This Hollywood whodunit features stolen jobs
Rising production outside the Los Angeles area -- and globally -- is just part of why Tinseltown is slowly shrinking.
Hollywood 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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[BRIEFING.COM] Equity indices settled on their lows following a steady, session-long slide. Similar to yesterday, small-caps paced the retreat as the Russell 2000 fell 1.6%, extending its December loss to 3.6%. The S&P 500 settled lower by 1.1%, widening its month-to-date decline to 1.3%.
There was no specific news catalyst behind today's slide, which had the markings of broad-based profit-taking. Seven of ten sectors settled with losses of 1.0% or more while only two groups ... More
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