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Hollywood goes on the road

Production companies are running to any place they can get the most bang for their movie-making buck, producer David Lancaster says
Why Hollywood has lost its place capital of movie-making 07:08

By long Hollywood tradition, "places" is what the director tells the actors when their scene is about to be filmed. So why is Hollywood less and less frequently among the places where movies are shot? Our cover story is reported by Lee Cowan:

Next week California will have a very bad day -- or at least, that's the way Hollywood will make it look. The disaster thriller "San Andreas" is about The Big One: a 9.0-magnitude earthquake striking California.

But surprisingly, hardly any of "San Andreas" was actually made IN California. Star Dwayne "The Rock" Johnson and crew shot their California disaster epic in Australia instead.

"The term 'runaway production' has been a bug-a-boo for this industry for years and years and years," said Hollywood producer David Lancaster. He says, increasingly, Hollywood is running away to where it can get the most bang for its movie-making buck.

His film "Nightcrawler," also set in California, was ALMOST made in New Mexico instead. The reason? New Mexico basically offered to pay him to make his film there.

"The economics are critical, so any edge you can get, whether it's a 5, 10, 20 percent tax credit, you're going to chase it," Lancaster told Cowan.

Nearly 40 states, as well as many foreign countries, are now clamoring to attract Hollywood business, offering lucrative tax breaks, rebates or grants that can slash the cost of making a movie by as much as a third.

The result: Location feature filming in and around Los Angeles has plummeted 50 percent since its peak in 1996.

For those behind the cameras, like video assist engineer David Goldsmith, that has put a tarnish on Tinseltown.

"It's Hollywood, but we're not as busy as we used to be," said Goldsmith. "And that's a big problem."

Hollywood was once almost synonymous with movie magic.

Like Detroit with its auto industry, L.A.'s film factories gave Hollywood its identity. And while Hollywood will likely always remain the center of movie glitz and glamor, it's the workforce that L.A.'s mayor is worried about.

"We're seeing these good middle-class jobs go off to Louisiana, and to Georgia and Canada and North Carolina. ... We're talking billions of dollars that would have been spent in California that was not there. We're talking about tens of thousands of jobs," said Mayor Eric Garcetti.

Ever since taking office two years ago, Mayor Garcetti has vowed to make Hollywood at least more competitive.

He helped push through a new $330 million filming incentive package that will triple the tax breaks available for movies like "Message From the King."

"This is a show business. The show is nice, but you have to be smart about the business, too," said Garcetti.

Especially when you consider the recent success of the "other" LA: Louisiana.

"Pitch Perfect 2" -- released this weekend - was shot in the Bayou state, as were two other blockbuster sequels: "Jurassic World" and "Terminator Genisys."

There have been so many feature films shot in Louisiana, it's earned the nickname "Hollywood South."

Louisiana first rolled out its tax credit red carpet back in 2002, offering to cover up to 35 percent of a film's local costs.

That means when Warner Brothers spent more than $100 million shooting "Green Lantern" here, the studio got back almost $37 million, courtesy of Louisiana taxpayers. That's more than the state allocated to the University of New Orleans last year.

Chris Stelly, who heads up Louisiana's film office, says, "When you see what this industry and what this incentive have brought here, it's absolutely worth it."

Cowan met Stelly at Celtic Studios, a sprawling production facility outside Baton Rouge, where they were putting the final touches on another superhero film - "The Fantastic Four."

"We do over a hundred projects annually ... so we're doing something right," said Stelly.

Producer Michael Mailer jumped at the chance to shoot his independent film, "Showing Roots," in Plaquemine, Louisiana.

"I mean, from an economic standpoint, why would a producer shoot a movie in L.A., if they can't get subsidies for it?" he said.

While the tax credit clearly helps his film's bottom line, he says it also boosts the local economy as well.

"These are mini economic zones," said Mailer. "I don't know if we're stimulating their local economy by a huge multiplier, but we're doing something."

He says he's easily employing a hundred people, and on some days more.

But critics aren't impressed.

"Every independent study of the film program has shown that it returns pennies on the dollar," said Jan Moller, director of the Louisiana Budget Project, a watchdog group that claims rewarding the film industry has been a legislative flop. "Any way you do the math, this program doesn't come close to paying for itself. So what we're doing, in effect, is paying movie productions to come and shoot in Louisiana."

"So is there any economic benefit to this, in your view?" asked Cowan.

"Well, sure, there's an economic benefit for the people in the film industry," replied Moller.

In a state with an estimated $1.6 billion budget shortfall, those are public dollars, he says, not being spent on basic necessities.

"Nobody is saying it has to make money for state government," said Moller. "That's not the purpose of having a film industry. But I think there is an argument that we shouldn't be spending money in perpetuity to keep this industry here."

Many Louisiana legislators agree. Last month, several proposals were put forward to cap the amount of money the state spends on film credits. But some worry about limiting the program too much.

North Carolina played host to the film "The Hunger Games." Its tax credits used to be among the most generous. But worried it was costing the state too much, North Carolina abandoned the program.

"Hunger Games II and III" were shot in Georgia instead.

The test for California's expanded tax credit is to see whether it actually translates into more jobs and local production, or just subsidizes films that would have been made in Hollywood anyway.

For workers like David Goldsmith, it at least gives Hollywood a fighting chance to keep the state's home grown industry at home.

"I mean, this is a job-creating machine," said Goldsmith. "And we manufacture something. And that's what California needs."

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