TV Production Exodus: 'Misery in L.A.', Who's Getting 'Screwed' and What to Do About It

As seen on The Ankler.

Is Hollywood a place or an idea? For more than 100 years, it has been both. But with cities, states and countries across the globe hungry for film and TV production and luring projects with lucrative tax incentives, it’s becoming harder and harder to shoot in and around L.A.

“Everyone I talk to says, ‘We’re scouting this location and this location.’ It’s never L.A.,” a top talent lawyer tells me. “That’s unfortunate for the place that gave birth to Hollywood.”

Over lunches and golf outings, these conversations are happening all across town, with agents, lawyers and producers lamenting that once bustling studio lots are now eerily quiet. Their fears are fueled by stories like Warner Bros. Discovery announcing last month that it will commit to spending $8.5 billion in Nevada if the state sweetens its incentive program.

As with most things today, it boils down to economics. Labor costs are increasing, interest rates remain high — and the tax breaks offered by the Golden State just don’t cut it.

“People move here because they think they’re going to work here, but the government has made for an inhospitable environment in California,” the lawyer says. “The government simply does not care about keeping the entertainment industry here. I don’t know if Los Angeles is done, but it’s close to it.”

Colleen Bell, executive director of the California Film Commission, says the state does care — and not just because a Los Angeles County Economic Development Corporation (LAEDC) study showed that every dollar allocated in the program generates $24.40 in economic activity. Though that certainly doesn’t hurt.

“It’s a very important part of the California brand, our identity, our legacy,” she says. “We’ve got some of the best training programs anywhere in the world, the best infrastructure. We want to keep production here and, frankly, need to make sure that we continue to invest in our lead. We don’t want to get left behind.”

“Incentives are important. They are critical,” says Entertainment Partners SVP and incentives expert Joseph Chianese. “They started in 2001, and everyone assumed that it was a fad. In its peak here in the U.S. in 2008, there were 48 states with incentives.” Interest had ebbed and fewer states were trying to entice productions, but Chianese says it’s on the rise again now. “We’re back up to 40,” he says. “Places like Wisconsin and Michigan are all reconsidering bringing back incentives.”

Amid the fervor — and the surprising number of recent headlines about tax incentives — I spoke with key players from Barnes & Thornburg and Entertainment Partners, as well as others who wanted to remain nameless so they could be candid about just how dire the landscape really is right now.

In this issue, you’ll learn:

• The outsize impact Netflix has had in accelerating California’s production exodus
• How talent and showrunners often lose money on relocation costs today
• The role streamers’ use of block shooting in TV plays
• Which jurisdictions still have money to burn before the end of the year in tax incentives — including California
• Mayor Karen Bass’ new Entertainment Industry Cabinet, who’s in it, and what they are doing about the issue
• Five overlooked U.S. states and five countries with attractive tax incentives
• The role California politics will play in keeping production in the state

Beyond La La Land

To quote one veteran lawyer, there’s just “more misery in L.A.” than elsewhere at the moment. The people I interviewed chalked it up to local labor costs and the state’s increasingly less competitive tax incentive program that’s capped at $330 million annually.

FilmLA’s most recent quarterly update, released in July, reveals the extent of the exodus out of Hollywood. It notes that “overall [local] on-location filming levels heading into summer are down 33.4 percent below their fve-year seasonal average.” (That figure excludes 2020.) Otis College’s dashboard on the state of the creative economy puts numbers on what this has meant to local employment. There were nearly 195,000 entertainment workers in L.A. at the end of 2023, down from the peak in 2022 when there were 250,000 workers. (FilmLA’s next report will be released later this month.)

A successful film and TV producer tells me that he hasn’t shot a movie in L.A. in almost 20 years, and it’s been quite a while since even just running the numbers was anything more than a nostalgic exercise.

“I would love to shoot in L.A. It’s not possible. It’s not viable,” he says. “There's no studio that I’ve ever worked with that doesn't allow you to do a side-by-side comparison if you want to. It’s never even come close. All you’re doing is taking money off screen.”

TV productions leaving (not just films) is a more recent phenomenon and seems to be the source of new angst. A few people I talked to say it’s another symptom of the Netflix elect.(They call out other streamers too, including Amazon and Max.) Streamers are making shows the way films have been made, prepping scripts in advance and shooting all the episodes in a block, which makes it easier to move the production to another state or country where it’s cheaper to film.

Current buzzy TV series such as Wednesday, The Night Agent and Apples Never Fall have been shot in Ireland, Vancouver and Australia, respectively. The highly anticipated Suits L.A., as reported last month, is moving its production to Vancouver.

“We can’t always compete dollar-for-dollar with other tax credit programs in terms of our percentages,” Bell admits, adding that California’s experienced crews, infrastructure, weather and topography still help it compete against jurisdictions that offer more money.

One of the biggest gripes is that above-the-line talent pay isn’t factored into the calculus in California. That’s one reason big-ticket Marvel movies head to Atlanta: Georgia’s incentive includes above-the-line talent and doesn’t have a cap.

Stephen Weizenecker, a partner at Barnes & Thornburg who advises entertainment clients and has helped several states and countries with their incentive programs, says a lot of productions moved overseas during the strikes and just stayed there. “We don't have anything shooting right now in L.A.,” he says. “Unless you absolutely have to be there, until interest rates come down and it makes it less expensive to shoot in California, it's going to be hard to get it to come back.”

New York remains a major hub, of course, as well as places like the U.K., Canada, Australia and New Zealand. According to my sources, underrated or overlooked players include Kentucky, Missouri, New Mexico, Illinois and Alabama in the U.S. and such countries as Italy, Spain, Ireland, Bulgaria and Hungary.

“Incentives are important. They are critical,” says Entertainment Partners SVP and incentives expert Joseph Chianese. “They started in 2001, and everyone assumed that it was a fad. In its peak here in the U.S. in 2008, there were 48 states with incentives.” Interest had ebbed and fewer states were trying to entice productions, but Chianese says it’s on the rise again now. We’re back up to 40,” he says. “Places like Wisconsin and Michigan are all reconsidering bringing back incentives.”

The Hidden Cost of Shooting Abroad

When producers run the numbers, it often shakes out to be cheaper to fly people across the globe than it is to shoot at home. That savings comes at a cost. Obviously, there’s a huge hit to local crewmembers and ancillary workers who are left behind and not working in L.A. when productions go elsewhere. But there’s also creating financial struggles for talent that has to travel.

A prominent lawyer who works with both on-camera and behind-the-scenes talent says studios aren’t giving relocation money for working on a series as freely as they used to. “On a film, they’ll pay for everything,” the lawyer notes. “On a TV show, they’re cheap.”

It goes back to that Netflix thing. Unlike the days when a series regular would have to pick up and actually move out of state — Chianese notes that Ugly Betty taking 600 jobs to New York was a catalyst for California’s incentive program — working on a show seems much more temporary. That’s the justification anyway.

During the strike, SAG-AFTRA got a boost to the minimum that studios have to pay, but if$5,000 a month (for up to six months) doesn’t cover rent and other living expenses, well, as the lawyer says, “You’re kind of screwed.”

Actors are not the only ones leaving home for shoots. Another lawyer notes that even some showrunner clients who have to relocate for several months at a time are having to pay for things themselves. “They are getting a housing allowance, but it’s not enough to cover what they need to rent a house or apartment, especially one that can accommodate their family, in a safe area that’s in proximity to the production,” the lawyer says. “They’re having to go out of pocket to cover that gap.”

You can try to negotiate things that may limit the amount of time on set or cover some other costs, but it usually doesn’t add up. “You can ask for anything that people actually need, more [plane] tickets, a rental car,” the first lawyer says, “but there are really not other perks that translate into dollars in the same way.”

The second lawyer derided the studios’ willingness to write an A-list star a big paycheck — or spend lavishly on elaborate sets — while also nickel-and-diming other expenses: “It feels like someone driving their Bentley to wait in line for half an hour to get gas at Costco.”

From Neogitating to Lobbying

One lawyer tells me that there’s only one project on his docket that’s filming in L.A. and it’s because the lead actor wouldn’t take the role if it shot elsewhere. That’s not a real option for most talent, which means lobbying may be a better use of those negotiating skills.

There’s a consensus among the dealmakers I talked to that at some point California is going to have to step up its game. The current program was extended through 2031, but that doesn’t mean it couldn’t change before then.

“You have to decide what kind of content you want to go for and compete with those credits,” says the producer. “Do you want to compete with Vancouver, which has a lot of television? I don’t think you could ever compete with Atlanta — the state couldn’t afford it— but maybe you could compete with Louisiana or North Carolina or Cleveland.”

In Los Angeles, mayor Karen Bass has assembled an Entertainment Industry Cabinet dedicated to supporting Hollywood — and it’s a murderers’ row that includes Motion Picture Association CEO Charlie Rivkin, L.A. film czar Ken Zi ren and Karla Sayles, the deputy director of the California film commission. The group had its first meeting July 24, and on the mayor’s office website it notes that they’ve streamlined permitting and inspection for seven new studios and soundstages. To combat “production leakage,” she’s also putting together a task force of =film liaisons from various city departments that will meet quarterly.

The group hasn’t been the subject of much press (or industry scuttlebutt) so far, but an ongoing conversation between the city, state and Hollywood about stabilizing production and ensuring there’s a future for it in L.A. certainly seems like a positive step.

The Perception Problem

Maybe the biggest challenge for dealmakers lobbying lawmakers in Sacramento for a change to the program is how any increase would be publicly received as it works its way through the legislative process. After all, California is a huge state and Hollywood isn’t a priority for everyone.

The lawyer who advises showrunners, among other clients, says that the toxic nature of modern political discourse has made people cynical and hampers pragmatic changes. “It makes it really hard to have a grown-up conversation about the real issues,” the lawyer says. “Any criticism of California is interpreted as a Fox News hit job. It will get lampooned as a bunch of so-called progressive, bleeding-heart California liberals pushing money out of the state budget into the pockets of Iger and Zaslav.”

For the record, if it wasn’t already clear, that’s not the case. Not only does each incentive dollar translate into $24.40 in economic value to the state, but that same LAEDC study shows that it also equates to $1.07 in tax revenue. In other words, it pays for itself, with a 7 percent profit to boot.

Still, people on the frontlines are gearing up to win over Californians in other parts of the state.

“If we can demonstrate that we’re making money statewide, that we’re actually a surplus to the state and not a detriment to the state, we get [people] to applaud instead of shout,” says a veteran Hollywood lawyer.

Adds Bell: “It's an economic development tool. It's tried and true, and it really delivers the spirit of what it is meant to do.”

Open Call for Cash

Let’s end on a positive note, shall we?

For producers, there’s still incentive money to be had. Not only does Chianese note that “Missouri has $10 million of money that they need to use, or they'll lose, by the end of the calendar year” — but California still has cash left in its coffers, specifically for new television series.

So far, a dozen shows, including NCIS: Origins (CBS), All’s Fair (Hulu), The Pitt (Max) and Dr. Odyssey (ABC) have taken advantage — and there’s still room for more.

There are two upcoming windows, Sept. 9-11 and Oct. 21-23, and folks can apply here.

“We had a couple of years where we did not have any funds for new television and there became this perception that we’re closed for new TV series, but we are not,” Bell says. “We are open for business right now for new television.”

Ashley Cullins writes about the agents, lawyers and other dealmakers who make Hollywood work for paid subscribers (every other Tuesday, alternating with Reel AI). She recently dove into the fight against celebrity AI scams, the coming M&A landscape and why cost-plus deals are dying. You can reach her at ashley@theankler.com.