SoCal Soundstage owners fear they won’t survive until 2025

Entertainment production in Los Angeles has always been feast or famine. When times are good, they are great. But when times are bad… For those running Hollywood production facilities today, words like “dead,” “barren,” and “apocalyptic” are often thrown around. Things aren’t just bad, they’re killing the industry.

Southern California’s film and TV industry employs 618,000 people across a variety of occupations and contributes $115 billion annually to the area’s economy. Ellen Goldsmith-Vein, producer and CEO of Gotham Group and chair of LA Mayor Karen Bass’s Entertainment Industry Council, shares Variety. Over the past year and a half, local film and TV production in the state has steadily declined. FilmLAAccording to the 2023 Scripted Content Study, released on October 9, production fell 19.3% last year.

But on October 27, at an event at the famed Raleigh Studios, Governor Gavin Newsom took the first step to revive manufacturing in Southern California, announcing a proposal to increase production capacity in Southern California. Film incentive from California to $750 million, more than double the current $300 million subsidy. If approved by the Legislature next year, it would take effect in July 2025. It is hoped that this is just the beginning of several elements that many have cited as reasons for the lack of film shooting in the city, including the expansion of subsidies to more varied forms of production.

“Many productions are becoming more budget-conscious,” says Jason Jones, president of Key Locos, a production location broker. “Studios are bringing stuff onto the lot and eliminating stuff from off the lot, which has a big impact on these businesses.”

Brian Boehner, CEO and owner of Fat Eye Studios, a 21,000-square-foot soundstage and studio, reflected, “I thought starting my own brick-and-mortar business would give me a little bit of financial security.”

Over the past year, Boehner has seen his studio’s revenue drop by almost 70%. Relationships with regular customers have kept the studio afloat, but with high overhead and a quarter-million dollar investment over the past two years in upgrading the HVAC and power, Fat Eye won’t be able to keep it going much longer. “We might have four or five months and that’s it.”

It’s a stark contrast to the number of independent studios just 12 months ago: hopeful after the COVID-19 crisis and utterly defeated after the end of the strikes. Sparked by the surge in production, Jacqueline Carroll, co-founder and owner of Studio Eleven43, sold her Long Beach company, Thunder Studios, to move to LA in hopes of finding more opportunities closer to the studios. Over the past year, she has witnessed the large production soundstages that major studios rent go unused. “If Paramount is empty, if Universal is empty, if Sunset Bronson (Studios) is empty, that’s a big deal for someone like me because they get booked with shows first,” she says. “And then if someone wanted to shoot a commercial, there wouldn’t be room for them there, so they would have to come to a room like mine.” Studio Eleven43, which once employed at least ten people, now has just three crew members.

“It’s all about competing for a smaller piece of a smaller pie,” says Paul Audley, president of FilmLA.

Ironically, investments in soundstages are booming. Over the past five years, both Warner Bros. Discovery as Universal invested millions in expanding their individual campuses; Worthe Real Estate Group invested in a $500 million development with 16 sound stages and a 300,000-square-foot office complex on the former Warner Ranch lot, and Hackman Capital and MBS Group invested in a $1 billion upgrade to the Radford Studio Center .

Investing in more buildings is part of Bass’ Executive Director 8, intended to inspire productions to return to LA and film locally. “We have more than 8 million square feet of new soundstage production and supporting creative office in the pipeline that are going through various stages of entitlement,” said Rachel Freeman, deputy mayor for business and economic development. But independent soundstage owners don’t believe the problem can be solved with more soundstages. “Investing in space is important (but) it will be a bit difficult because there are enough studios. There just isn’t enough work,” says Carroll.

Currently struggling sound stage owners point to the lack of financial enticement to have studios produce locally instead of out of state. California’s tax incentive program has been cited as the main culprit driving creators outside the city to more hospitable locations such as Georgia and New York, as well as to Australian and European locations such as London. “It’s not cheaper to go to New York or London than to LA, but they offer a lot more money for it than we do,” says Audley.

California’s tax credit caps at $330 million per year, which puts the country at a disadvantage compared to other states. “The productions that California turned down went to another location or didn’t go into production at all,” says Goldsmith-Vein. “These lost film and TV productions are sending ripples throughout the economy, impacting suppliers and our small businesses, not to mention the working families directly employed by the industry.”

Boehner notes, “My wife is an actress and she’s working on a shoot that’s happening in Whittier… and she’s in Vancouver right now.”

FilmLA called for a “massive expansion” of the California tax credit, which, according to Evan Thomason of the Santa Clarita Film Office, saved things in 2009 when the economy was in a similar situation. Bass and her Entertainment Industry Council are on a mission to entice productions to return to Southern California.

“If California offers a more robust tax credit program, production will come back because a decision about where to film is based on money,” Audley says.

At a local level, Bass’ entertainment directive, signed in August, seeks a “holistic” approach to solving the crisis. “It asked the city of Los Angeles to look internally (and) take a more customer-centric approach, under the ethos of (if) you choose to produce here locally, if you choose to film here and keep jobs here How can the city best support you? How can the city help be a problem solver, build solutions and create the best possible experience?” says Vrijman.

Part of that includes the 19-member Entertainment Industry Council, led by several industry leaders, to identify issues and create a film liaison in each city department. “This industry is truly the cornerstone of our local economy,” Freeman said. “It adds billions of dollars to local GDP and hundreds of thousands of jobs, and its impact is not isolated to the sector. There is an incredible ripple effect that helps support the entire small business community.”

But soundstage owners feel they have no time to waste as the bureaucratic process continues. “By the time the task force has completed its duties, looked at their results and released the numbers, too much time has passed,” said Mary Claypool, Laurel Canyon Stages rental manager.

Hoping to right the ship until the state government can help, soundstage facilities are trying to reach different facets of the industry and keep the content flowing. For Carroll, a content producer herself, she uses her own production team to keep things moving. The studio is also making the transition to virtual production and live shows. Boehner would like to use Fat Eye for live events, but says the restrictions on getting permits approved for an unapproved venue are proving problematic. Some facility owners are willing to simply sell everything. In the city of Santa Clarita, with a rich history based on film production, the historic Sable Ranch is currently for sale due to the economy.

‘I call someone to ask how he is doing, but the phone cuts out. They went bankrupt,” Claypool said. “Survive until ’25” is the mantra for soundstage operators today, but the question is who will survive into the new year.