DGA Magazine VOL 28-3: November 2003
DGA Magazine VOL 28-3: September 2003
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DGA takes action to move federal legislation forward
The Back Story

Speaker of the House of Representatives Dennis Hastert (R-IL) - click image for larger view.
Representative David Dreier (R-CA) - click image for larger view.
"Between today's amendment introduced by Congressman McCrery in the Ways and Means Committee and the tax incentive provision previously approved by the Senate Finance Committee, the DGA is encouraged by the strong bipartisan support we have been receiving from both Houses of Congress in our effort to fight the economic impact of runaway production. We recognize, as we always have, that the road to achieving final legislation is a long one and we remain committed to working with our Congressional supporters and the House and Senate leadership to that end."

–DGA President Michael Apted
Representative Howard Berman (D-CA) - click image for larger view.
Representative Jim McCrery (R-LA) - click image for larger view.
For the past 4½ years, addressing the problem of runaway film and television production has been the Guild's top legislative priority. We have been working on this issue as part of a broadly based Alliance that is active at the federal, multi-state and local level. That Alliance includes the MPAA and individual studios, the other Guilds and unions, the independent and commercial producers, post-production and equipment rental associations, and all the state and local Film Commissioners. The first step we had to undertake at the federal level was to educate elected officials about the "real" face of our industry — to dispel the People magazine image of red carpets and box-office grosses and underscore that this is also an industry of working men and women and small businesses throughout the United States. The success of that effort was fully realized when our supporters in the House and Senate introduced our first runaway production legislation The United States Independent Film and Television Act of 2001 in the 107th Congress and again this year in the 108th Congress. The bills had large and broad bipartisan support from Representatives across the country who recognized the impact of runaway production on their own communities.

Legislation in Pre-Production

In September, we made an important first step in our effort to secure federal runaway film and television production legislation. That month the Senate and the House began work on legislation that presented the best opportunity we have had to get our issue addressed and attached to a bill. That bill is S.1637, the Jumpstart Our Business Strength Act (JOBS) introduced by Senators Grassley (R-IA) and Baucus (D-MT) on September 18. This bill replaces existing export subsidy rules with a favorable tax rate deduction for U.S. manufacturers (which includes films and television productions).

The DGA, along with our co-sponsors Senators Lincoln (D-AR) and Snowe (R-ME), and with the support of Senators Baucus and Daschle (D-SD), worked out an alternative approach to dealing with the runaway problem: an immediate write-off of all production costs (similar in part to the current UK and German subsidy programs) for projects costing less than $15 million and a three-year write-off for projects in excess of $15 million. Having vetted this idea with AFMA and a number of producers who were positive about its potential impact, and knowing that this approach was more acceptable to all members of the Senate Finance Committee, our supporters worked closely with Chairman Grassley's staff to secure his support.

The Greenlight?

On October 1, the Senate Finance Committee included our runaway production proposal in the Chairman's legislation, S.1637 and favorably voted the bill out of Committee. This legislation will now go to the Senate Floor at a date yet to be scheduled and then into a joint Senate-House Conference Committee which will create the final House-Senate legislation.

On Tuesday, October 28, the House Ways and Means Committee met to "mark up" Chairman Bill Thomas's (R-CA) international export subsidy/domestic manufacturing bill, HR 2896, the American Jobs Creation Act of 2003. Speaker Dennis Hastert (R-IL) and Congressman David Dreier (R-CA) have been working closely with the Ways and Means staff on the inclusion of our proposal in their bill as well. Our Ways and Means supporters, Congressmen Mark Foley (R-FL) and Jerry Weller (R-IL) have also been heavily involved. Chairman Thomas made the decision to include no provisions, including our runaway proposal, that were in the Senate bill in the House legislation, knowing that those provisions would be included in the House-Senate Conference Committee where negotiations on the final bill take place.

However, other anti-runaway production provisions were put in the House bill. Most significantly Congressman Jim McCrery (R-LA) added an amendment to a special provision applying to income earned by studios outside the U.S. For producers to qualify for reduced foreign sales benefits, a 50% domestic content rule is applied. In other words, "50% or more of the total compensation related to the production of a film must constitute compensation for services performed in the United States by actors, production personnel, directors, and producers."

We still have far to go before our proposal is a reality but at this moment runaway production now has a place in federal legislation.

The PAC Leadership Council role has been instrumental to our success to date. The involvement of all of those elected officials mentioned above was a direct result of their meetings with the Leadership Council and DGA members. Thanks to the frank discussions that take place in those meetings we gained the understanding, and most importantly, the active support of these key Senators and House members.

The DGA thanks our Congressional supporters, and we also thank the DGA members who have played a part in making our voice heard with Members of Congress during these past few weeks: Michael Apted, Taylor Hackford, Irwin Winkler, Phil Alden Robinson, Clint Eastwood, Joe and Anthony Russo.
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News Regarding Canadian Runaway Production
Culled from the media

Directors Guild of Canada (DGC) President Alan Goluboff writes in the Summer 2003 issue of the DGC Newsletter:

"It is proving to be a difficult year for many of our members. Production levels are down, specifically in Ontario where 40% of our membership resides. At the time of writing, production levels there are down 40% with little on the horizon. The future also does not bode well in British Columbia where production is busy at the moment but does not look so positive for later in the year.

"Ontario has been devastated, to say the least, by ongoing concerns over SARS, the impact of which will be with us for a long time to come, affecting us all across the country. Adding to that, mad cow disease out West, West Nile virus, the Norwalk virus and the dropping U.S. dollar (causing our dollar to surge), it is apparent that we have a witches' brew of problems affecting all levels of the industry."

Reporters Brendan Kelly and Tamsen Tillson in the October 10, 2003, issue of Daily Variety write:

"The much bigger worry is the rising Canadian dollar. The loony, as it's known here, has soared from the low 60 cents to 75 cents in the past year, and some economists say it might hit 80 cents within months. The rising dollar already is convincing many American producers to look elsewhere for locations."

Media reporter Richard Blackwell in the October 9, 2003, edition of the Toronto Globe and Mail writes:

"The election of Arnold Schwarzenegger as California's governor has sent a shiver through the Canadian film industry, which is worried the superstar and former body builder could flex his new political muscles to try to keep movie production in his home state. ... Although Mr. Schwarzenegger may not have the inclination to take such action while he has much more pressing problems on his plate, "we are concerned," said Stephen Waddell, national executive director of the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA). ... 'If he comes out against production leaving California, which has a further rallying effect on leading performers — that's where we're really vulnerable,' Waddell said. 'If the Harrison Fords, or other performers who can green-light a movie just on their participation in it, take a position that "we're not working outside of California," it's going to have a devastating effect on production in Canada.'"
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The DGA PAC (Political Action Committee) ensures that the voice of the Guild is heard when important issues that affect the economic and creative livelihood of our members are being decided in Washington and in State Capitols. The DGA PAC Leadership Council includes many of the Guild's most prominent members who personally represent the concerns of our membership in face-to-face meetings with members of Congress. To join the Leadership Council, members contribute $1,200 annually to the DGA PAC.

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