The state awarded $300 million in tax credits to more than 100 projects (features and TV) during '09-'10. (Commercials are not eligible for the California incentives program, which provides a 20 to 25 percent tax credit on qualified production expenses that can be used to offset state income or sales tax liabilities). Casting an eye to the rest of the country, the LAEDC noted that a number of cash-strapped states with film tax credit programs have been questioning the cost effectiveness of these programs and some are scrapping them, which might reduce competition for local production.
The boost in motion picture/TV industry employment is an important factor in continued economic recovery. L.A. County is estimated to add a little more than 24,000 jobs this year. However, L.A. County's unemployment rate, which averaged 12.5 percent in 2010, will barely dip this year to a projected average of 12.4 percent in part due to ongoing cuts in government employment, according to the LAEDC.
The forecast added that the advertising industry has perhaps the best prospects for growth this year. The recovery in advertising gained momentum during the second half of 2010 and is expected to pick up speed over the coming year, concluded the LAEDC report. All together, ad spending rose by 6.4 percent nationwide during the first three quarters of 2010 compared with the same stretch in '09. Television had the greatest increase in ad spending, posting a rise of 10.5 percent. While TV pulled ahead early, other media followed: Internet display ads were up 7.7 percent, outdoor ads jumped 7.3 percent and free-standing inserts up 6.7 percent. Newspapers continued, though, to lag behind, dipping nearly three percent. Looking at ad spending by product category, automobiles jumped by 23.7 percent--the LAEDC noted that many car commercials are filmed in Los Angeles--while telecommunications, financial services and food also posted significant gains. Noteworthy for the local economy, four of the top 10 advertisers by dollar volume own movie studios with facilities in Southern California: News Corp., Time Warner, G.E., and Disney.
Not measurable is the positive impact that L.A. locations seen in movies, TV and commercials have on the region's tourism. Travel and tourism is L.A.'s largest industry, employing thousands of people and generating billions of dollars in economic activity. L.A. County hosted 25.7 million overnight visitors in 2010, which was up eight percent compared with '09, and is close to 2007's peak of 25.9 million overnight visitors. Tourists and business travelers spent $13.1 billion last year, an increase of 10.4 percent over '09.