Strike action would hurt L.A.'s economy, study says

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The high risk of a "real or de facto" strike by Hollywood unions means film industry employment could drop substantially in 2008, according to a new forecast by a regional economic group.

The Los Angeles County Economic Development Corp. report, set for release today, covers an array of regional business sectors but spotlights entertainment as a primary trouble spot.

"As to the industries at risk, the most notable is the motion picture/TV production industry, which has to face contract negotiations with three key labor unions (beginning with) the Writers Guild in October," the LAEDC said.

LAEDC chief economist Jack Kyser noted a "variety of scenarios" over how negotiations between the WGA, SAG and the DGA and studio representatives might unfold this year and next.

In any event, "The risk of a strike, real or de facto, is high, and this would not be good news for areas of Los Angeles County with exposure to the business," Kyser said.

Some industryites believe "de facto" strike conditions already are in evidence. For instance, talent on hit TV shows are being asked to make themselves available to film extra episodes to stockpile in case writers go out on strike in the fall. And the current pilot season is tilting toward more reality, or "unscripted," programming (HR 2/15).

The report estimates the total number of regional film and TV jobs will rise 4.5% to 170,300 in 2007 before falling 1.4% to 167,900 in 2008 due to strike uncertainty. About 2,000 of the lost positions will be in film production, with most of the balance because of strike-related TV retrenchment, the LAEDC projects.

"The studios already are in a stockpiling mode, and they will continue to stockpile scripts and product if they can," Kyser said. "So it could be a roller coaster period for anybody who is connected with the industry. This (even) has implications for hotels on the Westside, because if there is a strike and there are fewer parties and fewer people flying in, it could take a nick out of their bottom line."

In the event of an actual strike by the WGA or other guilds, the economic effects would be particularly dramatic, he said. One estimate put regional economic losses following the WGA's five-month walkout in 1988 at $1 billion.

A WGA spokesman said history indicates that the expiration of guild contracts doesn't necessarily mean big job losses.

"What we've seen in the past is that in the two quarters prior to contract expiration, there has been a jump in employment, followed by a small decrease in employment in the following two quarters," WGA spokesman Gabriel Scott said. "But what we end up seeing is that it's still a net gain, as the increase in the two quarters prior to the expiration date is larger than the subsequent decrease."

A SAG spokeswoman expressed hope that employment in Hollywood will continue to grow.

"We're not predicting a slowdown or a speed-up," SAG deputy national executive director Pamm Fair said. "We're hoping that production grows over the next two years."

The LAEDC report said the flight of film and TV work to other locations, combined with the growth of nontraditional distribution platforms, also undermines the local film industry.

"The movie industry continues to face ongoing challenges from runaway production and uncertainty caused by shifts in the way content is delivered," the LAEDC said.

The report also notes state legislators failed to pass a film-production incentives bill last year, "even as other states upped their offerings." And it suggests major studios are producing fewer big films and focusing on cost containment.

"A variety of scenarios are now being spun out," the report summarizes, while noting that studio stockpiling is one of the discussed scenarios. "Another is that the WGA will extend their contract to June 2008, so the studios will have to face all three guilds at once. Talk about a headache!

"To be honest, no one knows how it will all turn out," it concludes. "The de facto strike in 2001 caused a lot of economic pain in areas of Southern California where the industry is concentrated, (so) we have built a disruption in our forecast."
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