CORPORATE FOCUS: Hollywood on the Run

A rebellion is brewing in Hollywood -- not on screen, but behind the scenes.The Screen Actors Guild, the Directors Guild of America and other entertainment industry unions are protesting against "runaway" production of film and television production.Since 1990, the proportion of U.S.-developed films and television productions produced outside of the United States has soared by nearly 100 percent, according to a study commissioned by the Directors Guild of America and the Screen Actors Guild. According to the study, conducted by the Monitor Company, a management consultant firm, the number of "economic runaways" -- production located outside of the United States for financial, not creative, reasons -- rose from 100 in 1990 to 285 in 1998.The vast majority -- 85 percent -- of the out-of-U.S. productions located to Canada, with most of the rest going to Australia or the UK. Productions are migrating to Canada for a simple reason: lower costs. The Canadian dollar has plummeted in value as against the U.S. dollar in 1990s. Wage rates have risen at a slower pace than in the United States. And the Canadian federal and provincial governments offer major tax subsidies to film and TV productions. Overall costs are 25 percent less in Canada than in the United States.To many workers in Hollywood, especially camera people, grips and various production workers, as well as lower tier actors and directors (supporting actors, stunt people, associate directors and others) the Canadian shift has become a serious jobs issue. If a film is shot in British Columbia instead of Hollywood, Tom Cruise does not lose a job. But his stunt man may find himself replaced.From the Canadian perspective, of course, things look quite different. To those in the Canadian industry, the "runaway" productions are bringing jobs, in a relatively high-paying, low-polluting industry.What makes this point of view particularly compelling is the overrunning of Canadian media in the last couple decades by the U.S.-based multinational media giants.Less than 1 percent of English-speaking screen time in Canada is devoted to Canadian film productions, says Garry Neil, a Canadian consultant on cultural policy issues. Pressure from the Motion Picture Association of America has stymied Canadian attempts to adopt domestic movie distribution regulations designed to build up Canadian counterparts to the Hollywood studios, and thus to develop an institutional means of support for Canadian productions.When Canada tried to foster space for its domestic periodicals against U.S. competitors, the United States took the issue to the World Trade Organization and forced revocation of the Canadian magazine protections. (Canada had sought to ban "split run" publications -- those produced for the U.S. market and then sold in Canada with the same copy but Canada-specific ads. The fear was that Canadian publications, sold in a market approximately one-tenth the size of the United States, would be unable to compete with U.S. publications that could cover editorial costs from the much larger U.S. market.)Efforts to promote Canadian cable channels, including a Canadian country music station, have foundered in the face of the economic clout of U.S. media companies.In this context, it is hard to blame the Canadians for offering tax breaks and aggressively courting the U.S. movie and TV show makers. If they cannot nurture their own industry, why not lure the U.S. firms to locate production in Canada?But the rank-and-file U.S. film industry workers are also right to perceive a threat to their livelihoods.Right now, the U.S. unions are responding to the "runaway" problem by campaigning for federal and California tax breaks designed to offset the Canadian tax subsidies. They say these should be "wage-based" tax credits, but there is no getting around the fact that the benefits will accrue to the big production studios.We are thus in the middle of a race to the bottom in tax giveaways, a zero-sum game in which the only ultimate winner will be Warner Brothers, Disney, Fox, Sony and the other giant media companies."The fact is," says Rafe Greenley of the Screen Actors Guild, "in a global economy, the one thing that can move [most] easily is" TV and film production. There are no factories to relocate, no heavy equipment to move.Even cultural production, supposedly one of the great strengths of the U.S. economy, turns out to be prone to the destructive dynamics of corporate-driven globalization.Unless public outrage forces a rewrite of the script, this is story set to have an unhappy ending, with the bad guys laughing all the way to the bank.Russell Mokhiber is editor of the Corporate Crime Reporter, and Robert Weissman is editor of the Multinational Monitor.

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