When deciding where a TV series is produced these days, only three things matter: Incentives, incentives, incentives.
The trend started slowly after Canada being wooing productions north with tax breaks and other perks and has rapidly accelerated in recent years. Today, nearly three dozen U.S. states have some sort of production-company incentive plan in place, compared to just five a decade ago.
The race kicked off in 2002 when Louisiana started luring productions with a generous deal. “There’s no question thing changed when Louisiana got into the tax-credit game,” Will French, president of the Louisiana-based company Film Production Capital, said. “Then, it seemed that every two weeks another state had a new program. There was a whole cottage industry for people providing incentive updates.”
Technology has also played a key role in making production more mobile, French added. “Before, you had to be in New York or Los Angeles for the labs and the editing equipment and the cameras, he said. “It’s now a user-friendly, portable industry.” (Hollywood has been feeling the sting — according to the Los Angeles Times, only two of 23 one-hour broadcast network dramas for the 2012-13 season were shot in L.A., costing the industry thousands of jobs that have found homes elsewhere.)
That portability has led production into plenty of new places, especially when it comes to reality shows. For unscripted series, tax incentives are not top of mind, though, Original Media senior vice president of current series and development Patrick Moses said.
For instance, the Original-produced History series Swamp People was not a show that could have been easily transferred from its Louisana locale, Moses said.
Moses is currently working on an unscripted series in rural Oregon where the location was crucial. Other factors, like the ability of a state, town or other agency (in Swamp People’s case, the Louisiana Department of Wildlife and Fisheries) to cut through red tape or help find local talent, crew and vendors can be vital, he added. In a place like rural Oregon, where there may not be TVproduction infrastructure in place, local officials are so excited that they go out of their way to be helpful, he added.
As with many states, the Oregon Production Investment Fund reimburses filmmakers and production crews for up to 10% of what they spend on wages and benefits for Oregon-based workers, and 20% of other expenses incurred in the state. Production companies must spend at least $750,000 in Oregon, and the cash rebates are limited to the total funds available.
The state legislature voted two years ago to extend the film and video tax credits until 2018, but cut the value from $7.5 million a year to $6 million. The legislation would also require production companies to spend at least $1 million in Oregon, up from $750,000.
“The tax incentives are now the biggest driver in any calculation,” one studio executive who asked not to be named said. “Now, the bottom line is to make the numbers work.”
But the quality and quantity of the incentives, credits and breaks varies wildly. The states attracting the most productions — Louisiana, Alaska, New York, New Mexico, Georgia, North Carolina and Connecticut — are among the first to offer incentives, have the most generous deals or have the best infrastructure and locations.
“Having a head start certainly helps,” Connecticut Film Center CEO Kevin Segalla said, adding that while Louisiana and Alaska have compelling locations and Georgia a strong infrastructure, Connecticut is helped by its proximity to Boston and especially New York. His company worked with Chelsea Piers to develop the $120 million new home of the NBC Sports Network.
If a state that offered similar locales wanted to compete with say, Louisiana, according to the studio executive, it would actually need to top the incentives on offer. That’s because the cost of bringing vendors and crews to virgin territory would more than offset similar savings.
Still, even those states with success often find themselves embroiled in policy battles about the merit of their incentive programs, with legislatures or, more frequently, governors trying to scale them back. “It has become a political hot potato,” French said.
The economic downturn and subsequent slow recovery has put such deals under closer scrutiny, National Conference of State Legislatures policy analyst Todd Haggerty said. In recent years, states such as Arizona, Arkansas, Idaho and Kansas either ended their or defunded their programs. “But for every state that has been thinking about reducing or eliminating incentives one is looking to build theirs up,” Haggerty said.
The nature of such incentive deals is changing, though, with observers noting that states are targeting productions more specifically, in a manner that favors TV over films.
“The debate doesn’t always break down along party lines,” Haggerty said, although Republicans are by far more reluctant to give tax breaks to the entertainment industry. “Instead, it centers around whether people feel they’re getting a return on their investment. States are giving different levels of credit if you are building a studio or training a workforce or having some other long-term impact.”
Gary Lico, president and CEO of Connecticut-based CableReady, noted that discontent in his state’s legislature is aimed at movies that come and shoot for a few weeks and then leave, not at long-term players such as TV series or networks. As a result, Connecticut’s film credits began evaporating this summer, even as the state keeps welcoming TV with open arms. Segalla hailed that as a smart decision, adding that digital media is being added to the incentives mix. “Not many states are sold on digital media incentives yet, but some are starting to recognize that creating content for the Web will be a big part of the future,” he said.
When Michigan Gov. Rick Snyder campaigned on cuts to the state’s production incentives, and then began pushing for them, Louisiana began to pick up productions that were leaving that state, French noted. When governors begin talking publicly about cutting subsidies, it can be damaging, he said.
“It’s a lot of subsidy and it makes sense to take a real hard look,” French said, though he added that it’s not worth jeopardizing the thousands of jobs and billions of dollars TV production can yield. “Even threatening to cut or cap incentives can be the kiss of death — people may think twice about investing in a studio or a set or productions start to look elsewhere and may not come back.”
State incentives play a key role in deciding where TV shows will be produced.
STATES OF TV
Where some of television’s most-popular shows are produced:
North Carolina:Under the Dome, Revolution, The Ruckers, Homeland
Georgia:The Walking Dead, Love & Hip-Hop Atlanta, The Real Housewives of Atlanta, The Vampire Diaries, Necessary Roughness
Louisiana:Treme, Swamp People, Duck Dynasty, The Governor’s Wife, Cajun Pawn Stars
Connecticut:Maury, Jerry Springer, All My Children, One Life to Live, The People’s Court
SOURCE:Multichannel News research