Runaway drain? Study: In U.S. pic biz in big production pickle

The report -- tracking films that grossed at least $500,000 domestically -- also showed annual worldwide production dollars rising 30% to $7.2 billion between 1998 and last year, not including P&A. Spending on films shot in the U.S. declined 14% to $3.38 billion over the same seven-year period, with the American market share sliding from 71% to 47%. California saw a slight 6% hike in production dollars spent between 1998 and 2005 to $2.07 billion. Meanwhile, Canadian production nearly tripled to $1.2 billion; production in the U.K. and Ireland rose 66% to $809 million; spending in Australia and New Zealand more than quintupled to $717 million; and Eastern European production soared from $30 million to $308 million. The study showed the U.S. decline in feature spending came almost entirely from projects with budgets of more than $50 million. Worldwide production of such pics rose 33% to $4.36 billion between 1998 and 2005, but the U.S. share of that spending slid from 76% to 43%. 2006 http://www.ceidr.org/2005CEIDRReport.pdf As part of the American Jobs Creation Act of 2004, producers were able to write off a movie in a single year if it had a budget under $15 million and 75% of that budget was spent in the U.S., or $20 million if it was shot in a low-income area. The tax break, dubbed Section 181, was a small component of a $136 billion corporate tax bill aimed at ending a bitter trade war with Europe. "It's a real carrot for producers to stay in the United States, especially if you're able to couple that with state incentives." ... The tax break could be used to a greater extent if the IRS rules favorably on the issue of whether residuals and participations should be counted in determining if production costs exceed the $15 million cap. "It's been a home run for TV producers," says Rick Rosas, a partner at PricewaterhouseCoopers. "Everyone who can use the 181 program is using it." http://www.variety.com/index.asp?layout=features2006 &content=jump&jump=story&head=berlin&nav=FBerlinUSA&articleid=VR1117937731
2007-07-06 17:30:47