Strikes cast a shadow

Study further dampens L.A. showbiz jobs scenario

A regional economic forecast update boosts previous projections for job declines from potential Hollywood labor strife.

Even without a strike by writers, actors or directors, entertainment industry employment will decline 1.9% next year to 161,300 jobs, according to today's report from the Los Angeles County Economic Development Corp. The midyear forecast also said that accelerated film and TV activity at the start of Hollywood contract talks will produce a modest 0.9% increase in entertainment employment this year, for a total 164,500 industry jobs.

In a February report, the agency had forecast an '08 decline of 1.4% and a more robust '07 jobs growth of 4.5% (HR 2/21).

LAEDC chief economist Jack Kyser attributed the short-term job growth and longer-term decline on studios' stockpiling of film and TV materials in anticipation of a possible strike by Hollywood writers or others. The WGA is in negotiations with the Alliance of Motion Picture & Television Producers for a new film and TV contract, and actors and directors are expected to begin similar talks early next year.

"We have built in some sort of labor disruption for 2008," Kyser said. "Even if there is no strike and everything is hugs and kisses, you have a slowdown. That's because you already have product sitting on the shelf, so to speak. … With TV series, you see extra episodes going into production, (and) on the film side, people are rushing to line up actors and directors, with the rule of thumb being to try to get two films done (per actor) before anything might happen."

The regional economist recalled first noting evidence of film and TV stockpiling in February, when the LAEDC issued its earlier forecast.

"There was a lot of pooh-poohing of that from the Writers Guild back then," he said. "Well, you can't pooh-pooh it now. It's there."

A central issue in the WGA-AMPTP talks, which began Monday, is whether writers deserve boosted compensation for film and TV content reused over the Internet or over mobile platforms.

It's an issue that could defy easy resolution, in part because the technology on which studios are trying to base new business models is still developing, Kyser said. Indeed, studios want writers to delay their demand for boosted Internet compensation until new-media businesses mature and profits stabilize.

"It's going to be really difficult," Kyser said. "They're saying you can get an episode of 'Ugly Betty' on your telephone, but I'd be happy getting my phone calls through without experiencing dropped calls. So I think you're a way away from any sort of profitability."

The LAEDC economist said California would do well to offer tax credits or other incentives similar to those in dozens of other states but added, "I'm not holding my breath on that."

The usual budgetary woes ultimately will dash hopes of passing incentive bills circulating in Sacramento, Kyser predicted. That's unfortunate, he said, as the incentives of other states, including a particularly aggressive recent push by New Mexico, are causing a flight of projects and jobs from California.

"People think the big studios are really rolling in dough, but people forget that studios are part of big conglomerates and have to be mindful of the bottom line," Kyser said. "And if there are incentives offered, they are going to take advantage of those."

The LAEDC report forecast for other industry segments was rosier than for entertainment, whose prospects it gave a "C" grade. For instance, technology is rated "A-" and is expected to mark a 12.1% employment increase to 241,100 jobs in '07 and post another 2.7% uptick to 247,700 jobs in '08.

Statewide, the LAEDC report found that growth will slow in California in '07. In '08, economic growth in the state will pick up a little speed (and) a modest acceleration is expected in 2009."
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