November 25, 2019

City’s billion-dollar film biz booms as companies fight for streaming dollars

via Crain's New York

For decades the open secret about films and TV shows set in the Big Apple was that they were not actually shot here.

Jerry Seinfeld’s Upper West Side apartment was on a Los Angeles soundstage. NYPD Blue detectives mostly roamed a Hollywood back lot. Even a 2003 television movie about Rudy Giuliani was mainly shot in Quebec. New York has hosted its fair share of major films. But for many productions, it was simply cheaper and easier to film elsewhere.

“They would shoot for nine months in Canada, L.A., New Orleans before doing what we call the hero shot,” said Hal Rosenbluth, president of Kaufman Astoria Studios. “You’d grab your stars and bring them up to New York, stand them in front of an iconic location and suddenly it is a New York show.”

But in a recent plot twist, New York now stands in for other cities. The Americans faked Cold War Washington, D.C., in parts of Brooklyn. Madam Secretary passed off the Ritz Carlton as the White House. And in a true reversal, the CBS show Tommy, which centers around Edie Falco as a Los Angeles police chief, was shot at Kaufman Studios and several Staten Island locations. It premieres in February.

The shows provide the latest evidence that generous tax credits and an unending appetite for new content have pushed the city’s entertainment economy to new heights.

“We are as busy as we’ve ever been,” Rosenbluth said.

For years directors saved money by choosing tax-friendlier filming locations. That changed in 2003, when the state adopted a tax incentive to help spur growth. Since then the film tax credit has supported about 43,000 jobs each year and $7.6 billion statewide in spending, according to a report that economic development firm Camoin Associates prepared on behalf of the state.

It also helped that around the same time the city started to adopt film-friendly policies. Starting under Mayor Michael Bloomberg, City Hall offered free police assistance to crews and resisted charging for film permits until 2010, when it instituted the paltry $300 processing fee that remains in effect. The city also offers a marketing credit to films and plasters “Made in NY” promotions for films and shows on buses and other locations.

“When sets come here, they know that they’re going to get the iconic landscape and the talent,” said city Film Commissioner Anne del Castillo. “But they also know that they’re going to be dealing with a city that knows how to manage production.”

Job creation
The changes helped boost the local employee pool. The Theatrical Teamsters Local 817—which represents transportation, casting and location services workers—recently told a City Council panel that its member ranks have grown nearly 150% since 2004.

“One of the knocks on New York—and this is going back 25 years—was that it didn’t have the talent L.A. did,” said Domenic Rom, managing director of Goldcrest Post, a company that offers editing and creative services. “There was a small talent pool that couldn’t handle the volume that went through L.A. That has changed, and we now have incredible talent on par with Los Angeles and London.”

While state and city programs have helped attract productions, the demand from cable networks and streaming services has boosted production growth. This month both Disney and Apple launched streaming services to compete with Amazon Prime, Hulu and Netflix. NBCUniversal is set to launch its Peacock streaming service in April, and HBOMax is expected to start streaming the month after.

Kaufman’s studios are part of that boom. Stages and sets are occupied by Tommy, the new Apple show Dickinson and the Anna Kendrick–led romantic comedy Love Life, an HBOMax anthology series.

“What we are seeing—not just here but across the industry—is an explosion of content,” Rosenbluth said.

Netflix, which filmed Orange Is the New Black at Kaufman, is spending $100 million to convert a Bushwick warehouse into a soundstage. Kaufman, meanwhile, is expanding its facility by 150,000 square feet and constructing a building that will have two soundstages, production offices and 65,000 square feet of commercial offices targeted to media companies.

Other studios are growing as well. Steiner Studios started with five soundstages in Brooklyn in 2004 and now has more than 30. In the next decade or so, CEO Doug Steiner plans to build out the full 60 acres at the Brooklyn Navy Yard, with studio space, soundstages and a back lot to rival those in Hollywood.

Wildflower Studios—an investment group that includes actor Robert DeNiro and his son Rafael—has purchased 5 acres from Steinway & Sons in Astoria, with plans to build a 650,000-square-foot “vertical village.” As designed by architecture studio Bjarke Ingels Group, the roughly $400 million venture will feature space dedicated to film, television, augmented reality and virtual reality productions.

Plenty of businesses beyond studios are benefiting from this boom too. That includes Goldcrest Post, which has worked on either sound or picture editing for New York shows on both traditional and streaming networks including Billions, Blue Bloods and Russian Doll. The 20-year-old company, which has a full-time staff of about 40, has grown between 15% and 20% in revenue each year, Rom said, and occupies nearly all of its six-floor Meatpacking District building.

“We’re using every little nook and cranny that we have,” he said.

Edge Auto Rental, a Greenpoint- based company, started with 40 vans in 2006 and has expanded its fleet to more than 900 vans and other vehicles, becoming one of the largest on the East Coast. Rudy Callegari, co-founder and CEO, said that growth can be credited “in major part to the consistent business that the film industry” provides.

Bad reviews
The state film tax credit has its fair share of critics, who raise concerns about how much money is being given to the industry. Since 2003 it’s added up to more than $5 billion.

The tax break started at 10% in 2003 and was expanded in 2008 to its current level, which allows filmmakers in the city to get back 30 cents for every dollar spent on “below the line,” qualified production costs, such as crew salaries and set construction. And there’s no end in sight.

Earlier this year Gov. Andrew Cuomo extended the credit through 2021, with $420 million available each of the next two years. A February paper from the Empire Center for Public Policy, a fiscally conservative think tank, pointed out that the total tax credit adds up to more than was offered to Amazon in its scuttled Long Island City deal.

“Any industry offered reimbursement of 30% to 40% of its production costs would create jobs in New York,” the Empire Center’s E.J. McMahon wrote.

Production also seems to disproportionately help New York City. More than 90% of the state tax credit’s payouts have gone to productions in the five boroughs, despite the payback rising to 40% for productions outside the metro area.

At the same time, some city residents say shoots jam up parking and block local businesses. At a September hearing on a series of bills to crack down on film sets, Councilman Mark Gnojaj said lawmakers need to ensure no resident feels as if he is living in the “parking lot of a Hollywood film shoot.”

Industry officials fear that the City Council’s proposals could slow down business.

Del Castillo warned that proposals including instituting a 14-day waiting period before crews can be issued a permit to film are financially destructive. She testified last month that TV crews work on a schedule far too dynamic to plan shoots two weeks ahead.

“That is not how TV works, and they will go away,” she told the City Council.

Even the industry’s most ardent backers think the expansion has limits. Intense competition eventually could shake up production companies and slow the current race to develop new programming. That’s why Steiner says lawmakers should remain friendly to productions, as manufacturing and even banking and finance jobs leave the city.

“There are not many industries that want to be here to manufacture products,” he said. “But entertainment is one that can thrive.”

The question is, he added, “What is New York’s future, and where should it seek to attract future growth?”

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