Survey shows LA’s share of commercial production pie is shrinking

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The rebound in commercial filming in Los Angeles, fueled by a recovery in the national economy, the low dollar and a little help from the Super Bowl and the Vancouver Winter Olympics, continues apace: On-location filming activity soared 173% last week over the same week a year ago.

Nonetheless, a new report throws some cold water on the otherwise upbeat news, finding that Southern California’s slice of the commercial production pie is, in fact, shrinking.

Reflecting a similar trend in feature films and television, commercial work is increasingly flowing outside of California, to a host of other U.S. cities and states offering hefty incentives to lure producers, according to a report from the Assn. of Independent Commercial Producers.

Among the report’s key findings is that Southern California’s share of all commercial production fell to 48% in 2008 compared with from 54% the year before — even as the percentage of commercials shot in the U.S. continued to grow.

In short, more commercial work is flowing to the U.S., but not necessarily back to California. Rather, it is being spread across smaller states including Connecticut, Pennsylvania, Massachusetts, New Mexico and Arizona, as well as major rivals such as New York, which saw its share of commercial production grow to 15% from 12%.

Matt Miller, president of the commercial producers association, said California is losing out to states that are picking up the business because they offer tax incentives and rebates that reduce costs to producers.

Although California adopted its first film tax-credit program last year, the credits do not apply to commercials, a sore point with Miller’s group. He , who notes that commercial production employs an estimated 10,000 people in the L.A. area and supports about 220 companies.

If the trend continues, Miller contends, the local companies that service the industry — equipment rental houses and production facilities — could move permanently to other states, inflicting long-term economic damage, he said.

“The loss of market share in Southern California will definitely have an ongoing effect on the health of the infrastructure that supports commercial production,� Miller said. “That’s the big concern.�

Although most commercial producers would like to shoot more locally, tighter budgets have forced them to seek out states that offer incentives.

“I try to shoot as much as I can in Southern California,� said Frank Scherma, president of Radical Media Inc., which is filming a commercial for Dentyne in Hollywood this week. But he adds: “There’s not a client that doesn’t get on the phone with me and ask if there’s a place they can get some sort of tax relief.�

Camille Taylor, executive producer and owner of Crossroads Films, just finished shooting a Pringles commercial in Buenos Aires and later this month plans to shoot a commercial for Samsung in Hawaii and Cape Town, South Africa, where costs can be as much as 40% lower than in California.

Though she’s filming a commercial in Long Beach for a drug company, such local shoots are relatively rare, Taylor adds. “If there were incentives,’’ Taylor said, ‘you would try your best to make the numbers work to stay here.�

-Richard Verrier