COMMERCIAL—Commercial Production Stalling, Putting Thousands of Jobs at Risk

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A steep downturn in local television commercial production is putting the squeeze on thousands of local workers employed by advertising agencies, production companies and myriad related businesses.

The sagging economy prolonging a yearlong advertising decline and the Sept. 11 terrorist attacks are the obvious culprits in what shapes to be the worst commercial production slump in more than a decade. But many say that the surge in foreign production inadvertently triggered by last year’s six-month Screen Actors Guild strike against advertisers is a key factor in the longer term erosion of an industry with an estimated $6 billion to $8 billion annual impact on the local economy.

Commercial production days through September 2001 were down roughly 15 percent from the comparable period in 1999, the most recent non-strike year, according to the Entertainment Industry Development Corp., which tracks permitted filming in Los Angeles. But many believe those numbers don’t tell the whole story of what has been a tumultuous 18-month period in the television advertising business.

“The commercial industry hasn’t really recovered from the strike. I’ve only done two jobs this year, and I’m not only the only one in this boat,” said Janie Walter, a veteran independent producer who works mostly on automotive commercials. “It’s not just the producers and the crew. All the people in the related industries from casting to editorial all the way down to the messenger services are being affected.”

There are no hard numbers, but anecdotal evidence suggests that thousands of people whose livings depend on commercial television production have either lost their jobs, left the industry or are seriously underemployed as a result of the shrinking work pool.

Some local shops, such as the commercial production units of Shooting Gallery and Straw Dogs, have folded, while others, like Propaganda Films, have trimmed staff. Meanwhile, independent trade workers are scrambling for work in an increasingly barren environment.

“There’s no question that this has been a tough time. There’s a lot of belt tightening going on,” said Steve Caplan, senior vice president of external affairs for the Association of Independent Commercial Producers. “Companies in our business are looking closely at ways to stay competitive and run lean-and-mean shops.”


Strike legacy

In part, the slide in local commercial production is a byproduct of the national economic downturn. After years of strong growth, spending on local, network and cable television advertising reached nearly $60 billion nationwide in 2000. Midway through the year, forecasters said that figure would drop by 0.4 percent in 2001.

Now even that conservative prediction is looking overly optimistic.

“There’s a natural shakeout going on in the industry because advertisers are spending less,” said Damon Webster, director of advertising production for Saatchi & Saatchi in Los Angeles. “I hate to see people out of work, but I think it’s going to get darker before it gets lighter.”

In addition to the industry’s current woes, many say a troubling development for local firms and workers is the marked increase in commercial projects shooting in Canada and other countries where production costs are cheaper and financial incentives readily available.

That trend was well underway before last year’s SAG strike, but many believe the strike exacerbated the problem by persuading many advertisers and producers who had not previously worked abroad that the savings were well worth the hassle of being away from home.

Some assert that Canada will become a less attractive locale if that government follows the recommendation of its finance minister and abolishes a tax shelter that has helped studios and producers shave millions off filming costs. But with commercials now being shot in dozens of countries that offer similar incentives, there are still plenty of cheap options available outside California and the United States.

In the meantime, bills introduced in both the House of Representatives and Senate to offer wage-based tax credits for producers who stay in the United States face uncertain prospects in Congress, which is grappling with severe budget restraints and huge expenditures in the wake of the Sept. 11 attacks.

The net result is that for the time being at least going abroad continues to make economic sense, said Bernie Wesson, a partner at Cucoloris Films, which, does commercials for AT & T;, MCI, Clairol Inc. and many other major advertisers.

“The damage of the strike in and of itself can’t be downplayed,” he said. “Basically SAG put us and everyone else in the position of making (filming outside California) a viable alternative.”

SAG officials, who declined to comment for this story, have defended what they say were substantial gains made in the 2000 strike although others assert that little was accomplished.

Mitchell Sack, president of PTS Truck and Car Rental, which gets about 80 percent of its business from commercial productions, said the strike made advertisers realize they could do more with less money in other locales.

“It really showed people they didn’t have to shoot their commercial in Los Angeles,” he said.

Walter, for one, is not feeling optimistic.

“I’ve probably been on hold for 26 jobs this year and they’ve all fallen through. That’s never happened before,” she said.

Webster said layoffs are chipping away at the agencies as well, and that with cutbacks in ad spending, the ongoing response to last month’s terrorist attacks and the unstable economy, the uncertainty in the commercial business is as bad as it’s been in years.

“I have a bookcase filled with reels from producers,” Webster said. “The competition is fierce. There are a ton of people looking for jobs.”

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