This Hollywood whodunit features stolen jobs

Rising production outside the Los Angeles area -- and globally -- is just part of why Tinseltown is slowly shrinking.

By Bruce Kennedy Apr 2, 2013 9:17AM

Image: Directors Chair © Chloe Johnson, AlamyHollywood may be a fantasy factory, but the film industry there is dealing with some very down-to-earth economic problems.


Some cases in point: Late last week, as reported by the Los Angeles Times, a federal bankruptcy judge approved the planned $30 million sale of Rhythm & Hues. That's the visual effects company that recently won an Oscar for its work on the film "Life of Pi" -- produced by 20th Century Fox, a division of News Corp. (NWS). Rhythm & Hues went into Chapter 11 bankruptcy protection last month after cutting 250 workers.


In February, the Times reported DreamWorks Animation SKG (DWA), which scored huge hits in recent years with such films as "Shrek," "Madagascar" and "Kung Fu Panda," was planning to lay off up to 20% of its 2,200 employees this year.


And the newspaper recently quoted data from the California Employment Development Department that jobs in the state involving motion pictures, TV and sound recording fell 7.3% in January compared with the same time in 2012. And those January figures were the lowest they've been for any month since January of 2001.


What's going on in Tinseltown? Apparently, a multiplex of factors are involved, including the ongoing economic slowness, strong global competition, a growing number of film and TV productions filming outside of the state and a shrinkage in revenue from longstanding sources like DVDs while the growing digital and online markets mature.


As Gina Hall at L.A. Biz recently observed, "it's hard for Hollywood workers not to notice the Indian and Chinese companies taking more visual effects jobs and production still running off to the latest state or country to offer generous tax incentives." Australia has just secured an agreement with Walt Disney (DIS) to film the remake of "20,000 Leagues Under the Sea" there, thanks to a $22.5 million grant.


In fact, a municipal study released late last year said the TV and film industry in Los Angeles County alone had lost more than 16,000 jobs since 2004, which is pretty unsettling when you consider the entertainment industry is the region's fifth-largest in terms of employment.


But there are hopes that a slow but steady recovery from the recession may soon lift some boats in the entertainment business.


"My conjecture is that Hollywood thinks that with the economy turning around, it's going to be a better year in the summer and late in the year when blockbusters tend to be released," Stephen Bronars, a senior economist with Welch Consulting, told CNNMoney. "They seem to be spending more and hiring more on the production of movies."


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3Comments
Apr 2, 2013 4:35PM
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Lets face it the companies in America go to the cheapest places on the earth sell out American interest and the complain when they steal there technology ignore there copyrights and pirate there products put  Americans out of work then complain when no one is buying there products. Then they complain that there to big to fail and ask for government handouts in the way of tax breaks and no interest loans if this were not real it would make for good daytime drama on tv.This country and the government and corporations who own it not run but own have no allegiance or loyalty let it fail.
Apr 2, 2013 8:52PM
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They're making Transformer 4 in China. Why bother making one at all?
Apr 2, 2013 8:18PM
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"20,000 Leagues Under the Sea" to be redone by Disney and with an Aussie grant?  Great!  One of my favorite all time movies, 1954, when I was 12.  Kirk Douglas at his peak.  James Mason as Capt. Nemo.  Jules Verne at his best.  The great giant squid battle.  The Nautilus sub.   The Chinese and Indian cos. are gaining ground very quickly....drastic change must take place here to regain our stature.  As for tinsel town, beneath the tinsel is the real tinsel. 
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