Connecticut’s film and digital media industry had a blockbuster year in fiscal 2012, raking in $118 million in state tax credits, as production companies added jobs, increased spending and grew their infrastructure in the Nutmeg State, records show.
Film tax credits issued by the state rose 69 percent from a year earlier, and several of Connecticut’s flagship companies were the biggest beneficiaries.
Bristol sports broadcaster ESPN earned the most, collecting $33.5 million in state film tax credits last year, while Stamford’s World Wrestling Entertainment banked $7.3 million.
Other big winners included Greenwich’s Blue Sky Studios, maker of the popular “Rio” movie, which took home $16.6 million.
NBCUniversal and its Stamford Media Center, a studio that plays host to popular talk shows like “Maury” and “The Jerry Springer Show,” received $18.4 million in film tax credits, records show
Officials say the significant increase in film tax credit spending is a signal that Connecticut’s fledgling film industry is beginning to mature into a key economic driver.
As many other Connecticut sectors have struggled to keep or add jobs the last few years, Connecticut’s film and digital media industry has been a bright spot in what has largely been a stagnant economy, officials say.
Since its 2006 inception, the state’s film program has issued $302 million in tax credits, which has leveraged about $1 billion in production expenditures and created 15,000 jobs, state records show.
“I absolutely believe the film tax credits are working,” said George Norfleet, director of the state’s Office of Film, Television & Digital Media. “The industry, as a whole, is expanding and creating jobs, and that is exactly what the tax credits are meant to do.”
The $118 million in tax credits received by the industry in fiscal 2012 were based on $426 million in total spending by production companies, Norfleet said. But not all that money was actually spent last fiscal year.
Many states offer some type of film tax credit program making it a competitive environment to recruit business, but Connecticut has established itself as a major player in the television and digital media space.
That is where the future of the industry lies in Connecticut, Norfleet said, adding that the main purpose is to attract new jobs to the state.
Some are even calling Connecticut the sports media capital of the world with ESPN, NBC Sports, Yes Network and Hartford’s fledgling golf lifestyle channel Back9Network, now calling the Nutmeg State home.
“As jobs grow, production expenditures grow,” Norfleet said.
The state offers three tax credit programs for production, infrastructure and digital animation, which were originally established in 2006. The film and digital media tax credit is the most popular and is tiered to reward productions that make higher expenditures. Companies can receive as much as a 30 percent tax credit if they spend over $1 million on production costs.
Companies can also sell film credits if their total value exceeds their state tax bill.
The state’s film tax credit program hasn’t been without controversy. With the state continuing to battle tax hikes and spending cuts tied to its budget deficits, some groups have argued that the state is spending too much money on the film program and there have been several efforts in recent years to cap the tax credits.
Connecticut Voices for Children has previously attacked the state’s subsidies for the entertainment industry as a “money-losing proposition.”
Wade Gibson, a policy analyst with Connecticut Voices, said the biggest issue with the film tax credits is gauging their overall economic impact.
It’s not enough, he said, to say how many jobs were created as a result of the program, he said. More information is needed on the pay and benefits from those jobs.
Also, it is difficult to gauge whether companies would make the promised investments even without the tax credits, Gibson added.
“We don’t think there is enough information provided about the dollars we are spending on these tax credits to know if the $118 million is being spent in the best possible way,” Gibson said. “To some extent it’s impossible to know.”
What can’t be disputed, however, is that the digital film industry has found a strong foothold in the state.
ESPN has been a big part of that growth. Since 2009 the Bristol sports media giant has created or relocated 700 jobs to Connecticut. It also invested in significant infrastructure projects like the build out a few years ago of its 139,000 square foot transmission and research and development unit — known as “Building 13” — on its Bristol campus, said ESPN spokesman Mike Soltys.
Soltys said the state’s tax credit program has led ESPN to focus on growing its digital media business, which includes ESPN.com, ESPN Mobile and other segments, in Connecticut at a time when many other states are trying to woo it.
Besides Connecticut, ESPN has also been growing in Los Angeles, Charlotte, Orlando, Fla., and Brazil, Soltys said.
“The tax credits are an important component when making decisions on where we are going to be expanding,” Soltys said. “We have facilities in many other places and have the ability to grow in many other places. But our preference is to grow in Connecticut.”
ESPN’s $33 million in tax credits were based on $123 million worth of investments, records show. But Soltys said some of those investments were actually made prior to 2012, but the tax credits didn’t get cleared until last year.
Additionally, the payout total didn’t include the up to $25 million in incentives ESPN is eligible for under Gov. Dannel P. Malloy’s “First Five” program.
ESPN was a “First Five” recipient in 2011, and will receive a mix of loans and tax breaks from the state for adding at least 200 jobs within five years. ESPN is also investing more than $100 million on a new 193,000-square foot digital center on its Bristol campus that will house four studios, six production control rooms, 26 edit rooms, and serve as the new home of ESPN’s flagship program, “SportsCenter.”
Kevin Segalla, president of the Connecticut Film Center and one of the leading proponents of the state’s film tax credits, said the state has reached a critical mass that is leading to a snowball effect of activity for the industry.
Despite budget pressures, Segalla said policymakers will continue to support the program because without it, the film industry wouldn’t have emerged in the state.
“The tax credits have been the impetus to get the ball rolling,” Segalla said.
