Mandalay chief Peter Guber: California is giving away film production

Entertainment executive and entrepreneur Peter Guber says California isn’t doing enough to keep film productions in the state. Rather, the state is giving the industry away.

Los Angeles in particular has long struggled to keep its signature industry from moving more filming activity to other cities offering incentives including tax subsidies — a phenomenon dubbed “runaway production.”

But Guber, chairman and chief executive of production company Mandalay Entertainment, on Thursday called that term a misnomer.

In remarks at the UCLA Anderson Forecast event at the Kirk Douglas Theater in Culver City, he said it should be called “giveaway production” because California state officials haven’t done enough to stop the business from leaving the state.

“The state is not a victim,” he said in an interview after his remarks. “It’s a complex problem, and if you don’t address it, you give it away to someone who does.”

Mandalay’s recent movies, for example, include the faith-themed football drama “When the Game Stands Tall,” which was set in Northern California but filmed mostly in New Orleans.

California Gov. Jerry Brown has sought to remedy the situation, last year signing a bill to triple annual funding for the state’s film and TV tax credit program to $330 million a year for five years.

But Guber said the growth of digital technology and the migration of creative workers and actors to other cities around the country have also put pressure on California’s entertainment business.

“I think we’re in a period of a great sea change,” he told the Culver City audience.

A report included in the Anderson Forecast found that the entertainment industry in Los Angeles grew by 22% from 2001 to 2013 in terms of total employee compensation. That’s slower than nationwide growth of 33% during the same period.

Los Angeles continued to dominate other cities in terms of production in the film and sound recording industry, with an estimated economic output of $55 billion in 2013. Its total payroll compensation of $14.3 billion was more than double the nearest rival, New York ($6.5 billion).

Still William Yu, the economist who authored the entertainment report, characterized the growth of employee pay in entertainment as weak, especially in Los Angeles. He said the growth in total compensation has not kept pace with the overall growth of the entertainment business.

“In terms of job creation, it’s lagging behind,” Yu said in an interview.

However, there have been some positive signs for Hollywood.

Last month, state jobs data revealed that a surge in digital entertainment jobs from online shows on Amazon, YouTube and other Web outlets has helped drive employment in Hollywood to the highest level in a decade.

The Los Angeles entertainment sector added 8,000 jobs last year. The 6.5% growth from the previous year was three times higher than for all private-sector jobs in the county.

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