Here is an interesting article on the Lost show.
No Spoilers, i promise!
Kind of a long read, but good.
http://starbulletin.com/2005/01/26/news/story2.html
LOST opportunity
ABC TV
Matthew Fox, Evangeline Lilly and Josh Holloway star in "Lost," filmed in Hawaii. Producers of the hit TV show are voicing doubts about continued production here.
High filming costs force
ABC network executives
to consider relocating
The hit television series "Lost," which is spending about $45 million in Hawaii in its first season on ABC, likely will relocate unless state and studio executives can find ways to offset the high cost of filming here.
"Nobody wants to move, but this is a business and we must consider options to cut expenses," said producer Jean Higgins.
The sentiment is shared by other ABC/Touchstone executives who agreed that the series is losing about $500,000 an episode, or $11 million for the first season's 22 episodes. Season one filming ends in April.
"Lost," with its ensemble cast, costly sound stage, office and storage space and crew expenses, arguably is the most expensive series on television, costing $2.5 million to $2.8 million an episode, several sources said. The series has cost at least $60 million to date, with 75 percent of its budget spent in Hawaii. About half of that spending is local crew salaries.
Hawaii production costs can be as much as 35 percent higher than in Los Angeles, but the higher costs of "Lost" are in the 25 percent to 30 percent range, several sources said.
State officials are taking steps to try to keep the highly watched weekly drama.
"We're actively working through the process and have had many discussions with ABC about these issues and possible solutions," said Ted Liu, director of the Department of Business, Economic Development and Tourism. "We do not yet have (an assistance) package ready."
One of the major issues for producers is the higher cost to film in Hawaii.
"This is all tied into (ABC/Touchstone's) perception of the cost differential between filming in Hawaii and Los Angeles," said Liu. He said the differential is less than 35 percent.
A conference call earlier this month between production executives in Los Angeles and Liu; Judy Drosd, chief officer of the Arts, Film and Entertainment Division of DBEDT, and Donne Dawson, Hawaii Film Office director, centered on ways to lower production costs, including using state tax credits available for investments in high-tech businesses, sources said.
The state's options are limited, though it could allow the production to use the Hawaii Film Studio rent-free, which would save ABC/Touchstone about $500,000 a year. The Hawaii Film Studio, which has a 16,500-square-foot sound stage, is being used by Fox Television's "North Shore" hotel drama.
The annual savings on sound-stage costs, however, would not be enough to keep "Lost" in Hawaii, ABC sources said.
Liu believes ABC/Touchstone wants to remain in Hawaii because "they've been successful here and cast and crew are happy."
"If I were a producer, I would say, 'Why tinker with a model that's worked?'" he said.
Jorge Garcia, who plays Hurley in the show, said the subject of relocating has been mentioned a few times. "We all immediately shoot it down," he says.
Liu said he hopes to have an assistance package ready by the end of February.
"Whatever we come up with, the state must be comfortable that it can offer this to other productions as well, and that's what is taking us time to prepare," Liu said.
"Lost" will get no special deal, he said: "That would be the worst for the industry, the worst for Hawaii, and the state ends up with everyone being suspicious and unhappy."
Another option has the state helping "Lost" get discounted contracts with local vendors for vehicle rentals, air transportation and accommodations, said Marsha Wienert, the state's tourism liaison. The production won't disclose these costs, but the amount saved likely would do little to offset the series' deficit.
According to several sources, "Lost" producers spend about $70,000 a month for its 30,000-square-foot sound stage in the former Xerox building, office space at Dole Cannery and storage units. The production also spends as much as $20,000 a month on a special air-conditioning system to cool the stage.
Because the show's current sound stage can only hold one major set, the production has had to do more shooting outdoors, adding $30,000 to $60,000 an episode to the budget, sources said.
The public may perceive that since the series is a hit, it's making money. But "Lost" is "not a bona fide hit" financially until it runs five years then goes into syndication, an executive said.
A major reason for the "Lost" budget problems surrounds Act 221.
ABC/Touchstone expected to raise as much as 20 percent of the show's budget from selling investment credits under the act, which is designed to encourage investment in the state's fledgling high-tech industry. For qualifying investments, the act provides a 100-percent tax credit over five years. According to sources, the Department of Taxation allowed fewer tax credits for each dollar invested than expected, which caused the budget deficit. Details of Act 221 transactions are confidential.
Some Hollywood filmmakers say the administration and Tax Department are being overly careful in granting Act 221 investment credits after production companies for "Blue Crush" and "The Big Bounce" films a few years ago received especially high returns. Universal reportedly got a $15 million to $18 million tax credit on the $41 million budget of "Blue Crush"; Warner Bros. received $13 million in tax credits on the $53 million budget of "The Big Bounce."
Some state officials and the public believed that "Blue Crush" took advantage of the legislation, which lawmakers later agreed had been too liberally written. The act has been tightened and applications more scrutinized.
"What happened back then can't happen now," Drosd said.
The Hawaii Film Office, the local Screen Actors Guild and others within the state's production industry this legislative session will propose a bill that provides a 15 percent to 20 percent tax credit for money that productions spend in Hawaii. The bill won't be voted on until after ABC/Touchstone executives decide whether to relocate.
The bill would allow productions to factor rebates into their budgets. The state currently offers productions a refundable 4-percent production expense and 100-percent hotel room tax credit, based on qualifying criteria. Several states offer production expense incentives more attractive than Hawaii's production and hotel room tax.
Competition to attract productions has become so intense that New Mexico Gov. Bill Richardson traveled to Hollywood last year to meet with executives from Universal, Dreamworks SKG, Warner Brothers, MGM and Paramount studios to lure them to his state. Since Richardson took office, 14 films have been shot in New Mexico, including the remake of "The Longest Yard," which star Adam Sandler wanted to shoot in Hawaii.
No Hawaii governor has traveled to Hollywood to help promote the industry.
If Hawaii loses "Lost," it's losing a wealthy neighbor that has spent heavily with local businesses.
When ABC/Touchstone was preparing its camera equipment order prior to arriving in Hawaii last spring, executives required supplier Panavision to open a Hawaii company. The production also uses Hawaiian and Aloha airlines exclusively to transport actors, executives and crew to and from Los Angeles.