Warner Bros. is a big spender in L.A. County: $4 billion a year
On a typical day, Kun Lee, owner of Bake It Again Sam, prepares 360 bagels and 240 muffins for his famous customer across the street. And that’s not counting the scrambled eggs, sandwiches, quesadillas, cookies and specialty order birthday cakes he often serves up to the crews of such television shows as"Pretty Little Liars” and"Shameless.”
“They’re a big chunk of my business,” Lee said. “If it wasn’t for them, I would have gone under a long time ago.”
Bake It Again Sam is among 1,200 vendors and suppliers in Burbank that provide more than $550 million worth of goods and services each year to one of the city’s A-list residents: Warner Bros.Entertainment, the studio behind such movie franchises as “Harry Potter” and “The Dark Knight” and popular TV shows “The Big Bang Theory” and"2 Broke Girls” on CBS.
In 2010, the studio spent a total of $1.58 billion on products and services from companies across Los Angeles County and paid $2.5 billion in wages and residuals to county residents. Warner’s total spending of more than $4 billion in the county was an increase of nearly 30% from 1999, largely reflecting a growth in television production, according to a study the studio conducted of its local expenditures.
Studios are typically guarded when it comes to disclosing expenditures on their movies and TV shows, let alone what they spend in an entire community. Owned by media giant Time Warner Inc., Warner Bros. has privately been tracking its costs for more than a decade, initially as an effort to educate film-wary communities about the economic benefits of film and TV productions. But this marks the first time the studio has publicly released such detailed information, providing a rare glimpse into the business operations of a major Hollywood studio.
Warner executives say there was no specific catalyst for the decision to release the spending information, but they stressed it is part of an effort to better inform local politicians and the public about the value of the entertainment industry to the local economy at a time when L.A. is struggling to keep productions from chasing more advantageous film tax credits and rebates in other states.
A coalition of industry groups, including the Motion Picture Assn. of America, has been lobbying state lawmakers to pass a bill that would extend California’s film and TV tax credit program for five years. Warner also is using its research to encourage cities in Los Angeles County to adopt ordinances that would streamline the film-permitting process.
“There was no impetus behind this except listening to enough folks in our company say, ‘With all the tax incentives offered in other states ... does the state of California really understand the value of our industry?’” said Lisa Rawlins, Warner’s senior vice president of public affairs. “The debate around the California tax incentive has really provided an opportunity for people like us to step back and say, ‘We need to tell a better story. We need to convey to folks that we are deeply committed and invested in these communities.’”
Rawlins began compiling the studio’s spending data by ZIP Code in the late 1990s, drawing upon her experiences as former director of the California Film Commission, where she worked before joiningWarner Bros.in 1990.
With 35 soundstages and more than 3.2 million square feet of office and production space, the Warner lot (and nearby ranch) is among a cluster of studios that include Walt Disney, NBCUniversal, the Cartoon Network and Nickelodeon that have helped transform Burbank, City Manager Michael Flad said.
“When I was growing up in Burbank, it was Lockheed Town,” said Flad, referring to the defense and aerospace contractor. “It’s remarkable, to say the least, that we’ve gone from being a center of aerospace manufacturing to media capital of the world.”
In 2010, the studio spent $3.4 million on construction supplies, $2.4 million on food and catering purchases, $142.5 million on editing and postproduction services and $18 million on posters and other advertising materials at vendors in Burbank.
The overall increase in spending occurred during a period when L.A. steadily lost its share of production, especially in feature films, as crews flocked to Canada and some 40 states that offer film tax credits and rebates that lowered their costs.
Warner’s own research reflects the trend: 22 feature films were produced on the Burbank lot in 2006. That number dropped to just 10 in 2011, including such films as"J. Edgar"and “Argo.” Nonetheless, overall spending increased because of the growth of cable television programs and such talks shows as “Ellen” and “Conan.” Warner is the industry’s largest TV producer and last year housed 26 pilots and TV series, including “Chuck” and “The Middle.”
“We’re producing shows like ‘The Closer’ and ‘Rizzoli & Isles’ for cable channels that we weren’t producing 10 years ago,” Rawlins said.
Like other studios, Warner was buffeted by the recession and the industry-wide decline in DVD sales. In 2009, the studio cut 800 jobs. Warner employs 10,000 to 12,000 people at its facilities in the Burbank area.
Despite the job cuts, the studio’s overall spending on wages and residuals in Los Angeles County has held steady in the last five years. Warner said its payroll expenses in the county in 2010 were $2.5 billion, virtually unchanged from 2006 and up from $1.82 billion in 1999.
Christine Cooper, an economist with the Los Angeles County Economic Development Corp., had not reviewed the Warner research but said she was not surprised by the numbers.
“These studios spend billions locally and throughout the region on transportation, catering, construction, electrical supplies, coffee shops,” Cooper said. “They are the lifeblood of our economy.”
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