SOURCE: FilmL.A., Inc.

January 25, 2007 11:30 ET

L.A. On-Location Production Growth Slows to 1% in 2006

Reality TV Surges as Films Resume Downward Trend; Commercials Decline for 1st Time Since 2000

LOS ANGELES, CA -- (MARKET WIRE) -- January 25, 2007 -- Declines in Los Angeles-area feature film and commercial production were offset by a surge in reality television that helped raise the region's overall on-location entertainment production just under 1% during 2006, according to year-end data released today by FilmL.A., Inc. The private, nonprofit film office coordinated permits for a total of 55,399 on-location production days during 2006, compared to 54,876 in 2005. The tepid 1% growth rate was a decline from the 4% rate in 2005 and a 19% spike in 2004.

Led by a 52.7% leap in reality production, television continued to dominate local on-location activity, with an overall 10.2% gain during 2006. Within the scripted category, sitcom production rose 12.6%, while dramas were up 6.2%. With its dramatic surge, reality held a 41% share of all on-location television days in Los Angeles during 2006.

Meanwhile, L.A.-area commercial production fell 3.4% to record its first year-to-year decline since 2000, which occurred during a six-month strike by SAG and AFTRA over commercial contracts. FilmL.A. President Steve MacDonald notes that last year's decline was the result of more long-term changes.

"Many commercial producers are opting for lower cost locations overseas and in other U.S. states," he said. "In addition, changes to the advertising landscape such as the shift from broadcast commercials to ads on the internet and non-traditional media are having a significant effect."

However, the biggest contributor to LA's slowdown in growth during 2006 was the 7.4% slide in feature film production, which marked a return to the downward spiral that began in 1997 and continued through 2003. Feature production during 2006 totaled 8,813 days, down from 9,518 days in 2005. The most recent figures represent a 37% decline from 1996, when feature production in Los Angeles peaked at 13,980 production days. This long-term loss coincides with dramatic gains in feature film production achieved by other regions that offer attractive financial incentives and growing production infrastructure.

"We may look back on 2006 as a turning point given it was the year when 16 of the 28 states that currently offer financial incentives either enacted them for the first time or significantly sweetened what they have to offer," MacDonald said.

Incentive packages offered by other regions include a 15% tax credit in New York, a 20% credit in New Mexico and a 25% credit in Louisiana. Internationally, they range from a 12.5% rebate on qualified spending in Australia to federal and provincial labor tax credits in Canada that can exceed 45%.

MacDonald added, "Such incentives have enabled other states to report record year-to-year gains in production."

He also pointed to the growing availability of skilled crews and the development of new production facilities such as the expanding Albuquerque Studios complex. This infrastructure, combined with financial incentives, helped double fiscal year-to-year production spending in New Mexico from $71 million in 2005 to $142 million in 2006 (New Mexico Film Office).

"A growing number of states are luring production and the high-paying jobs that come with it," added MacDonald. "Lawmakers in these states also realize that entertainment production generates significant tax revenue."

A recent California Film Commission/LAEDC study estimates that a $70 million feature film generates close to $11 million in state taxes, and can pump up to $200 million into the local economy. Production of a 22-episode season for a typical one-hour TV drama that costs close to $50 million pays about $5.6 million in taxes, and generates more than $140 million in economic activity. While the CFC/LAEDC study did not examine the financial impact or tax revenue generated by reality TV production, industry sources estimate that the average cost to produce a reality episode is $700,000, or $5.6 million for a typical eight-episode season.

Despite the success of other regions, the entertainment industry remains vital to L.A.'s economy. It directly supports an estimated 240,000 high-paying jobs, and pumps an estimated $30 billion into the regional economy.

While it can do little to compensate for the lack of state and local incentives, FilmL.A. works to facilitate L.A.-area production by streamlining the on-location permit process and addressing the needs of residents and business owners in the neighborhoods that host production.

Los Angeles region year-end production figures are based on permit applications coordinated by FilmL.A., Inc. They represent permitted days of on-location production in the City of Los Angeles, unincorporated areas of Los Angeles County, the cities of West Hollywood, Diamond Bar and South Gate and the Angeles National Forest, as well as all facilities operated by the Los Angeles Unified School District and the Burbank Unified School District. A production day is defined as one crew working at one location during a 24-hour period. The figures account for more than 80% of on-location production in Los Angeles County, but do not include production that occurs on certified sound stages or on-location in surrounding cities. Overall figures include production of feature films, television programs, commercials, music videos, still photography, documentaries, student films, and a category for miscellaneous production.

About FilmL.A., Inc.

Founded in 1995, FilmL.A. is a private, one-of-a-kind nonprofit economic development corporation that works on behalf of media producers, Los Angeles-area residents and local government to coordinate on-location production and help sustain the Los Angeles region's status as a global leader in entertainment production. More information about FilmL.A. is available at

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