Hollywood Companies Have Extracted Billions of Public Dollars

July 19, 2023

It’s been over two months since the Writers Guild of America (WGA) began striking, and they now join the Screen Actors Guild American Federation of Television and Radio Artists (SAG-AFTRA) to fight for more equitable pay and protections from artificial intelligence. The powerful companies they’re up against have recorded high profits in recent years and taken billions of dollars in public subsidies from the workers who make their success possible.  

Hollywood sign on green hill with blue sky.
Source: César Guadarrama Cantú on Unsplash

Together the WGA and SAG-AFTRA represent over 170,000 workers striking together for the first time since 1960, fighting for fair wages and their share of residuals, the pay given to actors when their work is replayed. Many actors have been showing off the minuscule residual checks they’ve gotten from streaming giants such as Netflix and Amazon, while some studios claim that information is too hard to track.  

Both unions are striking against the Alliance of Motion Picture and Television Producers (AMPTA), a trade association that represents over 300 movie studios, broadcast television networks, and streaming services. This includes Universal Pictures, Walt Disney Studios, ABC, CBS, Netflix, Apple TV+, and many other power players. These companies have boasted high profits in recent years, with Netflix netting $5.6 billion in 2022, Warner Bros. with $2.7 billion, and NBCUniversal with $942 million. 

Some of those profits are thanks to film subsidies and tax abatements the companies have been able to extract from state taxpayers. In the last 15 years, seven of the largest production companies have received more than $3.5 billion in Film & TV Tax Credits – and that’s only from states that have transparent disclosures. It represents only a fraction of the billions given out annually from the 37 states offering production incentives.  According to Good Jobs First’s Subsidy Tracker, from 2007 to 2022:

    • Disney Productions amassed more than $1.5 billion via film subsidies, and another $500 million from other “job creation” or investment subsidies.
    • Paramount Global got $1.6 billion in film tax credits. That includes an over $115 million subsidy for Madam Secretary in New York, given to Paramount’s subsidiary Eye Production Inc.
    • Warner Bros. got $521 million via film credits. This includes over $30 million dollars from Louisiana for the production of the film Green Lantern.  

These deals are costly: Georgia’s film subsidies costs residents $1 billion annually; New York’s residents lose $700 million to them annually, and California’s giveaways will cost taxpayers more than $330 million annually for five more years. Film and TV production “tax credits” are actually cash gifts – they’re given in the form of transferable or refundable corporate income tax credits.

Their value is equal to up to 40% (depending on the state) of a studio’s in-state spending. Transferable credits enable producers to sell or transfer the credits to other companies for cash, and the buyers use them to lower their state income obligations, dollar for dollar. Refundable credits means that if a company cannot use all its credits (because the credit exceeds the company’s income tax bill), the state will return the value of the unused credits in cash. 

They’re notorious for very negative Return on Investment (ROI) rates: for example, the Georgia Department of Audits found that for each $1 a film company gets, the state loses 90 cents. Despite the empirical consensus that film and TV fail to benefit taxpayers, states continue to keep and even increase these programs. In fact, many states upped their media giveaways during the pandemic, and even within the past month: 

With record profits and billions in taxpayer subsidies each year, production companies owe their writers and actors a fair deal. WGA estimates that its changes would only cost around $429 million annually, while SAG-AFTRA has yet to release its figures.  Incentives must work to empower communities and workers, not just studio CEOs, by making sure that all of those who make the media we receive get their fair share.  

Read more about film subsidies here.