Actors strike echoes in L.A.

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Since the Screen Actors Guild/American Federation of Television & Radio Artists strike against advertisers is now a record-setter in terms of length [at deadline for this article, negotiations were to resume Oct. 19], maybe it's time for a rumpled old economist to look for some messages.

LITTLE SYMPATHY

There has been little damage to the overall economy of Los Angeles County, despite estimates of direct and indirect losses due to the strike of $9.1 million a week.

There is pain, but it is very concentrated in areas of the county where entertainment is the main activity, with the impact falling on the craft unions and support businesses.

Moreover, the local media places any coverage way back in the business section, and there is little discussion of the strike among the general populace, and little apparent sympathy.

DRESS REHEARSAL FOR 2001

The strike, however, has caught the attention of the greater entertainment community, with the consensus being that this is a dress rehearsal for 2001, when studio contracts with SAG (July 1) and the Writers Guild of America (May 1) expire.

So Hollywood is feverishly stockpiling product (which may be of dubious quality) to tide them over.

Regardless of the outcome, there will be a slowdown in production activity around June of next year that will feel like a de facto strike. Again, the biggest impact will fall on support businesses, and the craft unions. And one should not forget July 1, 2002, which is when the Directors Guild of America contract with the studios expires.

NEW REVENUES

Technology and globalization have had a big impact on the entertainment industry, and the actors and writers are trying to capture their fair share of the rapidly growing income streams.

In some cases, there is anticipation of which technologies will become important, but this is dangerous. One only has to look at all the new technology bubbling up around Los Angeles County to know that nothing is going to be certain in future product delivery.

LONG-TERM DANGER

There has been a lot of angst about "runaway" production from Hollywood. Canada has been the major destination, especially for TV movies and down-market TV series, but some feature films have been made there.

Since the start of the strike, commercial production has migrated to secondary production sites in the U.S. and to Canada. This could be very dangerous for the Los Angeles production community as the long-term lure of lower costs combined with talented crews could be a very powerful long-term attraction.

The studios' headquarters (or the brains) will remain in Hollywood, but filming is increasingly a global activity.

The net results of all this will be very interesting. Already, the buzz in the legal profession is that there will be lots of bankruptcy filings among movie-related businesses next year.

Not only will it be tough going for the craft unions and support businesses, but the areas of Los Angeles County where the entertainment industry shops and plays will be impacted.

The bottom line is that nobody wins in a long strike, and the other parties being hurt by the walk-out need to become more vocal.M

Mr. Kyser is chief economist for the Los Angeles County Economic Development Corp., Los Angeles.

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