Newsom says film tax incentives are bringing Hollywood home but industry experts warn it may be 'too late'
California Gov. Gavin Newsom says Hollywood is returning to its glory after years of production fleeing Los Angeles for cheaper filming locations, but industry experts tell Fox News Digital the sector is still reeling from production "decimation."
"We need a major rescue, like, immediately," Shadowcast Pictures owner Jay Ellison said.
Major studios are increasingly opting to film television shows and movies outside California, such as Canada and overseas in the United Kingdom, Ireland and Australia, as well as to domestic production hubs in Georgia and New Mexico.
Paramount Skydance CEO David Ellison is also reportedly considering relocating Paramount’s headquarters — which could divert billions of production dollars from California — while production of scripted television shows in Los Angeles is down nearly 30% since 2019, according to Luminate data.
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"Why did it take so long for the political establishment to take this seriously? Because Hollywood's business has been leeching away for the last three decades," entertainment lawyer Jonathan Handel told Fox News Digital.
StageRunner founder and CEO Jason Fisher, formerly head of production at Disney, Paramount and AMC, said he began noticing the rise of runaway production over two decades ago.
"Production has been slowly and then speeding up really over the last two years, leaving California for other states and other countries and really nothing was done until it was almost too late," he told Fox News Digital.
Several popular episodic television series were filmed outside of California, including Paramount’s "Landman" in Fort Worth, Texas and Netflix’s "Stranger Things" in Atlanta, Georgia.
Despite LA-based studios’ efforts to film locally, the substantial savings available outside of California made production in the Golden State increasingly difficult to justify.
"When I worked at the studios, we talked about a lot. ‘What could we do to keep the show here?’ And when you get to that place where you're just saving millions of dollars by going to some place other than California, they're just aren't any other levers to pull," Fisher said.
The decline in production has sent ripple effects across California’s economy, with more than 80 production service businesses closing in Los Angeles since 2022 because of a lack of work and industry strikes, according to CBS News.
Experts say production work has been hemorrhaging for decades and that Los Angeles has lost tens of thousands of film and television jobs over the years.
"It is decimation, and it's not just like the film rental companies, the production companies — it trickles down to the restaurants, the people supported by the industry here," Ellison said.
Ellison’s camera rental house, Shadowcast Pictures, provided cameras, lighting and other filmmaking gear to production crews for nearly two decades before becoming one of the businesses forced to close.
"We've been injecting our own money to keep the company going. I know lots of others are doing that, and it came to the point where we finally had to say enough because we've had three years of downturn," Ellison told Fox News Digital.
Industry workers who once spent 15 to 20 days a month on set are now working as few as one to 10 days, if they are "lucky," Ellison said. He added that many are hoping to secure jobs on long-running television series in search of greater stability.
"I have networks of friends who are actors, who are crew members, who are directors, who are writers trying to get scripts sold. And if you ask one of them, ‘Have you worked lately?’ You get looked at like you're crazy," Handel said.
"Because we all know the answer, which is … in most cases, no," he added.
The production downturn comes amid major turmoil within Los Angeles' entertainment space. Television City, an iconic Los Angeles studio lot where "The Sonny and Cher Show" and "The Price Is Right" were filmed could be up for sale as its owners struggle with all-time low production levels and $357 million worth of debt.
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"I don't know if in a year, two years from now, we're going to be able to call it an industry because so much has left," Jay Ellison said.
"We have Quixote Studios closing their stages here. Then we're going to have possibly this major merger between Paramount and Warner Brothers, are they going to keep two massive studio lots? A lot of questions being raised about that right now," he added.
Meanwhile, Gov. Newsom recently touted California’s Film and Television Tax Credit Program, which he said is on track to generate $6.6 billion in direct production spending back to the Golden State.
"The world we invented is now competing against us ... We've got to step up our game," Newsom said last year when discussing the incentive.
Ellison and Fisher agreed that state leaders were "too late" in recognizing the production problem plaguing the birthplace of entertainment, questioning whether Hollywood could ever fully reclaim its former dominance, even with Newsom’s expanded tax credit.
"The incentive has brought back some production. It's keeping things going," Ellison said. "It's just not nearly enough when you're competing with so many other foreign countries."
"I think it's a start, but I don't think it is enough," said Fisher. "Everyone who works in the industry understands California is the most expensive place to shoot, and it's the most challenging place to shoot. Getting those incentives is still a real challenge."
Experts said financial incentives are not the only factor luring studios elsewhere. Rival production hubs, most notably Atlanta, have developed extensive infrastructure, experienced local crews and vendor networks.
Ellison said that those investments have put Los Angeles in a position where it no longer has a competitive edge against other cities in production resources.
"Other jurisdictions around the world have built up their own capabilities, and they are now attractive places to shoot. And there's only so much that you can stretch the California budget in terms of tax incentives," Handel said.
Now that studios have access to well-established and less expensive production centers elsewhere, Handel said, California will face difficulty winning business back.
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"All of that is now what California is fighting against, and it's a tough uphill climb," the entertainment lawyer told Fox News Digital. "It would have been easier to keep the business here than it will be to claw it back with improved tax incentives in California."
In a statement to Fox News Digital, Gavin Newsom’s office said California remains the nation’s top destination for film and television despite "unprecedented competition."
"That’s exactly why Governor Newsom took historic action to more than double California's Film & Television Tax Credit Program, strengthening California's competitive edge by keeping jobs and investment where the industry's unmatched workforce, infrastructure and creative talent have made it the epicenter of the world's entertainment industry for more than a century," the statement said.
"In its first year, the expanded program is projected to generate $6.6 billion in direct production spending across 170 projects, bringing nearly 35,000 cast and crew jobs to communities across the state," it continued.
While some blame California’s political leadership over Hollywood’s production decimation, others are also pointing fingers at the studios themselves.
"Not nearly enough has been done, but at the same time, it's also not up to our elected officials entirely to bring production back to California," Ellison said. "The studios are the ones deciding where they're going to ultimately film, and they're choosing to film overseas because it's cheaper in the end."
Fisher, who held executive roles at major studios, defended the corporations, saying they ultimately bear a "fiduciary responsibility" to shareholders.
"We have a very sharp-edged capitalist system, and the studios are doing what businesses frequently do," Handel said.
Fox News Digital asked the industry experts whether Los Angeles could reclaim its position as the world’s dominant film and television production hub.
"I think that it's not too late. I think it can get rebuilt, but action needs to happen immediately," Ellison said. "It needed to happen months ago."