Business Update with Mark Lacter

LA's Gibson Ampitheatre to be torn down

KPCC's business analyst Mark Lacter explains why the Gibson Ampitheatre is no more.

Steve Julian: A lot of famous and not-so-famous acts played concerts at Universal Studios.  Mark, why the decision to tear down the Gibson Amphitheatre?

Mark Lacter: You might remember it as the Universal Amphitheatre, Steve.  It's one of L.A.'s most famous, most venerable music venues (lots of memories at that place) - and it's being razed to make room for the new Harry Potter attraction.  The Universal theme park in Orlando recreated some of the famous Harry Potter moments a few years ago, and that resulted in a big boost in attendance.  But, what's going on at Universal City is a lot bigger than even Harry Potter (if that's possible) - this is part of what's known as NBC Universal's "Evolution Plan," which is a $1.6-billion development - that they're careful not to call an expansion - but which does involve adding about a million-and-a-half square feet of production and office space, along with room for two hotels, restaurants, stores, and those theme park attractions.

Julian: County Supervisors finally signed off the plan after years of public hearings...

Lacter: ...and after an earlier proposal to build 3,000 residential units was dropped following lots of opposition.  You know, this has been a case of very conflicting agendas: NBC Universal is looking to bolster its theme park and TV studio operations, homeowners and environmental groups are concerned about additional congestion in the area (it's already plenty congested), and elected officials are trying to appease both sides.

Julian: NBC Universal did agree to accommodate the changes...

Lacter: That's right, they'll spend $100 million in various transit and roadway improvements (that includes upgrades to the 101 Freeway), and they'll also have a bike path along the L.A. River, along with additional green space.  This isn't a game changer for the local economy, especially since the project will be completed in phases over many years, but it will generate lots of construction jobs - which is good - and it also affirms the fact that the entertainment industry isn't going anywhere, no matter how many incentives other states might provide.  And, by the way, L.A. has seen a rebound in the amount of location shooting during the first three months of the year, especially involving TV dramas.  Also, employment in the entertainment industry was way up in L.A. County in March compared with a year earlier.

Julian: But Burbank is still losing the "Tonight Show."

Lacter: Yes, NBC is moving the show to a brand new studio at 30 Rockefeller Center in New York.  Jimmy Fallon, of course, takes over early next year for Jay Leno (Fallon already does his late-night show in New York).  Now, there might have been all kinds of reasons for making the switch, but one of the biggest ones could be money.  The state of New York made an interesting adjustment to its tax incentive program for TV shows - let me read off the requirements, Steve, to see if they ring a bell: you have to have a talk show that's taped before a studio audience of at least 200 people, you need a production budget of at least $30 million, and the show had to have been produced outside New York for at least five years.

Julian: Er, sounds like the "Tonight Show" to me...

Lacter: They obviously crafted this change specifically for the "Tonight Show," and it could give NBC a 30 percent tax credit, which works out to more than $20 million in annual savings - that's according to the Hollywood  Reporter.  For a show that's only making $30 to $40 million, which is less than a third what the network used to bring in, that's some serious money.  But for New York State, this kind of tax break is a gamble - you have to assume the show is going to provide a big enough economic boost to offset the tax loss the state is going to incur, and as we've seen with other tax credit programs, the benefits are not that clear.  (as a matter of fact, several state legislatures are cutting back on their film and TV incentive programs.)

Julian: As far as the economic benefit of L.A. versus New York, does anyone really care where a show is located?

Lacter: Maybe it made a difference in the 60s and 70s when Johnny Carson was still around (and when the two cities were different in lots of  ways), but these days everyone is from everywhere - and, it's also worth remembering that the Jimmy Kimmel show on ABC is taped... in Hollywood.

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


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