Is California's $750 Million Bet on Hollywood Working?

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1:03It is Friday, July 10th. It's now been a year since the state of California dramatically increased its production incentives to make film and television shows in the state. If you recall, in the aftermath of the L.A. fires and the strikes and the general exodus of productions to cheaper places like the U.K. and Georgia and New Jersey with more generous incentives, the state finally acted. The legislature raised the cap on annual incentives to$750 million and allowed more productions to qualify. Now, a year later, the impact is starting to show. Los Angeles saw a roughly 10 % increase in shoot days to start 2026, compared to the three months prior, according to Film L.A.

1:41Movies saw a 52 % year-over-year increase, and nearly a quarter of all filming in that category came from titles getting subsidies. The issue of runaway production is finally center stage, with politicians on both sides talking extensively about it in the recent governor and L.A. mayor primaries. Governor Newsom claimed this week that$750 million in annual incentives is translating into$6.6 billion in economic impact. That means jobs and spending and ancillary businesses like hotels and craft services. This week, the state released a new batch of 41 beneficiaries, including for the first time animated titles, Disney, DreamWorks, and Pixar.

2:20Together, they scored$72 million to shoot in the state. That's 38 % of the total handed out to all these new movies selected to receive credits. A big chunk of indie productions also got incentives as well. So it's working. But is it enough? And what should be done? Soundstage properties in LA continue to struggle. Just this week, Hackman Capital, the biggest independent owner of soundstages in LA, they defaulted on a loan due to low activity. And at the center of all this is Colleen Bell. She's the California Film Commissioner, whose job is to bring productions to the state. Colleen is a producer, her family makes the bold and the beautiful soap opera, and she was ambassador to Hungary under Obama.

3:00Since 2018, she's been the top advocate for filming in California. So we're going to talk to Colleen today about what's changed lately in the production world, how to build on the current momentum, the possibility of a federal credit, what's going on with Netflix shooting their stuff in New Jersey and New Mexico, and why tens of millions of dollars are going to these big animated movies. Today, it's how to bring more productions to California, what's working, what's not, and what should be done. From The Ringer and Puck, I'm Matt Bellany, and this is The Town.

3:32Okay, we are here with Colleen Bell, who is director of the California Film Commission. And this has got to be a good week for you. You're giving out money. You must love to give out money. Yeah, this was a big week for us. It was the final application round for fiscal year one of 4.0, and we had a stellar slate to announce this week. So 41 projects, six non-independent projects, and 35 independent projects. And so we're super excited. We've got animation. We've got live action. We've got a whole range of projects that have come into the program. Yeah, I wanted to start by talking about the animation stuff because that is new.

4:10And you guys are giving out. Not giving out. You are incentivizing with a pretty big chunk of money to go to these four movies from two of the biggest corporations working in California, Disney and NBC Universal. What was the rationale there? Because I think some people might look at this and be like, this incentive was supposed to be for small indie producers. Why is the Walt Disney Company getting almost 20 million for a movie like Hexed that they were probably going to make in California anyways? Or were they? Well, were they going to make it in California? Possible that they wouldn't. But we modernized our program and increased the funding of our program.

4:50And we're starting to see the results right now that decision makers are choosing California because we improved our competitiveness significantly. You know, these these projects, all the range of projects, large projects, small projects, they're all extremely important to us in California. And we want to make sure we capture as many projects as we can to keep Californians working here. I mean, this this is an important economic development tool. And you mentioned give away. So I'm going to push back on that. This is a tried and true investment, Matt. I know. I know you hate that word. I said it to Gavin Newsom at a party a couple months ago and he's like not giveaways no you really I think that that was super important for us to make sure that people understand this is this is an investment a tried and true investment with positive returns I know our listeners understand they've been clamoring for this for years this is I mean it's it's we're really talking about like it's about time they're doing this because somebody might look at the animation incentives and be like, what are you doing?

5:55But the other states are doing this. The UK is doing this. Canada is doing this. So it's all about what the competitive landscape is. And you can stomp your feet about giveaways and why are we funding this, but not that. But the bottom line is you either do it and you remain competitive or you don't and you don't. These are the conditions we're working under. You're absolutely right. And so we had to put together a smart and strategic approach to what we needed to do to capture all of these projects. And, you know, that was what we did. So we launched 4.0 last year and increased the funding annually from 330 million to 750.

6:36We were historically oversubscribed. I mean, I have had to turn away projects, many, many, too many to count, where they met our criteria to be here in California, but we did not have sufficient funding. So this increase has really made a huge difference. But also, we modernized the program, meeting the moment, expanded categories to include half hours and animation and large-scale competition. We increased our caps. We increased our percentages. We needed to do all of that. I'd heard decision makers want to shoot their projects here in California. and historically maybe they would have made the decision okay we know there's a gap other jurisdictions are offering more lucrative tax um incentives however there's still a lot of value in california but that gap got too wide and we had to do something about it still no reality though right no correct we got to do something about that rob lowe should not have to fly to ireland to film his show the floor it's kind of amazing that that that still exists when is there any movement on that or no?

7:46Well, you know, what I can say is that with the results that we're able to show now with these expanded categories, you know, maybe at some point the conversation will continue to open up to other categories. You know, again, we need to be nimble. We need to respond to what the demands are in the marketplace. So we'll see. There'll be a new administration coming in. We'll see if somebody is going to pick this up. Yeah, we'll talk about that. But there was another proposal for this year's state budget for post-production incentives, and that ended up not being included in the budget. Why didn't that move forward, given all the momentum?

8:27And is it dead? From what I understand, it's still in play. So, you know, we'll see. And also a bill put forward for commercial production as well. You know, listen, I administer, we administer the film and TV tax credit program, we don't have a carve out standalone for post production, although we do incentivize post production within our existing program with, you know, uplifts for visual effects, for instance, and bonus points for music scoring, etc, etc. And still nothing for above the line. To me, that's the game changer. Well, the cap, obviously, the 750 million cap, if you get rid of that, obviously it would be a bonanza.

9:10But the above the line deductions, other states and the UK offer that and California still won't. Well, you know, there was a lot of competition as this new program was structured, whether or not above the line will be included or not. There are a lot of competing interests and different, you know, opinions on above the line. But what we did was we needed to improve our effective tax rate. It was as simple as that. So in so doing, and how could we do, how would we be able to do that with above the line or how would we be able to do that if we didn't include above the line? And so these percentages are where we were able to get there and increasing the cap.

9:49So it's 35, 40, and even 45 if you hit the bonanza and get everything right. That's exactly right. Okay. Now we have an administration changing, as you mentioned, and you were a Governor Newsom appointee. Have you talked to Javier Becerra about his opinion on this? He's put out a statement. The statement was sort of general, like, I want to continue to support this industry and bring jobs back, yada, yada. I intend to increase the program's scale, capacity, and access. That's his actual quote. But not a lot of specifics there. Have you talked to him about specifics? He's likely going to win in November.

10:29Yeah, I haven't spoken to Javier directly on this. But listen, you know, it's my hope that they whoever is the next governor will continue to build on the momentum that we've put in place. So, you know, this has taken years to get to the point where we are now. And is there more work to do? Absolutely. I mean, and that is my hope. Would you stay on if if Sarah asked? That's interesting. I will be transitioning out with with Governor Newsom. OK, so you're not going to be here. Matt, this is breaking news, actually, because I think it's only my deputies and my colleagues at GoBiz and the governor's office that know that.

11:12So there you go. Well, you know what? You got a lot to celebrate because you finally got your expanded credit in place, which is great. Yeah, absolutely. This is not a divisive issue in the state now. Steve Hilton, the Republican who's running. He wants a 60 percent incentive. He wants no cap. He has said he wants to work with Donald Trump to get a federal incentive. He's actually more specific and more bullish on this issue than the Democrat. Well, we don't know that he's more bullish at this point. But I can tell you, when I first took this position in 2019, I'm back and forth to Sacramento meeting with members of the legislature and their competing budget.

11:55priorities within members. Okay. And I did find that we had to shift the narrative. Okay. This is not a handout. This is an investment. And I, we've had a lot of success doing so. And, and, and as a result of that strong bipartisan support and, you know, many champions within the state legislature who were instrumental in getting, you know, 4.0 in place and up and running. Yeah, it might be tough if the Democrat legislature is working with the Republican governor to try to figure out the right tax credit. But who knows? Is there any update on this federal incentive? I mean, the John Voight crew has sort of gone dark on this issue and we don't hear President Trump talking about it anymore.

12:43What do you know that I don't? Yeah, well, you know, they reached out to me early on when they were designated his advisors, envoys. Special envoys. They're special envoys. Okay, special envoys. Okay, thank you for clarifying that. Reached out to me, which I was very happy that they did. I was able to say how our program is working, how it's not working, what do we need to do, and have those conversations. And, you know, that was helpful. I think federal tax incentive would be fantastic. I mean, if you stack that. OK, so if you were to stack 10 percent on top of what we're already offering right now, I mean, that makes a huge difference.

13:27We even have different cities like San Francisco who offers a fairly modest incentive to stack on top of ours. But all of this counts. I mean, I would be I would 100 percent support that. And, you know, it's not just California that was losing our market share in entertainment production. It's the United States. So, you know, I hearing this conversation about a federal and tax incentive, I think is an important conversation to have. and, you know, we'll continue to watch that space. Yeah. We got to make it, we got to basically match the UK. That's the big one. All the big movies are going to the UK because of the incentives there.

14:07Yeah. And they could come back and whether it's California or Georgia or New Jersey or whatever. Well, Matt, we've got a lot of big movies shooting here in California and choosing California. Okay. Right. I'm overstating. Yeah. But Marvel, Star Wars, they are for the most part in the UK now. Well, we had the Mandalorian and Grogu Mandalorian, you're right. I talked to Favreau about that. They did shoot in California. There you go. Jon Favreau, who speaks so eloquently on why California is such a fantastic place to shoot projects. He just doesn't want to leave. He likes his lunch spots. Yeah.

14:46Well, California does serve good food, too. No question. But also Jumanji, for instance. I mean, could have gone anywhere. Jumanji 3. Yes. two months jumanji three could have gone anywhere i believe it has another title now but i don't remember it and i will never remember but listen that's a big that's that's a big project no question about it that is yes that would be jumanji open world there we go thank you craig yeah there you go okay so they shot that in california as well happy for the rock um so let's talk about los angeles in particular because there's a mayor's race going on here I have not been impressed by what the current mayor has done for the industry.

15:28She was sort of absent during the strike. And I think that a little bit more intervention from both the governor and the mayor could have helped nudge those negotiations along. And on this issue, she doesn't seem to be a leader on it. I mean, I know now she's claiming that Film L.A. has been improved in their waiving fees at Griffith Park. And, you know, they fixed whatever problem was going on on the Baywatch set that may or may not have been a real thing. But what are your interactions with the city of L.A.? And has it gotten better and more streamlined and less onerous to shoot here? My interactions with Mayor Bass and Steve King, who she appointed to the film office, have been very positive.

16:16I think the responsiveness is there now. I meet regularly with Steve and also my counterpart at L.A. County. You know, we're looking for how do we build out efficiencies? How do we improve communication? You know, it's not just the tax credits that keep projects here and encourage projects to shoot in California. It's coordination. OK, it's a holistic approach and it's reducing some of those fees. You know, some of the fees, as you mentioned, permitting fees that Mayor Bass has been focused on and also parking fees, etc. And you have to hire a certain amount of security if you're doing like there's been a whole boondoggle where a lot of additional costs have been lumped onto the local productions here to satisfy various unions or various special interests.

17:09Where if you shoot here, you got to have a guy driving from here to here and he's a part of a particular union and you've got to have a guy doing this. And I know that's true on all movie sets, but there are particular requirements in Los Angeles that I think make it extra onerous to shoot here. Yeah. You know, and we want to hear from producers. We want to hear from location managers. We we we want to hear about any of those barriers that that complicate or increase fees for filming here in the state of California. I mean, we really do have a holistic approach to this. And so we're working on it.

17:47We're slowly whittling away at some of these problems. It's important we remain and we build on film friendly policies that we have in place. There's more work to be done for sure in that space. Yeah, I saw an interview with Nithya Rahman, who is the other contender running for mayor, and she was talking more about independent productions and serving the smaller productions, which I think is an important aspect of this. a lot of these movies that would not get made, literally would not get made if they can't meet their budgets. But she was talking about it sort of in terms of perhaps prioritizing that over the studio stuff.

18:27And I'm not sure someone like her would support an$18 million tax credit for the Walt Disney Company to make an animated movie. Are you in contact with the Ramon campaign as well? Not, no, not directly. We opened 4.0 last summer, our first window a few days after this was passed. We had to build out a whole new portal for applications, etc. So just been super busy, super busy with that. But in terms of the independent projects, I mean, there's such an integral part of the production ecosystem here in California. Those independent voices are so important. It's part of our cultural identity supporting these filmmakers.

19:19And also we have to take into consideration the fact that the larger studios, they have built in infrastructure to help navigate the complexities of filming in California, 48 counties in California, all of that. So we work closely with the independent projects. And a lot of these sound stages, especially the independent ones, not the ones necessarily on the studio lots, they're really struggling. Hackman, the real estate firm that bought up a bunch of sound stages in L.A., there's been a building boom lately. They're all, not all, but a lot of them are empty or not very full, and they're having problems with their lenders.

19:58Yeah. Matt, pre-COVID, pre the dual labor strikes and even the threat of the dual labor strikes, which caused a contraction. There was a low, low level of vacancy in California soundstage. That's why they built this stuff. They said, oh, God, we got the streaming wars are going to last forever. We got to build up production stuff. Yeah. So, you know, so we launched the soundstage film and TV tax credit program. That was 150 million investment into that into that program. We have exhausted all of those funds. But that was a way where another vehicle for offering tax incentives that not through our program.

20:40So we would certify sound stages and any projects that shoot on those certified sound stages would receive tax incentives for that. It was$150 million. Very successful. We've exhausted the funds from there. And so those projects will then go into our main program. This episode is brought to you by Accenture. When your advertising operations fall out of sync, campaigns slow down, insights get buried, and opportunities get missed. That's why Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business.

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22:39It's a new day and a new stay. Book your next day at HolidayInn.com. I want to talk about Netflix because they are one of the largest producers now. they had a choice on where to build their big production studio. They chose first New Mexico and then New Jersey. Why? I mean, Netflix positions themselves as the savior of the entertainment business. If they hadn't come in and, you know, been this hybrid of Silicon Valley and Hollywood, then the big tech companies would have just dominated California and dominated Hollywood. and they want to be positioned as a good guy in all of this. Yet they're building these two massive hubs elsewhere.

23:25What do you guys have to do to get Netflix to invest in a real production hub here in LA? Yep. Well, you know, you're going to have to talk to Ted. But you do. I've talked to Ted about this, but you do. And Ted says what I just told you, that they are the good guys here. that they, you know, they just, they're moving into CBS Radford and there's production facilities there and they do shoot. He could rattle off 10 shows that shot in California, but it's not where they chose to build their hub and they did it there because of the incentives. Well, listen, and you'll have to talk to them, but also I think that there was a, a, a land, agreement that was lucrative for them.

24:12Ted called me before this was announced, the night before. And he said, okay, I won't get into the details, details of our conversation, of course, but he wouldn't mind me sharing this. Please do. California is my home and I love California. I'm not giving up on California, but we're going to go and do this and gave a variety of reasons. And then I said to him, I said, I want even, I want the reasons that you might think that I'm not even thinking of, you know, share them with me. And, you know, a lot of considerations, I think he had mentioned, you know, housing was one, affordable housing of was, was one of them.

24:53It's not something that, that you would think about, but again, you know, of course I, I come back and relay this to, um, you know, the governor and, And, you know, housing is an issue for us here in California that that many people are working on now, making sure that we can we can provide more affordable housing. But it comes into play in terms of big investment decisions. New Jersey is not that much cheaper, by the way. But New Mexico is. So Ted specifically cited housing as a reason why they went to New Jersey and New Mexico. I mean, it was one of many things. And I don't want to get into our private conversation.

25:28I think it's ultimately money. They got a great deal. Well, they must have gotten a great deal. No question about it. So we got to figure out what do we need to do to get the next one? And we are thinking along those lines. Yeah. You know, it's all about leverage. And right now there's a giant merger that is pending between Warner Brothers and Paramount. And the Ellison family is dealing with potential lawsuits from California and other states over this merger. and it's ultimately going to lead to, I think, some concessions that they will make. Are you in the mix here? Are you talking to them about potentially putting a commitment to filming in California into the remedies that they would have to agree to, to get this merger over the line?

26:17You know, it's not our place to comment on corporate structure. So, I mean, from, I work for this. Well, you know, Rob Bonta's phone number. Well, yeah, I can tell you it was frustrating for a while there when I was trying to get the momentum on increasing the funding and making all these program changes. We did it, you know, and we Governor Newsom, no governor in California's history has been more supportive of of entertainment production. He actually does believe in this, I think. I think he's come around. I don't think he cared about it for a long time. And now he does. There is no question that he does.

26:56And, you know, he basically put this in a line item in his budget proposal. No one had ever done that before. It wasn't an easy budget year, but he believed in this program and the investment and the return on investment for California. Well, all the AI ghouls are taking, you know, making billions of dollars in paying taxes. Maybe some of that tax money will go to the content that they are ingesting for their AI models.

27:22you don't have to say i i can say that you can't um but but i i do have david ellison's phone number i can give it to you if you want to call him and say listen put in an annual commitment to fill film x amount of movies and tv shows in california and you know we'll come out and back your merger yeah well in conversations with um heads of studios and independent production companies and independent producers, when we were working on structuring 4.0, they continued to say, we want to be here in California. And I would say, okay, so if we get this done, we want you to invest. You need to invest.

28:05We've done our part. And sure enough, that's exactly what happened. Our applications were up 82 % this past year because of the improvements we made. So it's making a difference. And we cited some stats that the productions are returning. There was a 10 % uptick in the first quarter. So, but you know what? No one does anything because they, they want to, it's all talk, talk, talk. You got to give them what they want. Everybody was talking about how they wanted to be in California for the past 20 years. And then one by one, Oh, what's Georgia offering? Oh, what's the U S the UK offering? It's fiscally irresponsible to pay$30 million more for a movie than, you know, to just satisfy some, oh, we'd like to be closer to our families.