THE WALL STREET JOURNAL / CALIFORNIA
To hear some Hollywood players tell it, the film capital will soon
become a ghost town thanks to "runaway production" -- the local term for
filmmaking that takes place outside California.
With lower costs -- principally labor -- luring producers away, the
state Assembly passed two bills this session granting tax credits for
wages paid to union workers on low-budget films made entirely within
California. But while the bills await the next plot twist in the Senate, a
handful of Hollywood companies are finding a way to cash in on the
exodus from Tinseltown.
Sometimes called "international film liaisons," these middlemen make
it easier for production companies to shoot their projects outside of
Hollywood -- outside of the U.S. entirely, in fact. The liaisons try to
eliminate the headaches of shooting in foreign countries by obtaining
permits, hiring crews, negotiating tax breaks, renting equipment and
even taking on local "producers" to qualify a project as a product of
the host nation. And, in many instances, they help convince production
companies to shoot abroad in the first place by explaining how parts of
the foreign country look just like the U.S. -- or how overseas
production can fatten a project's bottom line.
"It's just getting better each year," says Dale Kushner, executive
producer and president of Africa Film Services Inc. in Los Angeles,
whose clients have produced commercials for Motorola satellite phones in
Namibia and the Seychelles, and spots for Country Time lemonade in South
Africa. "There's definitely been more work."
Mr. Kushner, a South African citizen and permanent U.S. resident,
received about 35 inquiries last year, a fourfold increase from 1996.
About one out of 10 leads to a foreign contract, he says.
Los Angeles-based Milk & Honey Production Services Inc., which
brought shoots for Mountain Dew commercials to Prague and arranged for
the Mexican production of such made-for-TV movies as "Primal Force" and
"Reunion: Journey Beyond the Bermuda Triangle," saw its revenue increase
to an estimated $10 million this year from $4.5 million in 1996. "It has
been a very rapid growth," says Howard Woffinden, Milk & Honey's owner.
"We found a niche that was waiting to be filled. It was a classic case
of the right place at the right time."
The British-born Mr. Woffinden came to Los Angeles to work in the
music-video business in 1981. He now spends most of his time in Prague,
although his company continues to have its headquarters in Los Angeles
and has offices in London, Mexico City, Montreal and Moscow.
Production houses make movies and TV spots abroad to take advantage
of scenery, weak currencies, government subsidies, lower crew salaries,
inverted seasons and even freedom from a Screen Actors Guild contract
clause that guarantees actors certain residuals for subsequent
broadcasts of commercials and programs. But production houses turn to
film liaisons because the pitfalls of shooting overseas can overshadow
the benefits, especially if the reason for moving the project abroad is
to save money.
"You don't want your camera or film to be tied up for three weeks
because someone in customs wants to impose a 100% tax on it -- which has
actually happened," says John Furia Jr., chairman of the writing
department at the University of Southern California's film school. With
a crafty middleman on one's side, "the government would let you shoot on
their property or use members of their military as extras."
Michael Jaffe, partner and president of Jaffe-Braunstein Films Ltd.
in Los Angeles and a minority partner in a film-liaison company based in
Montreal, says, "I've had associates that go to shoot in Canada --
projects on the same scale as ones I've done -- and after picking their
brains I found out that they spent $200,000 more on the same {type of}
movie" because they didn't have anyone to show them how to save money
abroad. "So is it worth paying us a service fee of $36,000 to save
$200,000? Sure."
That's scant comfort to allies of Hollywood's workers and smaller
businesses that depend on film production. "Some of these companies may
get short-term benefits, but over the long term it will adversely effect
the economy of the area and the entire state," says Assemblyman Scott
Wildman, a Los Angeles Democrat who introduced one of the tax-credit
bills. "We have the best infrastructure and the most highly qualified
personnel" right here, he says.
Film liaisons reject the notion that they're ushering Hollywood to an
early grave. They say that many of their clients would not be able to
shoot at all if they had to pay the going rate in Los Angeles. Moreover,
the brokers say, overseas shoots may end up benefiting the California
economy, since the money that production houses save by moving workaday
commercials and TV movies out of state enables them to shoot
bigger-ticket projects in Hollywood.
If producers add up the numbers and say "`We don't have enough to do
this in L.A.,' should we kill the project and have no product?'" says
Marc Blitstein, U.S. production manager for Cine South de Mexico and a
freelance film producer for eight years. "No, because they have the
option to go abroad. And ... production crews and ad agencies, at least,
can make money and eventually be able to afford the more expensive jobs
that might shoot in L.A."
To be sure, there's not always a happy ending to runaway production.
The enterprise has plenty of headaches, such as when production
companies run into local laborers unaccustomed to Hollywood's normal
14-hour workday, or when foul weather delays an exterior shot. And
critics point out that the costs of shooting abroad -- especially travel
costs -- can quickly overwhelm the labor savings.
"Locations are not less expensive," says Olivia Nagel, a spokeswoman
for the Film and Television Action Committee in Studio City, a group
backed by the Screen Actors Guild and others that support the tax
credits. "By the time you get frisked at the border, if you even get
your equipment out of the country, you've paid more."
---
On the Run?
Economic Focus
`Liaisons' Boom by Helping
Filmmakers Leave Town
By Ryan Tate
Staff Reporter of The Wall Street Journal
06/23/1999
The Wall Street Journal
CA1
(Copyright (c) 1999, Dow Jones & Company, Inc.)
Some Hollywood unions and support-service companies complain that
film production is fleeing the Golden State. Here's a look at where
movies are being made.
Total Feature Film Production Starts
Area 1995 1996 1997 1998
California 439 574 637 510
New York 60 63 79 75
Texas 17 34 17 36
U.S. TOTAL 569 702 823 744
Canada 38 58 38 59
Britain 33 37 32 15
Australia 4 8 7 9
Source: California Film Commission
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