Hollywood Is Beating Path to Australia

A few keystrokes on a computer wipe out the white sails of Sydney’s opera house and the steel loops of Harbour Bridge that spans the Australian city’s waters.

What’s left is a generic, nondescript metropolis hugging the picturesque blue ocean. It’s a postcard-like scene that could be almost anywhere--like the United States. For Hollywood’s rank-and-file workers, that’s a problem.

Thanks to modern special-effects technology, Sydney sans its two most famous landmarks worked fine as a setting for “The Matrix,” the Warner Bros. film that has been one of the year’s biggest box-office hits. Filmed in Australia at a cost of about $62 million, the science-fiction thriller could have easily cost 30% more had it been shot in the United States, according to executives close to the production.

“The Matrix” is one of several major Hollywood films shot in Australia lately, a trend that is raising fears among U.S. production workers that the country is a budding Canada when it comes to luring films and TV movies. Thanks largely to a cheap currency, government incentives and restrictions on U.S. workers, Canada has successfully drained a good portion of Hollywood’s production. Now there are concerns that Australia may be on the same track.

Australia hasn’t borrowed from all of Canada’s playbook. It isn’t nearly as aggressive as Canada at offering tax incentives to producers. Still, in an era of Hollywood belt-tightening, Australia is enticing producers with lower costs, a growing film production infrastructure and a highly diverse terrain of cities, jungle, deserts and mountains.

“It is viewed as an emerging Canada,” said Bryan Unger, associate Western executive director of the Directors Guild of America.

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Until recently, Australia had received little attention as a place for U.S.-developed films and TV shows seeking to shave costs. But a study released last month shows that the number of U.S. productions shooting abroad to save money is growing at a faster clip in Australia than anywhere else.

In addition to “The Matrix,” the big-budget “Mission Impossible 2” starring Tom Cruise is being shot there. George Lucas has already said he plans to shoot the next two “Star Wars” installments in Australia.

Cable channel TNT’s version of Herman Melville’s “Moby Dick” was shot in Australia, as was an upcoming TV movie of Jules Verne’s “Journey to the Center of the Earth.” Director Terrence Malick shot his Oscar-nominated “The Thin Red Line” in Australia, substituting its jungles for those of the Pacific island of Guadalcanal, where the World War II story is set.

And Australia has its own vibrant film industry as well, exporting such popular films as “Babe” and “Shine” to the U.S.

According to the study by the Directors Guild and the Screen Actors Guild, the number of productions since 1990 that left the U.S. for Australia to save money jumped 260% to 18 last year. The growth rate of feature films shot there for the same reason--as opposed to shooting there because a story calls for it--rose at an annual rate of 26.4%, the highest among foreign countries.

The number of U.S.-developed productions shot in Australia still pales when compared with the 232 shot in Canada last year. In addition, Australia’s percentage increases are so high in part because the numbers are still relatively small. Finally, there is still Australia’s problem of being 7,500 miles and 17 hours away from the decision makers in Los Angeles.

But whereas Canada has developed into a magnet for thin-profit productions on tight shooting schedules such as TV movies, Australia is showing it can lure the kind of big-budget feature films that can afford to spend months on location.

Australia was once a backwater for U.S. entertainment companies. In addition to its distance, it lacked a large infrastructure of sound stages, suppliers, post-production facilities and skilled crews that major productions demand.

All that has changed. Advances in communications technology and the rise of the Internet has eased the distance and time zone burdens. Australia has built state-of-the-art studios, including one in Sydney built by 20th Century Fox, whose parent company, News Corp., is based in Australia. Stages there are reportedly booked until well into next year. Warner Bros., which has a production partnership with the Australian entertainment company Village Roadshow, is a partner with the firm in a studio lot there as well.

As production facilities have expanded, so has the number of experienced film crews.

“The talent pool down there is very, very professional. They are very, very willing to jump in and make movies down there. It’s a more effective place to make movies from a cost perspective,” said Robert Friedman, vice chairman of Paramount’s motion picture group.

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Still, availability of production facilities for now limits the number of U.S. films likely to head for Australia. Andrew Mason, an Australian executive producer on “The Matrix,” said Sydney can support two big overseas productions at a time, leaving just enough staff and crew people to serve the country’s local film industry.

“That will grow, but it will not grow overnight. The capacity will increase slowly,” he said. “I think it’s cloud cuckoo land to think there’s going to be some gigantic flight of production from the U.S.”

Wilshire Court Productions, a wholly owned unit of entertainment giant Viacom Inc. that specializes in TV movies, has been involved in Australian productions for nearly two years. Ed Milkovich, vice president of production, said it is hard to persuade a company not to shoot in a location that is so much cheaper.

“Patriotism’s great, but if you walk into a corporation and say you can have it for this price or for a quarter of a million more, which one are they going to pick?” Milkovich said. “Everyone would like to support the business here if it could work. Australia for us has been a pleasant experience.”

For their part, Australian officials see themselves as having every right to entice production from the U.S., given that Australians are major consumers of U.S. films and TV shows. They argue that the entertainment business is an international one and that the U.S. should expect to share production with other countries.

“Film and TV production is a global industry,” argues Robin James, chief executive for the Pacific Film & Television Commission in Australia’s Queensland. “Obviously, the engine driving it is the United States out of Los Angeles.

“But we see ourselves as participants in the process. Like everyone else, we watch American movies, we watch American television, and we also encourage our own creative development,” James said.

The sudden growth in overseas productions filmed in Australia has been staggering. As little as three years ago, the film industry there was worth an annual $96 million, the vast bulk of which was spent by the local industry. Only $21 million came from overseas.

Now the budgets of some individual films shot there far exceed that amount. The film “Dark City’ came in at about $65 million. “Mission Impossible 2”--which could easily have cost more than $100 million if shot in the U.S.--is expected to cost just under $80 million.

In the Australian state of New South Wales, the film industry is a $135-million business, most of that from overseas money.

Although far more concerned about Canada’s threat, Hollywood workers are worried that competition from Australia and its relatively weak currency could further erode their job market, already tight because studios are cutting back on productions overall.

U.S. workers have organized protests and are encouraging legislation to offer tax breaks when films and TV shows remain here.

Hollywood’s unions believe it is unlikely they will completely close the cost gap between the U.S. and countries such as Australia and Canada, but they are hopeful that with some federal and state incentives, they can narrow it enough so that many productions will opt to stay home.

Joel Silver, producer of “The Matrix” and a veteran of many other big-budget films, including the “Die Hard” and “Lethal Weapon” movies, is unapologetic about filming in Australia. “It’s a wonderful place to shoot,” he says. “The economics are fantastic.”

Silver said he doesn’t blame Hollywood’s unions, which he says have cooperated with him to keep productions such as “Tales From the Crypt” in California. But he does bemoan the attitude of some locals in Los Angeles toward filming, from neighborhoods that block filming to a particular pet peeve of his, price gougers. Silver said he was once charged $500 a day for a parking lot to park equipment. A year later, the price had gone up to $5,000 a day.

“I live in L.A. and would like to shoot in L.A,” Silver said. “I don’t know how to figure out some structure that doesn’t allow people, when they have the opportunity, to gouge the film companies.”

One irony is that Australia’s growth as a movie locale is causing producers one of the same headaches they often face at home: residents who don’t want filming in their areas.

The makers of the “Baywatch” television series had planned to film a new series at the northern Sydney beach-side suburb of Avalon, sparking angry protests from locals. The show’s producers eventually decided to shoot it in Hawaii.

“If filming inconveniences people in Los Angeles, they drive right by--no problem,” said “Baywatch” executive producer Greg Bonnan.

“In Australia, they are not giving up those rights yet. They’re not used to a film company coming in and closing a street. People have not drawn the parallel yet between jobs and closing their streets.”

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Bates reported from Los Angeles, Dixon from Australia.