Studios’ Spending in U.S. Drops, Study Says

Larger-budget feature films are continuing to migrate to cheaper locales such as Canada, in part because of aggressive tax breaks producers have enjoyed there the last three years, a study by an independent research group shows.

The study by the Center for Entertainment Industry Data and Research said the amount Hollywood spent on films shot in Canada with budgets ranging from $10 million to $50 million increased 141% to $750 million for films released in 2001.

For the fourth straight year, the study said, overall spending by Hollywood on films shot in the U.S. fell, while spending on films shot in Canada increased. For films released last year, the study estimated that production costs totaled $3.24 billion for U.S.-shot movies, down from $3.93 billion in 1998. During the same period, expenditures on Canadian-shot films rose 144% to $1.05billion.

The study said the numbers may have been skewed by strike fears last year that caused studios to increase production, then scale back after they stockpiled movies.

The study is expected to be presented today during a panel discussion at the annual Showbiz Expo trade show in Los Angeles, focusing on growth in runaway production since Canada enacted new production tax breaks in June 1998.

Hollywood labor unions are making a major push to try to stem the flow of production from the U.S. This week, the California Assembly passed legislation to give smaller productions a 15% credit against the state wage tax.

Experts have long complained about the dearth of data on runaway production, in part because Hollywood studios closely guard budget numbers. Stephen Katz, executive director of the research center, said the spending totals are compiled from sources he has in the industry, along with published estimates.