March 13, 2015

There’s No Business Like Show Business: Entertainment and the Economy of the Golden State

UCLA Anderson Forecast event examines entertainment industry

LOS ANGELES, March 13, 2015 — At the latest UCLA Anderson Forecast, presented on March 12, 2015, several panels of industry experts and academics focused attention on the state of and economic outlook for the entertainment industry. Discussions began with a conversation between Peter Guber, CEO of Mandalay Entertainment, and UCLA Anderson Professor of Marketing Sanjay Sood.

In the exchange Guber shed light on how financial decisions versus choices of location are becoming the leading priority for media companies. If studios and production companies are able to save money filming internationally, that is also a consideration.

Current tax subsidies, specifically within California, pose continued concern throughout the industry, according to panelist Erich Schwartzel, film reporter at the Wall Street Journal. An increasing number of companies are heading to cities such as Atlanta, where the film industry is growing and it is more likely to be cheaper to film.

Guber corroborated that point, admitting that he recently made a film in British Columbia that takes place in Northern California. “There was a 27% difference in my costs. I’m not a charity. I’m not a philanthropist. I do give to charity, but when it comes to business, my business is a business. If it’s good for the business, I do it.”

Though Los Angeles still maintains the lion’s share of the entertainment industry, with 48% overall, the industry’s growth in California pales when compared to the U.S. as a whole, according to UCLA Anderson Forecast economist William Yu. According to his special investigation, employee payroll has fallen 14% since 2001, owing in part to a 47% decline in the music industry. And, although entertainment is a healthy industry nationwide, its growth is lower than star industries in other major metro areas, such as Silicon Valley’s high-tech sector or the oil business in Houston.

The panel participants addressed in greater detail the extent to which U.S. cities and states, including California, create incentives for the film and TV industries to take root. Georgia and New Mexico build in long-term plans to ensure the future of the business in their states, and stakeholders in Maryland, Massachusetts and Florida pressure their state governments not to let that sector weaken. California tries to compete, but budget might sometimes trump advantages such as weather and a concentration of industry experience. The conversation continued with a focus on the current evolution of the entertainment business, particularly within the areas of live and digital media. Though there is increasing development of some “revolutionary” devices and platforms that would change the way users experience live events, panelist Lori Kozlowski, editorial director at Atom Factory, questioned whether the ability to allow complete immersion into live events will replace the in-person interactions that are inherent in high-quality entertainment production.

No matter how the technology changes the nature of delivery and consumption, stories will always need to be told by writers, actors, producers and directors. “Technology is going to offer us a big bouquet of economic opportunities,” Guber added.

In light of the impending “digital tsunami,” as Guber labeled it, he and others are keeping their eyes on how the state, artists and financiers cope with changes in the entertainment industry and determine how best to take advantage of and manage new opportunities.

About UCLA Anderson Forecast

UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state’s rebound since 1993. More recently, the Forecast was credited as the first major U.S. economic forecasting group to declare the recession of 2001.

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About UCLA Anderson School of Management

UCLA Anderson School of Management is among the leading business schools in the world, with faculty members globally renowned for their teaching excellence and research in advancing management thinking. Located in Los Angeles, gateway to the growing economies of Latin America and Asia and a city that personifies innovation in a diverse range of endeavors, UCLA Anderson's MBA, Fully-Employed MBA, Executive MBA, Global Executive MBA for Asia Pacific, Global Executive MBA for the Americas, Master of Financial Engineering, doctoral and executive education programs embody the school's Think In The Next ethos. Annually, some 1,800 students are trained to be global leaders seeking the business models and community solutions of tomorrow. Follow UCLA Anderson on Twitter at or on Facebook at 

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