LA Mayor’s Film Czar Office Accuses Local Businesses Of Extortion

The LA Daily News reports on some recommendations by the LA Mayor’s Film Czar office at City Hall which you can hear at the 16:25 mark here:

Alluding to industrywide complaints that store owners frequently ask for money in return for allowing a production to take place outside their businesses, Dalal recommended that lawmakers address ethical issues, perhaps by creating a “code of conduct” for the industry.

“Los Angeles is known as the extortion capital of the world for the film industry,” Dalal said.

Extortion? Really? I’d like to ask the LA Mayor’s Film Czar’s office how they can accuse business owners of extortion when the film industry does the same thing on a more perverse level with their demand for more film subsidies.

According to Mr. Dalal’s statement, when disrupted business owners ask for compensation from Hollywood studios that shoot in front of their shops, that’s extortion, but those same studios threaten to disrupt the CA film industry by leaving unless the government gives them more free taxpayer money. Is that not the same type of extortion the Mayor’s film czar office says the studios are a victim of?

Looks like the pot is calling the kettle black here and the media and the public are wising up to this ruse.

The LA Times Michael Hiltzik already warned of what he calls “corporate extortion” by the studios earlier this year. This weekend NPR had a report where even the pro-subsidy people use the words “prostituting” and “cockroaches” to describe the studios’ subsidy practice. The LA Daily News followed up their report with a quote from an interview they did with me in reaction:

Not everyone supports City Hall’s backing of subsidies. Entertainment worker Daniel Lay, co-founder of ADAPT (Association of Digital Artists, Professionals and Technicians) believes studios are extorting local governments. Lay said Garcetti is “part of the problem” because he supports incentives.

“The studios are just looking to pit various governments against each other,” Lay added. “That’s the game that they are playing.”

The studios are demanding potentially hundreds of millions of dollars more on top of the $100 million they already receive. Even with that potential deal they even refuse to guarantee to bring more jobs back to CA. Why? Because they will take CA’s offer and game it against other governments in the hopes of maximizing the amounts of free taxpayer money they receive.

Furthermore, those local struggling businesses accused of extortion by the Mayor’s office pay taxes here and have managed to stay in California to do business without any special deal from the government to subsidize 20% of their costs. The Hollywood studios are making billions and already have a deal where California taxpayers pay 20% of qualified costs — and that’s still not good enough for them to stay.

Does that sound like extortion to you? Sure does to me.

Perhaps the Hollywood studios need to be given their own “code of conduct.” In fact there already is a code of conduct at the Federal level we intend to use. The Tariff Act takes disciplinary action against producers who try to use piracy or subsidies to harm domestic industries. It contains provisions that allow for the placement of anti-subsidy duties that nullify and negate their distortive effects.

A comprehensive program is needed to end the film subsidy race. It’s extremely important that studios are disciplined for these kinds of actions. Without enforcement, Hollywood studios will continue to extort a larger and larger amount of taxpayer money to fund their productions.

Soldier On.

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35 Responses to LA Mayor’s Film Czar Office Accuses Local Businesses Of Extortion

  1. Easy says:

    Mr. Dalil used to work for the MPAA.

    Not at all surprising…

  2. contessa12 says:

    While it may seem like extortion to some, please consider the disruption of a business when filming takes place. People can’t get access to the store and sometimes block, parking becomes Impossible and business is lost because of this. It would be fair to compensate the store owner for the disruption. How much is another story. Seems like everyone wants a piece of the pie…just sayin

  3. vfxmafia says:

    When people from the film biz throw $30,000 a plate dinners for politicians coffers….how do you think they will vote? (and it wont be for labor)…

    In 2010, I made Barbara Boxer’s office aware of what was happening in the film industry. She blew us off just like Garcetti will….

    If Garcetti wants anything done…..he has to go through film money to do it……can’t wait till he and his film Czar comes out pro-subsidy

    • tough says:

      I talked to a locations person on my last shoot and they are the ones that try and find locations and get people to allow shooting to happen. He said once upon a time there was a kinda flat fee per day to compensate. What really hurt CA was people got greedy demanding more and more money to shoot on locations.

      When they started moving to new location like Canada, UK, Louisiana people were less demanding and we will to except what they deemed a reasonable fee for using a location. Hence locations prefer to deal with people who are reasonable with expectations which has not been the case with many places in Cali in the last few years.

      • Andreas jablonka says:

        Is that somehow offset by subsidies??

      • vfxmafia says:

        @ tough…

        “people prefer to deal with locations like Canada, UK, etc”…

        yes producers are moving productions because their governments give out free money…and skirt around labor issues like OT……the only ones who are greedy are the frigging producers….

      • tough says:

        Subsidies aside, people in Cali got greedy over the years expecting higher kickbacks from studios to use locations. Way before you were all talking about the subsidy issue.

        Locations were finding it more and more difficult and began going to new locales where people were more willing to handle the dissruption. Along with that permits to film were also easier to obtain in other locations.

        Yes now we are faced with subsidies but his quotes are directly related to expectations for the use of locations which over the use got silly.

        When we are all on a level playing feild it is things like this that will then detmine filming locations.

      • vfxmafia says:

        to tough:

        dude you don’t know what your talking about. Cali productions started going to Canada over 20 years ago…why? Because Canadian dollar was half to %60 less than the American dollar….

        When the dollar evened out to the Canadian….then Canada started film subsidys which started like 10 years ago….

        get your facts straight Chief…..how many years you been in the business? …cause you sound like you just fell off the truck….

      • studio_spotter says:

        vfxmafia you’re talking about a relative trickle before subsidies to now a flood gate opening up with subsidies.

      • vfxmafia says:

        @ studio spotter….

        i was responding to “tough’s” remarks about California Artists being greedy……is why all the work left the US. Guy doesn’t even know what a location scout is….not alone taking advice on the VFX industry from a location scout……

      • Dave Carlson says:

        @vfxmafia:
        I think tough was saying Cali businesses and storefront owners got greedy, not Cali artists.

        @tough:
        It doesn’t matter what happened before the subsidies at this point. We are facing a WAY bigger problem with subsidies than we were back then with outsourcing for marginally better location deals.
        It’s like the difference between a coupon for toothpaste and a Black Friday sale for a man-cave entertainment system. Receiving subsidy money far outweighs the savings in foreign location costs, if I’m not mistaken?

      • tough says:

        Yes my comments have nothing to do with artists but people who get paid when there location is used. At no point did I mention artists so where you get that I have no idea.

        And yes these days we all know subsidies often drive location but blaming foriegn subsidies is wrong as its all subsidies aka Atlanta, Louisianna.

        My comments are what will bring filming back and the CVD wont as the studios will them take any extra work from the UK, Canada, NZ and place it in subsidized states and not Cali. Along with that they will look at driving costs down by using location that dont demand big paydays for using a shop, sidewalk and so on.

        You can bitch at me all you want but but I saw it through the nineties when local businesses in cali got greedy asking for more and more thinking they would pay up as they had no where to go.

      • Easy says:

        I just want to know why anyone thinks that business owners should give 2 f#@%s about what’s being filmed and where.

        I have 2 day rates, my real day rate and my “f#@% you” day rate.

        The latter is reserved for shitty jobs, or for shitty companies I don’t want to work with anyway. So maybe it’s not so much greed as it is “I don’t want you here screwing with my livelihood and hassling my customers, but if you insist, this is what it will cost, f#@% you if you don’t like it”

      • vfxmafia says:

        @ tough ….

        Productions leaving California had nothing to do with local California business owners.

        I too worked in the 90’s and controlled productions for music videos and commercials……there were/are plenty of stages, and alternative places to shoot. Productions starting leaving for Canada in the late 90’s …. because Canada dollar was %40 cheaper. I actually shot a few in Canada. Then subsidies took over….

        and location fees are nothing….labor costs are everything

        stop bagging on California…

      • vfxmafia says:

        @ tough

        I remember back in the late 90’s when David Fincher built 5 square blocks of NYC at Manhattan Beach studios for Panic Room. It was actually cheaper to build 5 city blocks on a stage for a year…than it was to shoot on location in NYC. People shot on back lots or in Canada as alternates…..

        Then Bloomberg made film permits easy and started giving away free subsidy money…and boom…now tons of movies are shot in NYC……

        in the end its Subsidy money….

      • tough says:

        geez, I am not bagging anyone just responding to the quotes that CAlifornia business wanted bigger kickbacks from studios to use locations.

        \Again lets live in a world without subsidies and then then we will all fight for the work. Just dont bitch when the work still doesnt flood back because locals make it difficult to film in locations around LA cause they want more of the pie.

        Peace

    • urizen says:

      Barbara Boxer’s office blew off the dire concerns of a delegation of her un-monied constituents?

      I’m shocked! Shocked I tell you!

      I can only imagine that it must have been her day off.

      CVD all the way- Cut out the corrupt parasite politician middleman.

      • Exterminator says:

        CVD won’t cut out that parasitic middle man in competing states dude. Not necessarily a VFX issue right now, but definitely an issue for the production jobs related to proposed California incentives. Real threat to bread and butter TV/Film PRODUCTION jobs in Cali is other states, and to a lesser degree Canada. But Canada will always win work when/if exchange rates fall pre 2002, even with CVD’s, nothing you can do about that.

  4. urizen says:

    @Exterminator:

    Next thing you’re going to be telling me that CVDs wont stop climate change.

    Oh cruel reality.

    • Exterminator says:

      CVD’s are duties levied on other countries, not states. A CVD may stop your job from going to Toronto but they can’t stop it from going to Georgia. That’s the cruel reality of states racing to the bottom against other states. Once California ups the ante to compete with Georgia and the like we are all in trouble cause it weakens the position for those who are anti subsidy and also favor CVD’s (like ADAPT) to get offshore jobs back. There is a correlation between the two, especially if you work in production.

      • matteobject says:

        What could be interesting is seeing what happens to those states if California implements matching subsidies.

        Subsidies only work if there’s an imbalance, as long as the state you’re stealing the jobs from does nothing to stop you exploiting the advantage of being subsidized by the local government.

        Given the extra cost of moving personnel & equipment to GA/LA/NY, CA is actually substantially cheaper than those states if you take the subsidies out of the equation.

        According to numbers thrown out by an MPAA guy (it’s in a few of the film works articles), BC is only 5% cheaper to shoot in than CA is, even with the subsidies. MI is only about 10% cheaper to shoot in with their subsidies.

        If California enacted even a 15% across the board film subsidy, it would suddenly be a lot cheaper to shoot here than in states that subsidize to the tune of 30% because you don’t incur all the remote location costs – that’s in addition to all the other reasons that caused people to shoot here in the first place.

        If that kind of thing comes to pass, Georgia & Louisiana’s film industries will collapse almost overnight, so will BC’s. Once the practical industries are gone, I’m doubting we’ll see much support for the VFX industries as well, since it’ll illustrate very nicely that subsidies don’t build industries, they just rent them.

      • Exterminator says:

        I would not take that MPAA figure to heart. I can assure you Tomorrowland did not go to BC to shoot in order to save 5%.

      • matteobject says:

        5% of a tentpole movie is upwards of $5m, you seriously think that in an industry as tight fisted as this one they wouldn’t shoot abroad to save that kind of money?

        At any rate, the fact remains that if California starts matching subsidies, it becomes substantially cheaper to shoot locally than to fly crews & equipment all over the continent, as soon as that starts happening, we’ll see how much loyalty the studios have.

  5. tough says:

    Except ho many crew fly with the productions? Large portion are sourced localy from construction, grips, Props, Costume, AD’s . Heck most Directors and DP’s do not live in Cali so if and when films come back they will still be fdlying people all over the place .

    • matteobject says:

      Most directors and DPs don’t live in California? Really? LA has easily the largest film & tv production crewbase on the planet.

      Add to that the fact that with the exception of arctic tundra, California has every major type of geography you’d ever want to shoot against within a few hours drive of the studios themselves. You never have to worry about weather stopping shooting & the thirty mile zone is centered there so you get a deal on union labor rates, which are invariably the largest cost of any production.

      The only significant reason people don’t keep shooting in California is because of production incentives, once that ceases to be an issue, they’ll return to shooting in CA for all the reasons they shot movies there in the first place.

      • Ebert's Ghost says:

        The “only” significant reason??? BS. You are living in the past. Like1940. Filmmakers want realistic locations. Look at Spielberg’s filmography as Director for example. He can shoot anywhere he wants and usually goes to locations, even before incentives existed. Percentage wise, very few of his films were shot in the thirty mile zone. Incentives aside, who wants to painstakingly try to double a city in California when you can pick up a Red Camera and go shoot there? The incentives only sweeten the pot.

      • matteobject says:

        Location shoots are location shoots, if you want a scene set in Times Square, you shoot in New York, regardless of incentives, but unless you’re setting an entire movie in Times Square, most of the rest of it can be shot wherever is cheapest.

        Because of incentives, however, you have movies like San Andreas that are SET in Los Angeles, but aside from a handful of establishing shots, the bulk of the filming is being done in Australia because they’re getting paid to do it there.

        Without subsidies skewing things, the bulk of the filming, the stuff that doesn’t need specific landmarks in the background, that typically gets done here, because it’s cheaper than shooting in the actual location.

      • jonavark says:

        @Matt.. That’s so far off base it is almost nostalgic fantasy.

      • matteobject says:

        Then where do you think they’re going to shoot?

        … bearing in mind that for all the bluster about building local film industries, the studios themselves are all still based in Los Angeles and like all financial institutions, one thing they hate above all else is uncertainty.

      • minoton says:

        When the CVDs kick in, not all work will return to L.A., or Cali, but a good portion of it will (how’s that for being vague on an amount?), because that’s where a lot of the talent is based, particularly the celebrities. But state incentives will still siphon away a good portion of work as long as they keep paying subsidies. We’ve already established producers love free money and if it’s not coming from out of the country anymore, they’ll look in the country. This will affect the live action production jobs more likely than the post jobs, but they could be affected, too, if a particular state decides to be the next Vancouver, with their VFX specific subsidies. But I think eventually state subsidies will fall by the wayside naturally by attrition as they have not been shown to pay for themselves. Many states have already decreased or ended their subsidy programs. But unless they are being balanced out by larger gains from another local industry, eventually they’ll be ended in order to cut costs and find savings on the governmental ledger.

        There has always been a need for films to be filmed on location. Think all those pretty John Ford/John Wayne movies were shot in CA? Star Wars was shot in Tunisia and London pre-subsidies, Raiders in Tunisia again and Hawaii. Twister was filmed Oklahoma and Iowa. Audiences now demand more reality than a soundstage dressed to be a desert. And the ranch land north of L.A. won’t cut it anymore. Everything will look too homogenous. So yes, some amount of traveling is going to be involved. But let’s hope locations are chosen for their merits in the story and not because a producer was paid off to film there.

        As for location shake downs, I don’t see this as being a big issue. Bigger would be just getting the proper permits from local governments in order. I think this is where L.A. and CA became unattractive to filming because of their over regulatory attitudes there. Agreements are made way in advance of filming with the local businesses and fair payment for any lost business is negotiated in advance. Many times filming is done overnight after the businesses are already closed or not during prime business hours. Crews do not just march in to a business or on a city street and take over like an invasion. All is planned out in advance.

        Remember how in the 70’s, 80’s, and early 90’s you saw all the same hotels, bars, office buildings, etc. in the various detective shows, or other dramas? That’s because the location scouts worked with the proprietors of these establishments to use their facilities. Most of these places had an entertainment industry liaison or contact that the productions dealt with. And these places got free advertisement/product placement out of the deal, too. They certainly wouldn’t have kept coming back to film there is the businesses were trying to shakedown the productions.

        L.A. was the hub of filming because of the centralized concentration of production resources: sound stages and the labs. Everything was shot on film and had to be processed. That’s not the case anymore. Film all but gone. Everything is digital. Shooting in digital, posting in digital. Even when subsidies are gone, filming will be like any other business: it will go where they will get the most bang for the buck and where hindrances to operation/production is minimized. Look at Lucas moving ILM up to the bay area after the first Star Wars. it wasn’t because of subsidies or talent (the talent went with him from L.A.). It’s because he wanted to get out from underneath the L.A. umbrella and be able to work the way he wanted to. If Rodriguez wasn’t such an ass, it’d be happening in Austin. it could and will happen anywhere, but it will be because producers will be forced to weigh apples to apples, not apples to accordions.

  6. matteobject says:

    All of which are fair points, but my argument was not to the effect of CVDs, but to the effect of increased California subsidies (read further up).

    CVDs or not, if California starts subsidizing movie production to the same level as Georgia, Louisiana and New York, any financial reasons that the studios have for shooting in those locations goes out the window.

    I can see some work staying in those locations, but the bulk of the crewbase is here along with a huge number of soundstages and other infrastructure.

    As ridiculous as it sounds, California would be the logical choice for filming if it weren’t for subsidies screwing with the market.

    • minoton says:

      That would only be the next round to the race to the bottom. What’s to prevent Georgia, Louisiana, or New York raising the stakes another 5%? It’s a poker game where nobody wins but the studios. The fact is, California does not have the money necessary to help finance Hollywood’s productions. It’s a money suck for the tax payers.

      • matteobject says:

        You’re suggesting that Louisiana & Georgia have the money for that?

        New York might, but the key there is having the taxpayers realize that they’re spending hundreds of millions on Hollywood lawn ornaments rather than healthcare or education.

        … and yes, it’s absolutely another money suck, but remember that California is the state that all the other states & territories are stealing the jobs from – the subsidies only “work” as long as California doesn’t fight it, soon as we do, everyone else will have to start increasing theirs and it’ll start to expose the whole Ponzi scheme.

        … and as I’ve been saying, a 20% subsidy from these places doesn’t qualify as a 20% reduction compared to LA rates simply because LA has the infrastructure to do this crap more cheaply than just about anywhere else. If California enacts a 20% subsidy, they’ll have to increase theirs by a lot more than 5% to remain competitive.

      • minoton says:

        Louisiana gets a ton of revenue from offshore oil production that could be offsetting their film subsidy losses. Where does California get it’s money from to throw at the studios? As you mentioned, other places have been luring businesses away from California, depleting it’s tax base. Contrary to popular belief these days, governments aren’t made of money. We can’t continue to rely on governmental Mommies and Daddies to buy us everything we want.

        Digital production democratized the business. Production is no longer shackled to where the sound stages and the processing labs are. Until California can get it’s costs of doing business in-state down, it will be difficult for work to be done ‘more cheaply’ than just about anywhere else. Why do you think all those businesses leaving CA in the first place? The 5% was not a hard and fast number based on any calculation, just as you can’t predict what the next player at the poker table is going to raise the bet if they think they can win the pot. Both the UK and NZ have increased their production and VFX subsidies over Canada. NZ twice got pressured into doing so by the studios and have now made statements they regret doing it. Can California play that kind of game? Just like the final scene of “Wargames”, the only winning move is not to play.

  7. Todd Marks says:

    Much of California’s production is getting obliterated.
    —————.

    More than 30K Georgians employed by film, TV work

    Sunday, July 20, 2014 – 2:01pm

    Members of the Rotary Club of Coweta-Fayette on July 14 were given a wide-ranging update on Georgia’s film industry by Georgia Film, Music and Entertainment Office Senior Location Specialist Craig Dominey.

    Dominey said that “Georgia has production incentives up to a 30 percent tax credit, state of the art infrastructures, highly skilled workforce, diverse shooting locations and direct flights through Hartsfield-Jackson Airport.”

    Dominey said Georgia now has eight film and television studio facilities.

    The film industry’s impact for Fiscal Year 2013 included 142 combined productions, which include feature films, TV movies and series, commercials and movie videos, Dominey said.

    “The direct spending from these productions was $933.9 million and the estimated economic impact was $3.334 billion,” Dominey said, adding that the economic impact from 1973-1998 was only $2.5 billion.

    Commenting on the impact of “The Walking Dead Tour,” Dominey said that since May 2013, 2,674 ticketed guests have visited Senoia and more than $100,000 has been spent in Senoia on items such as food and gifts.

    Dominey also addressed the quality of our talent in Georgia.

    “Georgia’s entertainment industries are among the fastest growing industries. More than 30,000 Georgians are employed in the entertainment industry. Nineteen Georgia colleges and universities provide certificate and degree programs in film and television and a minimum of nine productions can be simultaneously supported by the local crew base,” said Dominey. “And that number is growing”.

    Created in 1973, the Georgia Film, Music and Digital Entertainment Office is a division of the Georgia Department of Economic Development (GDECD).

    http://www.thecitizen.com/articles/07-20-2014/more-30k-georgians-employed-film-tv-work

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