Hollywood East Or Beacon Hill Bust?

Lack Of Movie Studio Tax Credits May Make Mass. A Laughingstock. Again

Commercial Interests
By Scott Van Voorhis
Banker & Tradesman Columnist
April 20, 2009

States like Connecticut, Rhode Island and New York ate our lunch with gambling, siphoning untold billions of dollars out of the Bay State over the past 15 years.

Now it looks like our neighbors may soon have another laugh at our expense – this time with the growing appetite of Hollywood to produce films in lower-cost locales.

Connecticut and New York in particular have launched aggressive bids to bring in hundreds of millions in new film business and thousands of jobs.

It’s a push that comes with the usual crown of anti-fun-and-everything-else critics here in Massachusetts homing in for the kill as they lobby to block incentives aimed at expanding the state’s growing piece of the film pie.

The antis on Beacon Hill are rallying around new research emanating in part from the Empire State that comes with a rather shocking message indeed. There’s really no use for states like Massachusetts to try to get into the film business – entertainment heavyweights like New York have it all locked up.

The criticism has film industry advocates, having enjoyed solid success attracting film shoots through the lure of state tax credits, looking at further incentives to spur the construction of a full-fledged movie studio. A State House bill that would have kicked off the construction of a major film complex in South Weymouth predictably fizzled last year in the Legislature.

“It’s stupid and so hypocritical,” said state Rep. Brian Wallace, D-South Boston, a longtime legislative champion of the film business. “It’s sour grapes and that is all it is. None of it is true. We are doing it here.”

Not so according to a pair of researchers – a Cornell University professor and a Needham-based employment expert – who recently made a splash with a paper, now under review for publication in an academic journal, that contends it is futile for states like Massachusetts to compete for films against New York and Los Angeles.

The entertainment industry heavyweights simply have an overpowering advantage when it comes to the infrastructure needed to attract and grow the film business, leaving the rest of the country competing for the crumbs.

Yet this argument appears to contradict the thrust of another study put out by the two researchers back in 2006, when they were hired by New York film industry stakeholders to examine the decline – that’s right, decline – of the Empire State’s share of the film and media biz.

The description of the goals of that 2006 study, sponsored by none other than the New York Film, Television and Commercial Initiative, just about says it all:

“There is substantial anecdotal evidence that production is decreasing in New York, with implications for employment of industry professionals and for the position of the city as a media production center. To ensure and build New York’s role in what are now global entertainment and information industries, we need to know why the location of production is changing and to devise a policy agenda that places New York at the center of these industries as a primary location for visual media production.”

Ned Rightor, the Needham-based employment expert and one half of this research team, notes that earlier study was a Cornell University effort in which the industry had no editorial involvement.

The latest study, an academic paper which explores the difficulty other states face going head to head with New York and LA in pursuit of the film business, is not funded by the entertainment industry and reviews years of research by other academics into the effectiveness of film subsidy programs in a range of states, including Massachusetts.

The conclusion, notes Rightor, is not necessarily comforting for New York policy makers either, calling into question all state efforts, including those of the Empire State, to subsidize film production.

While New York has had its challenges, it has entertainment industry infrastructure built up over a century, Rightor contends.

For her part, Susan Christopherson, the Cornell professor, argues Massachusetts would be better off with a more targeted approach, one, that, say, might focus on a niche, like digital media.

That’s good to know.

Take A Look Around

But in my view, you really have to follow the money. And, in this case, the real proof is in the cash other states are pouring into this seemingly futile effort.

Connecticut recently announced plans for millions in tax credits to help get a $65 million studio complex off the ground in South Windsor, as well as a $5 million loan.

It comes atop plans by NBC Universal to build a large television studio at Stamford.

Pennsylvania Gov. Ed Rendell, not to be outdone, is giving would-be studio developers in Norristown a $10 million check. No pesky and complicated tax credits here.

But what about New York, the giant against which other states should not even try to compete?

Funny thing, the supposed king of the film production business is apparently feeling a little worried about all that competition out there: enough for Gov. David Paterson and legislators to agree on a $350 million package of tax credits.

By contrast, the Bay State’s efforts to lure the film industry, which have suddenly become controversial here on Beacon Hill, hardly look lavish.

Nearly 20 major film shoots over the past two years have pumped more than $500 million in the state’s economy. Tax credits, by contrast, amounted to roughly $30 million in 2007.

The success has drawn proposals from would-be studio developers, who want to spend hundreds of millions to build a trio of film complexes that could help make Massachusetts “Hollywood East.”

No matter. State lawmakers, some of whom apparently aren’t feeling the heat of the down economy like the rest of us from their comfortable State House perches, balked at spending another $60 million last year in tax credits to help a proposed $300 million studio complex slated for the old South Weymouth airbase get off the ground.

Now that may change, with Wallace, the Legislature’s resident film buff, noting the House is poised to take up the South Weymouth studio proposal again.

Yet there is also a danger the Bay State will repeat all over again, this time with the film business, years of mistakes made with the casino business.

As Connecticut and other states built up lucrative gambling industries, our Beacon Hill antis blocked attempt after attempt to legalize some form of expanded gambling. Who knows what, if any, factor out-of-state casino interests played in this obstruction campaign, though it has long aroused suspicion among political insiders.

Clearly, when it comes to the film business, New York officials are nervously watching Massachusetts and hoping we decide to throw in the towel.

But beyond the gamesmanship, the real victim here is our own state’s now hard-hit economy.

If Beacon Hill had decided to bet a few dollars on the film business last year, we might at least have a studio project or two underway right now.

It’s not too late, and maybe the Legislature will finally pass that studio incentive package.

Coming attractions
MPAA study: Showbiz is big business



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