People come and people go, but nothing ever happens," says a character in the 1932 film classic Grand Hotel about the odd happenings in a luxury hotel. In the New York commercial production and postproduction community, there is a slightly different yet equally paradoxical saying: Everyone is busy—but there is less work to go around.
"There is a smaller group of people who are very busy with bigger productions," asserts Nancy Axthelm, executive VP/director of broadcast production at Grey, New York. "Unfortunately, the industry as a whole seems to be in a pause in the action right now. There are fewer new boards for the number of production companies around. It’s strange. Everyone I talk to seems to be busy, but there is less work."
Indeed, talk to most execs whose companies are either based entirely in New York, or have a Big Apple office, and the answer is the same: These are strange times. Throughout the local industry, paradox is the name of the game, with most remarking that the business in general is hurting, but they’re still managing to have a better year than last year.
Bicoastal Coppos Films, for instance, recently had three New York-based commercial shoots cancelled—the clients were reevaluating the advertiser’s budgets or rethinking the campaign, according to Joanne Ferraro, managing director at Coppos—but that hasn’t stopped other Big Apple bookings for June and July. "If all the projects don’t cancel, we will have a busy time on the East Coast this summer," Ferraro predicts.
"It’s certainly odd," notes Jon Kamen, co-proprietor of bicoastal/international @radical.media. "We’re quite busy. I’m amazed at the activity. Although there is a malaise in the economy that is affecting everything, things are picking up at a steady pace. I’ve had a remarkable year; better than last year’s market."
"Everyone’s willing and able to do the work, and we’re all trying to get a little client spending going now," notes Stephen Orent, managing partner of bicoastal/international Hungry Man. "The talk is that ad spending [for TV time is up], but then you turn on the TV and see agencies rerunning three- or four-year-old commercials. The agencies are not producing as much."
Orent does note that Hungry Man just reported its best quarter of the year, but adds that work is now leveling off. "It’s a real roller coaster," he says.
The reasons for those ups and downs are the same now as they were in the fall: The economy still remains in the doldrums, meaning advertisers are in no hurry to spend money. Additionally, the industry is still reeling from the effects of the terrorist attacks in ’01, and the Screen Actors Guild strike of ’00, which saw a lot of agencies taking production and postproduction work overseas and to Canada.
Economic Uncertainty
Increasing globalization of production companies—and their clients—has also led to increased competition, which also increases the pressure on firms with a strong New York presence. And, as they were in the fall, agencies are still somewhat tentative as advertisers are wondering what to do from year to year. Reportedly, budgets are being doled out piecemeal, rather than being planned months in advance.
The war in the Iraq has also added to the uncertainty. "During the war, clients did not want go out of the country," says Ferraro. "Things were put on hold." Even the weather did not help, with some citing the particularly brutal winter as a factor in slowing down work.
In the end, however, everything boils down to the 800-pound gorilla sitting on everyone’s back: the sagging economy. "Commercials are specifically dependent on the economy," says Matt Miller, president/ CEO of the Association of Independent Commercial Producers (AICP). "Everything is tied in to the stock market, and the stock market has been very uneasy. Investors have not been confident and that has spread over to how clients, agencies, and production companies are feeling. There is a lot of uncertainty as to what the future holds, so you can’t plan for the future. That’s a big problem when you’re trying to run a business."
The weak economy has forced many agencies to go where the director is. Rather than flying top Los Angeles-based helmers to New York, some shops take their productions to the West Coast. "Fewer and fewer top directors live in New York," observes Axthelm. "If a director lives in California, there is a good chance that he or she will recommend something closer to them." Similarly, if a director has two shoots on the West Coast and time for a third shoot in between, it is unlikely he will fly to New York to do it, Axthelm adds.
Incentives
To combat these problems, both the city and the state are doing what they can to attract work, ranging from tax incentives to improving the way local agencies conduct business. "We feel most businesses want to come here, so we try to make it attractive for them," says Pat Swinney Kaufman, deputy commissioner and director of the New York State Governor’s Office For Motion Picture and Television Development. "We work very hard to offer excellent service, with an excellent network of regional and local offices, and do a fine job of cutting red tape."
More specifically, the state offers financial incentives. New York’s manufacturing exemption covers purchases of machinery, equipment, parts, tools, and supplies used in production. The exemption also covers services like installing, repairing, and maintaining production equipment, and the fuel and utility services used for production. In addition, goods and services purchased for resale are exempt from tax. This means that film and video productions get a sales tax exemption for all production consumables and equipment rentals and purchases, as well as related services. These exemptions cover just about every aspect of film and video production and postproduction—from sets, props, wardrobe and makeup to cameras, lighting, sound, special effects, editing and mixing. Unlike other states, New York does not offer this as a rebate on money paid, but allows it as an outright exemption once the proper forms are filled out.
The state recently expanded the reach of that tax break. Previously, although the state half of the sales tax was forgiven, the local portion (applicable outside of New York City) was not. Within the last year, that was all changed, presumably making it more financially attractive to film throughout the entire state.
"We do well in terms of competition with other states," observes Kaufman. "Where we have stiff competition is with Canada, South Africa, and Australia and New Zealand because the dollar has been strong. But with the dollar dropping against the Euro, things may change. In the long run, it’s not a good thing, but specific to this industry, [that drop] could be good in drawing in foreign business."
On the local side, the New York City film office has been revamped to make it more inviting to producers. In her 10 months on the job, Katherine Oliver, commissioner for the New York City Mayor’s Office of Film, Theatre & Broadcasting, has made a number of practical changes in the film office to simplify operations and make the city more attractive to businesses. There is a new phone system and 12 personal computers for the staff (replacing electric typewriters), while the handwritten master calendar system has been replaced by Excel spreadsheet grids.
Even more significantly, within a month of Oliver’s arrival, producers no longer had to fill out paper permit forms in triplicate—in person—but were able to obtain permits online. "I wanted to fast-track the permit process," she says. "I wanted to be more proactive and film-friendly. Permitting time is reduced significantly so producers can spend more time on making films."
Oliver is also attempting to create a "business-to-business" approach. "This is a five-billion-dollar-a-year industry," she explains. "We are reaching out to other businesses to find out what their needs are. They often say New York is expensive, so we are working with hotels, parking lots, and other companies to try and get them discounts."
Unfortunately, the city film office finds itself restricted by the local government’s money woes. "We are looking at financial incentives, but it is very difficult to get them right now," admits Oliver, who adds that there is very little money (if any) allocated for advertising and travel to out-of-state promotional events. "I’d like to get some money to go to festivals and conferences, but I have no money in my marketing budget now, so we’re trying to find innovative ways to get word out that the city is a good place to work. We need to be very strategic in how we do that. For instance, we issue an electronic newsletter about the industry and our office’s activities. The best advertisement, though, is to have happy customers."
One way some operations are combating the up-and-down business cycle is to diversify. Diversification is a must, according to Alan Suna, CEO at Silvercup Studios, Long Island City, N.Y., who explains that a forward-thinking company needs to be able to compensate for slow periods and not depend on one area for all of its work. "Our business is doing quite well because we are a diversified company dealing with movies, commercials, and TV shows," he says. "We stay healthier by spreading it out."
Suna, for one, is optimistic about the future—so much so that he is in the midst of planning a new series of sound stages near the Queensborough Bridge in New York to open within the next three years or so. "Things are softer now than they had been before, but it’s my belief things will only get better," he says. "We put our money where our mouth is. We’re the only one who has built a meaningful studio in the last ten years."
Some are trusting their talent to get them work. "I don’t think you attract people with equipment or gimmicks," says John Palestrini, CEO at The Blue Rock Editing Company, New York. "It’s all about the bottom line. Technology is great, but in the end it’s always about the talent. That makes me optimistic about the future."
But others are more cautious, having gotten windburns from the roller coaster ride of recent months. "I used to be good at predicting the future," observes Orent. "But right now it’s hard to tell where we’re heading in the next six months. I tell everybody it’s about keeping your head above water. If we can get a wind in our sails, we can make this a great quarter."
