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 Entertainment Industry
2007:
Sacramento-Hollywood Stalemate to be Topic of
Entertainment Luncheon
Town Hall Focuses on Threat
from Piracy and Counterfeiting
Hollywood Chamber Asked Industry Leaders...
Entertainment Outlook 2007
2006:
Motion Picture Assoc. Leader Discusses ‘State of the
Industry’
Key Entertainment
Industry Leaders Attend Luncheon on September 15,
2006
What’s Going on in
the World of Entertainment?
Entertainment
Leaders talk about the Future of the Industry
Town Hall Focuses on Threat from Piracy and
Counterfeiting
Convincing local residents
that this is not a victimless crime is a challenge
The Hollywood Chamber of Commerce cosponsored a Town
Hall meeting and press conference last month with
the U.S. Chamber of Commerce to focus attention on
the growing problems of piracy for the entertainment
industry. It was part of a week-long focus in Los
Angeles on how counterfeiting and piracy affect our
communities.
The Hollywood Chamber assisted in organizing a press
conference at the Chinese Theatre, where Andrews
International Security demonstrated the latest
technology on catching video pirates.
Information
released at the conference estimated that
counterfeiting and piracy are costing L.A.-based
firms $5.2-billion annually and are responsible for
the loss of 106,000 jobs and $4.4-billion in wages.
A survey released by the Gallup Organization
revealed that one in four Angelinos believed or
suspected that they had purchased pirated or
counterfeited goods within the past year. When asked
why they did so, when they suspected that they were
illegal, 73 percent said the counterfeit products
were easily available and another 58 percent said
the price for the genuine product was too high.
Clearly, convincing local residents that this is not
a victimless crime is a challenge.
The loss locally was reported to be 45,100 motion
picture jobs and 6,400 sound recording jobs. On a
worldwide basis, it is estimated that the loss to
the motion picture industry is $6.1-billion annually
and $4.6-billion to the recording industry.
Participating in the Town Hall meeting were
Congressional representatives Diane Watson, Howard
Berman and Brad Sherman.
Watson reported that every state has now passed
legislation making counterfeiting and piracy a
felony. She noted that Congress passed legislation
last year to close loopholes that have allowed some
counterfeiting and piracy criminals to escape
prosecution.
“Ideas and innovations, meaning intellectual
property, are the greatest asset of the United
States,” she said. “We must preserve America’s
creative industry from this theft, which saps the
creative energy from the global industry. Every
product in every industry is vulnerable.”
She said that Congress needs to provide the
Department of Homeland Security with more tools to
prevent theft and to seize pirated articles.
Congressman Sherman agreed and said Congress needs
to focus its resources in such areas as customs
agents and prosecutors. He noted that a bill has
been introduced in the Senate that would create an
organized force to coordinate anti-piracy and
anti-counterfeiting efforts within the federal
government. It would create an Intellectual Property
Czar, who would be required to file regular reports
to Congress.
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Hollywood Chamber
Asked Industry Leaders....
What do you see as the outlook for the Entertainment
Industry in the coming year?
 The
real question is whether there is going to be a
strike, and who’s going to participate? Actors,
directors and writers are all converging for a
possible strike. If that happens, and it is
something that is long and protracted, it’s going to
be very traumatic not only for the Entertainment
Industry, but to Los Angeles as well. At the moment,
the studios and TV production companies are
scrambling to gather as much content as possible in
preparation for the reduction in production. On the
other hand, where there used to be no or scarce
options, there’s now an opportunity for independent
filmmakers, who are out there shooting ultra low
budget films, to have distribution avenues open to
them that were limited or nonexistent pre-strike. In
the post production field, it’s become increasingly
difficult. There’s a lot of price slashing going on
to try and gain market share. Long term, this is
extremely detrimental to the industry and even to
the customers who’ll be left with fewer firms to
choose from, and in the end quality will suffer as
well. Matt Cooper, Owner,
The New Post Group
 It’s
human nature to get the best deal… Basically,
production is based on how economically the project
can be done. The advantage Los Angeles has over
other places is climatic and although Los Angeles is
getting better in some of the tax regulations, the
bureaucracy has to kick in some incentives.
Duke Gallagher
Director
The Production Group
 The
entire Entertainment Industry is in jeopardy of
being an Industry of the past if we do not get some
quick intervention from Government officials that
will help to stabilize both the film and music side
of the businesses. The Music Industry is having a
much tougher time then the film side of the
business. Music is at a pivotal point in our history
and in my opinion the next 12 months are a
make-or-break period. We must find a way to combat
the Internet and make it work for us and not against
us. Maureen Schultz, Sr.
V.P. of Procurement, Capitol Records
 I
believe that the entertainment industry will prosper
in the coming year as consumer demand for
entertainment of all forms continues to grow. In
recent years we have witnessed an expanding appetite
for entertainment of all types on a worldwide basis
and an explosion in the ways in which entertainment
is produced, delivered and consumed. While there
have been many disruptive forces operating in the
world of professionally produced entertainment,
including piracy, file sharing over peer-to-peer
networks and the growing popularity of, so called,
user generated content, the good news for the
industry is that people continue to expand the
amount of time and frequency with which they access
entertainment products. This phenomenon is due in
part to the emergence of new forms of entertainment
and new platforms on which both traditional and new
forms of entertainment products can be consumed. As
technology and consumer tastes continue to evolve,
the industry will be presented with new
opportunities to deliver compelling entertainment
experiences over a broad array of platforms in a
variety of media – this is a great opportunity!
Stephen H. Kay, E.V.P. &
General Counsel, Gemstar-TV Guide International,
Inc.
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Motion Picture Assoc. Leader Discusses ‘State of the
Industry’
Dan Glickman, the
Chairman and CEO of the Motion Picture Association
of America, addressed more than 200 industry
representatives at a luncheon sponsored by the
Hollywood Chamber of Commerce. Below is the
full analysis.
The Hollywood Reporter plays a big role in telling
the stories behind the movies, and I want you to
know how much we appreciate your pursuit of good
journalism.
Thank you to the Hollywood Chamber for having us all
here today. Your commitment to the revitalization
of Hollywood has clearly made a significant
difference in how others from around the world
perceive the entertainment capital of the world.
Congratulations to Fred Rheinstein. Your
contributions to our industry and to the city of
Hollywood are well worth this great honor.
I’d like to recognize some other leaders in the
audience – people who really make this city run.
First, I want to thank City Council President Eric
Garcetti. Our industry appreciates your leadership
and commitment. I understand your grandfather was
tailor not only to my predecessor Jack Valenti but
also Lyndon B. Johnson. I am sorry I missed being
able to take advantage of his great skills.
I would also like to recognize City Council Member
Tom Labonge, and Assembly members Jackie Goldberg
and Paul Koretz, and the “Mayor of Hollywood,”
Johnny Grant.
And finally, I know that many of our industry’s
leaders are here from Universal, Disney and
Paramount. These are the people who make the movies
possible and I want to thank you all for being here.
I am honored to have the privilege of discussing
with you a subject near and dear to all of us – the
state of the movie industry.
As head of the MPAA I get to travel all around the
world. And wherever I go, I am constantly reminded
of the power of film.
I was just in Europe, for instance, at film
festivals in Venice and Deauville and you could
literally feel the excitement of the movies – of the
special magic that only film can create.
Of course, the power of film is especially
noticeable – and important, I believe – in some of
the more distant countries of the globe. Regardless
of whether you speak English, or have ever been to
the United States, our movies provide an
international common language - something that lots
of people know and can share.
That is a remarkable achievement, one that all of
you, and all of your colleagues in this industry
should be very proud of.
The truth is film has become one of America’s
greatest exports. Ours is an industry that drives
economic growth, provides good jobs, and generates
vital revenue for governments and communities at all
levels.
That is especially true here in Los Angeles, of
course.
In the course of an ordinary day in this great city,
you can find yourself driving by one of the world’s
greatest studios – or stumbling across a film
location that is central to America’s shared history
and culture. In fact, you can find the movie
industry – and see evidence of the vital role it
plays in our economy – throughout the state of
California.
Each year, the motion picture and video industry
generate about $38 billion for the state of
California. $34 billion of that figure comes
directly to Los Angeles County.
And here in the Los Angeles area, we are the
third-largest job producer. In 2005 alone, our
industry created an estimated 246,700 jobs.
All of us here today recognize the economic
importance of this industry. I know, because I’ve
worked with so many of you to address the challenges
we face – to turn them into opportunities that can
benefit all of us.
Every time a movie is made or a TV show filmed,
hundreds of people are employed, countless local
businesses get customers and work, and local
economies get a real shot in the arm.
That is why other states and other countries are
scrambling to bring film and TV production to their
areas – offering tax and other financial incentives
that are often impossible to ignore
So while 65 percent of productions occur right here
in California, many filmmakers have no choice but to
explore opportunities every day in other states and
other countries.
This is a priority issue for us at the MPAA. We’ve
worked with many of the elected officials here
today. I’ve discussed it on countless occasions with
my friend Mayor Antonio Villairaigosa. And he and
many of the members of the City Council here today
were responsible for a proposal to waive fees for
filmmakers on properties owned by the City of Los
Angeles.
And I would be remiss not to recognize the enormous
contributions made by Los Angeles law enforcement in
our fight against piracy.
We continue to work hand-in-hand with other leaders
– from the Governor to many in the State Legislature
– to ensure that this industry can produce more good
jobs and foster economic growth for the people of
the State of California.
Of course, as you have probably read in the papers,
this is a particularly interesting time to be in the
movie industry.
I have been around a long time, and I can tell you
that this is not the first time this industry has
faced challenges like it does today. Time and
again, the movie industry has responded –
reinventing itself to continue its preeminent
position in the culture and economy of this state,
the nation and indeed the entire world.
In the 1950’s for instance, the movie industry was
supposedly “threatened” by the introduction of a
revolutionary technology that we call -
“television.”
A 1958 article in U.S. News and World Report
eulogized our industry as “the dying giant.” Looking
back today, it’s almost comical to read such
pronouncements.
What is interesting is how the movie industry
responded. Movie makers worked very hard to develop
new ways of attracting consumers -- using
innovations like 3-D and cineramas. And while
admissions initially fell off, movies endured,
people came back and eventually they came in record
numbers.
Not to mention the fact that MORE people were
actually able to see more movies because movies were
on television. I am not sure my children would have
ever seen the Wizard of Oz if it wasn’t for
television.
We are headed for similar big changes today. New
distribution platforms present new opportunities for
movie companies to reach consumers in new ways.
Every day, we see a fresh announcement about new
ways consumers can get movies. In just the last two
weeks, Universal, Fox, Warner Bros., Parmount and
Sony began distributing movies for download through
Amazon.com. And Apple announced that it will provide
Disney movies for download beginning in January.
Our studios have made distribution deals with peer
to peer sites, BitTorrent, community video sharing
sites like GUBA and others and because of those
deals, consumers can download movies to computers,
home networks and soon, Itv.
Consumers will continue to try new devices and use
new products that allow them to see more movies -
much like television. We know for a fact from our
own consumer research that consumers who have many
electronic devices at their disposal are liable to
see more movies.
One thing that is certain is that with the onslaught
of new technologies making movies more accessible,
more people will see movies. And that is very good
news for our industry.
But those mediums will not replace the experience
that one gets when they purchase a ticket to a movie
and sit in a dark theater eating popcorn with lots
of unfamiliar faces.
We are well aware that consumers want value for
their movie going experience and studios and theater
owners are working to ensure they see good movies in
a comfortable environment.
We created an online panel called My Movie Muse to
stay in more regular touch with our consumers on
issues they care about when it comes to movie going,
movie watching and more.
If we provide good value and a good theatrical
experience, people will always come back to the
movies.
2006 has been a good example of that.
In 2005 the newspapers were pronouncing this
industry dead and looking for body bags to toss all
of Hollywood into. But box office is up around 5%
from 2005. We had a great spring and some terrific
summer surprises including small but powerful hits
like Little Miss Sunshine and Step Up.
Our blockbusters brought in impressive sums both in
the U.S. and international markets. Pirates of
the Carribean Deadman’s Chest became the
third movie in history to gross over $1 billion
worldwide.
Not to mention the exciting fall lineup as we enter
Oscar season including the new Bond movie -
Casino Royale, Happy Feet, Night at
the Museum and Dreamgirls.
While in Deauville and Venice, I was able to see a
few other new movies coming your way including
Bobby and The Queen. Movie goers have
much to look forward to.
As we move into Oscar season and start to hear the
buzz of films small and large, I am reminded that
good stories compel people to see movies. And that
is a constant.
Our industry likes to judge its health by looking at
box office numbers week to week. And if you look at
box office over time, it goes up and down.
Box office is unreliable as the sole indicator of
success in our industry.
People will continue to see movies as long as we
continue to provide good value. They may see them on
an Ipod or a computer or maybe even a phone, but
movies are here to stay.
So while some will continue to pontificate on the
future of film, I predict that movies are a solid
bet for the future.
That is good for California and good for America and
I thank you for being here with me today.
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Key Entertainment Industry
Leaders Attend Luncheon on September 15, 2006
 After
a two-year lapse, the Hollywood Chamber of Commerce
brought back its Entertainment Industry
Luncheon, bigger and better than before.
Keynote
remarks on the state of the industry were given
by Dan Glickman, Chairman & CEO of the Motion
Picture Association of America (MPAA). Tony Uphoff,
the publisher of The Hollywood Reporter emceed, while longtime Hollywood businessman Fred Rheinstein
was honored.
The 2006 luncheon was held at
the historic Hollywood Roosevelt Hotel, 7000
Hollywood Blvd., on Friday, September 15, from 11:30
a.m. to 1:30 p.m.
“With so many events competing
for people’s time, we felt it would be helpful for
the Chamber to organize one annual power luncheon
where we could focus on the important issues facing
our entertainment industry and honor those
involved,” said Chamber President & CEO Leron
Gubler. “We are delighted to have someone of Dan
Glickman’s stature as our keynote speaker
and to be able to honor Fred Rheinstein, a longtime
Hollywood stakeholder. We also appreciate the
support of our sponsors.”
Presenting sponsors for the
luncheon included The Hollywood Reporter and
Paramount Pictures. Supporting sponsors included
Andrews International Security, the Association of
Independent Commercial Producers, and Gemstar/TV
Guide International.
 Glickman
has been Chairman & CEO of the MPAA since September
2004. The MPAA serves as the voice of the American
motion picture, home video and television
industries. Its members include Buena Vista Pictures
Distribution, Metro-Goldwyn-Mayer Studios, Inc.,
Paramount Pictures, Sony Pictures Entertainment
Inc., Twentieth Century Fox Film Corp., NBC
Universal, and Warner Bros Entertainment Inc.
Prior to joining the MPAA, he
was the Director of the Institute of Politics,
located at Harvard’s John F. Kennedy School of
Government. Glickman served as the Secretary of
Agriculture from March 1995 until January 2001.
Before that, he served 18 years in the House of
Representatives, representing Kansas’ 4th
Congressional District.
 Tony
Uphoff, a veteran of more than 20 years in the
publishing business, became Publisher this past year
of The Hollywood Reporter and president of VNU Film
& Performing Arts Group. Prior to joining VNU, he
was Vice President, Technology Media at Advanstar
Communications. He also spent eight years at CMP
Media and was part of the management team that took
the company public in 1997 and sold it in 1999.
 Fred
Rheinstein was the CEO and Founder of The Post
Group, Hollywood’s longest-running independent,
full-service post-production facility, from 1974
until 2005. Last year, he sold the company to
Lightning Media and the land to the Motion Picture
Academy, providing the key parcel that will allow
the Academy to go forward in Hollywood with a motion
picture museum, expected to be a major tourism
attraction and economic engine for the community.
Rheinstein remains the CEO and
Founder of The Production Group, which he founded in
1979. Offering three state-of-the art stages, it was
the first independent Los Angeles studio to offer
complete high-definition services, and continues to
provide full production services, including Virtual
Reality.
He served in various positions
on the board of the International Teleproduction
Society from 1980 to 2000. He was a founding member
of the Hollywood Post Alliance, a member of the
Television Academy, and the first vice-chairman of
the Directors Guild of America Foundation.
He is a graduate of the
Phillips Exeter Academy and Princeton University. He
and his wife Suzanne, have three children.
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What’s Going on in the
World of Entertainment?
Mindful of the important role
that the Entertainment Industry plays in the local
economy and culture of the region in general, the
Hollywood Chamber of Commerce has made industry
issues one of its top priorities this past year.
The Entertainment Industry as
whole is a particularly dynamic industry, constantly
reflecting the minutia of forces with which it is
subject. Recently, several major industry players
announced a number of layoffs in order to be more
competitive and keep pace with the costs of a very
expensive business.
Runaway production, not a new
concept by any means to anyone residing in
Hollywood, remains a concern of the Chamber as it
affects all businesses in Hollywood and the local
economy. Recently, Chamber executives were hard at
work trying to keep AB 777 (Nunez), a bill that
would provide similar tax incentives to the
entertainment industry alive, through grassroots
lobbying with sister chambers across the state
including the California Chamber of Commerce.
On several occasions this year,
Chamber members and staff spent long hours visiting
elected officials to discuss the importance of AB
777 in Sacramento.
“This bill speaks to the
concerns over runaway production that have shifted
from production moving to other countries such as
Canada and Mexico to other states such as New York
who offer surprisingly enticing incentives,” said
Rochelle Silsbee, the Chamber V.P. of Public Policy.
“Apparently, others too realize the potential impact
of this industry on the economy of any small town or
city. With an industry that provides over 353,000
jobs to the United States, it is no wonder why
everyone is chomping at the bit.”
“What California has on its
side is infrastructure and culture,” continued
Silsbee. “There are not many other industries whose
alias is literally synonymous with its primary
geographic location (psst… that’s “Hollywood” in
case you were wondering…) As a Chamber of more than 1,000
members, it is important that we constantly remind
legislators who aren’t from Southern California that
Hollywood is the culture of California – a culture
worth protecting.” Los Angeles County alone has 30
percent of all U.S. employment in the motion picture
and sound recording industry according to a recent
study by the Los Angeles Economic Development
Corporation. There are also several excellent
entertainment-related training/education
institutions in the state protecting that core pool
of talent.
However, the high costs of
doing business in California coupled with a seeming
refusal by legislators to match incentives promoted
by other states all remain factors pushing the film
industry into the arms of other states.
The Hollywood Chamber of
Commerce will remain vigilant towards stemming the
tides of runaway production and will continue to
provide our membership with up-to-date information
on the state of the industry. The September
Entertainment Industry Luncheon will be a key event
for the latest information on technology, resources,
and networking for those involved in all areas of
the entertainment industry. To help show your
support of bills like AB777 or to be involved the
Chamber’s advocacy efforts, call Rochelle Silsbee,
Vice-President of Public Policy at (323)469-8311.
Or, you can sign-up to take part in the Legislative
Action Committee who meets at 8 a.m, the second
Wednesday of every month.
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Entertainment Leaders talk
about the Future of the Industry
The
Hollywood Chamber of Commerce asked industry leaders
to describe the state of the Entertainment Industry
today and comment on the challenges the industry
faces.
Here’s what they had to say...
 Without
question, it is a dynamic time in the Entertainment
Industry. The industry is on the verge of yet
another stage of creative evolution – from the
development of new distribution methods to the
growth of digital and mobile entertainment, we are
faced with more exciting challenges and
opportunities than ever before. As an industry,
there is concern about piracy and runaway
production. At the same time, our business prospects
are limited only by our imagination to develop and
deliver entertainment options that resonate with
audiences worldwide.
Charles Armstrong, President, Studio Group,
Paramount Pictures
 The
Entertainment Industry is migrating to a model of
Participatory Media; the idea where consumers can
play a broader role in the direction and operation
of our media systems. This is replacing the
traditional model which limited consumer
participation to buying. With technology on the side
of consumers, they have more opportunities to make
meaningful contributions to decision-making, and on
top of this, the range of people with access is
broadening. This concept is at the core of the
entertainment industry’s current transformation and
it is critical as entertainment companies evaluate
strategic plans that they respect this new ability
and even more importantly, the general and growing
awareness of it. It is a very exciting time to be at
Nielsen, where our core competency is to listen to
consumers and advise the companies creating
entertainment how to profitably and better meet
their evolving needs and desires. Our business is
changing along with the business of our clients and
it is our challenge to stay at least one step ahead
of that change so we can provide greater value and
context for decision-making.
Adrienne Becker, GM, Strategic
Development Group, Nielsen Entertainment
 The
entertainment industry is undergoing tremendous
changes, and perhaps no segment of the industry has
faced more significant challenges in the past
several years than the commercial production
industry. Rapid technological changes such as
ad-skipping technologies like TIVO, and growing
alternatives to traditional broadcast television via
the internet, cell phones, and numerous other
devices have had a profound impact on the $5 billion
dollar per year commercial industry. Members of AICP,
however, are responding to these challenges. We are
creating new types of content everyday, while
continuing to produce compelling work that allows
advertisers to break through the cluttered media
landscape. On the production side, Los Angeles
continues to be the favored location for commercial
filmmakers. However, competition for our business
from competitors across the US and around the world
has taken a sizable bite out of Hollywood’s share of
the pie. We will continue to work with policy makers
in Los Angeles and Sacramento to find ways to
encourage more commercial production, and the
economic development it creates, in the coming year.
Steven Caplan, Executive
Vice President, Association of Independent
Commercial Producers
 In
my role as Chair of the California Film Commission,
I've seen the landscape for location production
continue to grow more competitive each day. Other
countries, such as Canada, England and Australia,
have been successfully pursuing our production jobs
with rich incentive programs for many years.
However, now the industry is being aggressively
targeted by other states as well. In fact,
twenty-nine states have recently passed new
production incentives or have increased existing
incentive packages after experiencing the economic
boom that motion picture production brings. It's
imperative for California to become more competitive
if our state wants to remain the filming Capital of
the world. Chris Essel,
Vice President, Paramount Pictures
 Every
day, Hollywood loses millions of dollars to runaway
production. This incredible economic engine, as
vital to Los Angeles’ present-day growth as it was
to its origins, must remain true to its roots. It is
imperative that California follows the lead of New
York, Louisiana and Illinois to pass tax incentives
to prevent producers from leaving the state. Screen
Actors Guild, along with other unions, have
vigorously fought to advance incentive-based
legislation. But the Guild cannot do it alone. SAG
calls on every Los Angeleno to recognize the impact
that local production has on our economy. Unity
keeps us strong, progressive and prosperous.
Ilyanne Morden Kichaven,
Hollywood Executive Director, Screen Actors Guild
 California
must remain the premiere location where filmmakers
want to work. At the California Film Commission we
are committed to supporting our vital film
production industry and to increase the number of
productions by offering support services and
providing filmmakers with low cost alternatives when
filming in the state. The services we provide, from
location searches to facilitating filming on public
property, allow a production company to access all
that California has to offer.
Amy Lemisch, Director,
California Film Commission
 Thanks
to the digital revolution and the challenges and
opportunities posed by the ever changing business
climate in Hollywood, this is an exciting time to be
in the movie industry. Consumers can now choose to
see movies when they want, how they want, either by
downloading a film from Movielink, CinemaNow or
another download service or getting episodes of
their favorite TV shows on a video I-Pod. New
technology paired with outstanding film content is
giving consumers even more opportunities to enjoy
entertainment. The challenge for MPAA and our member
companies is to ensure consumers can continue to
enjoy a multitude of entertainment options while we
can continue to protect content. We are meeting that
challenge and will continue to look for new ways to
do that in the future.
Melissa Patack, Vice President, State Government
Affairs, Motion Picture Association of America
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