Business analyst Mark Lacter joins KPCC once a week for an in-depth look at economic issues in Southern California.
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The entertainment industry and the economy

KPCC's business analyst Mark Lacter discusses how the entertainment industry's been doing in the Southland lately.

Tammy Trujillo: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, the entertainment industry has been one of the strongest parts of the local economy. Is that still true?

Mark Lacter: Well, probably Tammy, but you couldn't tell by looking at the latest employment report for L.A. County. It shows that between December and January the movie and television industries lost almost 24,000 payroll jobs - that's an 18 percent drop from just the previous month. It's also the biggest job decline of any industry in the county. Now, it is worth noting that show business is normally a very volatile business, and to see wide employment swings is not unusual. It's also worth mentioning that these are the first numbers to come out since state officials went through an annual exercise they call benchmarking - that's when they go back and make revisions on the previous year's results. As part of that process, it's possible that earlier estimates were overstated and so now the revision might be more accurate.

Trujillo: So do we really know what’s going on in the entertainment business?

Lacter: It’s actually a very hard industry to keep track of when it comes to jobs - much more so than, say, the auto industry. That’s because is that a lot of people in movies and TV are freelancers, and so they're not even factored into these payroll jobs that get tracked. Also, there’s no great way of gauging how much production is actually taking place in L.A. since much of the shooting happens on soundstages and the soundstage operators never release numbers on how full - or how empty - their sets are.

Trujillo: Aside from jobs, how is Hollywood coping in this economy?

Lacter: It’s a tough time because they can’t seem to figure out what will do well at the box office and what won’t. Movie stars, with rare exceptions, don't seem to be bringing in the crowds any more, the 3-D extravaganzas are very much hit and miss, and there’s a lot of pressure to move away from the theaters and make movies available in your home or even your smart phone a lot sooner. How all that ultimately affects the number of movies being made (and the number of people who work in those movies) is impossible to measure right now, but as a rule industries in transition almost always end up looking different. And Hollywood seems to be reaching that point.

Trujillo: So in the midst of that, we have one of the big Hollywood unions entering contract talks.

Lacter: Yes, the International Alliance of Theatrical Stage Employees represents more than 100,000 industry workers - we're talking about set decorators, prop masters, cinematographers, a whole host of folks working behind the cameras. This union has not been especially high-profile, certainly when compared with the Writers Guild or the Screen Actors Guild. The question is whether things will be different this time out. The union faces a huge deficit in its health plan because of the rising cost of medical care. Part of that plan is funded by employer contributions, but it's a good bet that the rank-and-file will be asked for concessions, and that's not likely to go down well. (Health care, of course, was the big issue in contract talks with the writers and the actors - as well as most every major union.)

Trujillo: And don’t they have a new president?

Lacter: That’s right – his name is Matt Loeb, and he's been a lot more aggressive than his predecessor. Just a few weeks ago the union organized picket lines outside the production offices of a cable TV show - they were protesting the firing of crew members who had sought union representation. As for the contract talks, it could turn out to be a complicated process because the Alliance is actually made up of smaller locals and they all have to work out an overall contract.

Trujillo: The current contract expires July 31.

Lacter: Yes, so there's still plenty of time, and given the industry climate we just spoke about, there's not likely to be much appetite for a full-fledged walkout. Just doesn't seem to be in either side's best interest. But these things can take on a life of their own, so we'll be watching closely.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA