One Industry Unable to Afford Its Traditional Home – Hollywood

 

One Industry Unable to Afford Its Traditional Home: Hollywood

The digital transformation, online distribution, the pandemic changing viewing patterns, executives with failed visions, massive debt, algorithms as deciders, consolidation and buyer contraction, AI, fakes and even better fakes, short theatrical windows, no loyalty, everyone is getting fired or at least cuts in compensation, shorter attention spans, few productions generate major cross-generational traction, shorter series seasons, franchise content under-performing, precedent is just bad word, renegotiation, guild agreements about to negotiate again, changing of the guard, and those massively high performing exceptions that creatives believe should apply to them. Try being a negotiator representing rights and talent… or a studio or network executive trying to pick productions and establish budgets. Welcome to my world.

Put all of this into “the place where talent and creatives live” – or used to live until their house burned down or they got fed up with the “noise, traffic and absurd costs” and moved. There was a time when studio space was rented out at a premium, where private equity believed that this was a good business. I suspect that’s why God created bankruptcy laws, and all the state-sponsored incentives couldn’t make up for the cost of living, one that has become unaffordable to people who are not at the top of the pay chain. Below-the-line personnel (crew) joined the ranks of once-in-a-while actors… and struggle in an industry where if you work in production, there maybe dry periods between jobs. In Los Angeles, that dry spell looks a lot like the Sahara Desert to so many. The falling box office is just one reflection of our new reality.

California real estate is part of the problem, but the changing consumer demand for differing content compounds the problem. The cost of production has now generated a push-back that is slamming owners of stage space, prop and equipment rental houses, out of business. I visited some clients recently, on one of the legendary LA studio lots… and realized that I could spend some serious quiet time almost anywhere within the facility. The trickle of production was not enough to keep this lot open. Along with a pile of other such production lots, it was forced into bankruptcy.

Writing for the January 27th Los Angeles Times, Roger Vincent and Samantha Masunaga surveyed the damage: “‘We just had all the major networks, all the major streaming platforms walk through this facility and they can’t believe how nice it is,’ said [Shep] Wainright, managing partner of East End Studios… But so far, no one has signed up to make a project at East End Studios’ newest property, even as state and local leaders tout new tax incentives to boost the film industry… ‘Everyone is doing their best to try to bring productions back to Los Angeles,’ Wainright said, ‘but it’s pretty dire.’

“The challenges facing owners of local soundstages came into sharp relief last week [mid January] when one of the largest landlords in Hollywood — Hackman Capital Partners — said it was turning over the historic Radford Studio Center in Studio City to Goldman Sachs… After years of aggressive soundstage development across Southern California — fueled by a surge in TV production and low interest rates — the writing was on the wall as filming activity dropped to historic lows... The average annual soundstage occupancy rate dropped to 63% in 2024, the most recent year for which data are available, according to FilmLA, a nonprofit that tracks filming in the L.A. area… The 2024 rate is down from 69% the prior year and is well below the average occupancy rate of 90% seen from 2016 to 2022, according to FilmLA data.

“An upcoming report for 2025 is expected to reveal little change in occupancy levels, spokesman Philip Sokoloski said. The group recently reported a 16% drop in film and TV shoot days last year compared with 2024… Those busy days were heady, but they weren’t built to last, said real estate broker Carl Muhlstein, who helps arrange sales and leases of studios and other large entertainment facilities.

“The dawn of the streaming era set off a scramble to grab market share among newcomers such as Netflix and old-timers such as Paramount and Walt Disney Co., which created hundreds of original scripted televisions shows. By 2022, during the height of so-called peak TV, nearly 200 shows were in production industrywide… ‘It was all about speeding to market and capturing eyeballs by throwing billions of dollars’ at creating new shows and movies, Muhlstein said. ‘They were all building platforms.’” And then in fits and stops, it all changed. To call it a slump or just a temporary moment is misleading. It seems more like the end of an era. Oh, productions will continue, a bit more decentralized, people still cherish entertainment, but the money and the technology – added to changing tastes and the complexity of too many demographics – well the economics are very different.

I still have to tell dreamers, who cite Maverick or Barbie as proof that this is a viable business where dreams can come true, that statistical realities paint a very different picture. I hate those talks. I hate explaining to amazing talent after a hit show why their next success isn’t generating the pay then know they deserve. Or get asked why major media executives still get paid tens of millions a year. It hurts, but a few are doing beyond well. And we will muddle along.

I’m Peter Dekom, and a few years ago, I delivered a lecture with the humous title – “Film, More than a Bathtub Ring” – but no one finds that funny anymore.