Rivals Seen as Threat to U.S. Movie Production

The Los Angeles entertainment industry remains strong but faces continued threats from competitors to the north and Down Under, a key industry observer said Monday.

At a noon session billed as a speech on the “state of the entertainment industry in the Valley,” Cody G. Cluff, president of the Entertainment Industry Development Corp., said that even though Los Angeles remains the entertainment capital, it should be on the lookout for foreign rivals hoping to snare the business.

At the current currency exchange rate, moving production to Canada “saves 30 cents on the dollar,” said Cluff, speaking at the 49th annual meeting of the Valley Industry & Commerce Assn.

Cluff, whose nonprofit group tracks industry trends and issues film permits for the city, said about 25% of the region’s entertainment production takes place in the San Fernando Valley, which reaps about 30% of the direct expenditures related to entertainment production.

He did not give figures for how much production has left town over the past year, when the Asian financial crisis made the dollar that much stronger compared with other currencies. But he called the imbalance, and the corresponding lure it creates to film elsewhere, “the biggest issue we face.”

“What happens is that the dollar is so strong, it makes the cost of purchasing U.S.-filmed entertainment much more expensive,” said Cluff. “Since other currencies are lower, it makes it cheaper [for filmmakers] to go someplace else.”

After filming much of his highly anticipated “Star Wars” prequel in Europe, producer-director George Lucas has said he hopes to film the next two “Star Wars” installments in Australia.

“That’s a $125-million budget,” Cluff said.

To address the problem of so-called “runaway production,” State Assembly Speaker Pro-Tem Sheila Kuehl will hold a hearing Wednesday to focus on what the state can do to stem the flow of jobs and revenue to Canada and other countries.

The daylong session will include presentations by Richard Masur, president of the Screen Actors’ Guild, and Michael Moore, president of Raleigh Studios. It starts at 9:30 a.m. at the Hollywood Entertainment Museum.

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Cluff said production migration is not the only foreign peril.

Though demand for Hollywood-produced movies at the box office remains strong in Western Europe and Japan, he said significant restrictions remain on the number and types of American-made films that can be shown in other countries.

On the domestic box-office front, he said, 1998 is expected to be another record year, with an estimated take of $6.8 billion, besting the 1997 record of $6.4 billion.

Cluff said the Valley’s entertainment industry has faced the same downturn as the rest of the region, with the exception of the sex-film sector “that’s been completely unaffected.”

He said he does not see a dramatic turnaround for the industry until the new millennium.

Meanwhile, he said the next trend in filmed entertainment--on both the big and small screens--will be so-called “niche” marketing. Noting the success of sleeper hits like “Rush Hour” and Adam Sandler’s “The Waterboy,” he said he expects to see more lower-budget films aimed at specific market segments.

Also Monday, the association elected its 1999 officers and directors, keeping in place most of the key figures who served in 1998. Steven Lew of Universal Studios remained chairman of the business advocacy group and Bonny Herman was reelected president.