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Sony Pictures Layoffs Won't Hurt Culver City Financially

Olivia Niland |
April 3, 2014 | 1:09 p.m. PDT

Staff Reporter

Sony Pictures Studios let go of 216 employees last month (Olivia Niland/Neon Tommy)
Sony Pictures Studios let go of 216 employees last month (Olivia Niland/Neon Tommy)
In the aftermath of Sony Pictures Entertainment’s announcement that it was laying off more than 200 employees at its Culver City headquarters, the local effects of the company’s cost-cutting measures remain to be seen.

Sony, a division of Sony Corporation, gave notice that 216 employees in various divisions and offices in Culver City would be laid off beginning March 17, according to a notice filed with the California Employment Development Department. Sony first announced its $250 million cost-cutting initiative last Novemeber, following an operating loss of $181 million in its fiscal second quarter. In January, an undisclosed number of employees in Sony Pictures’ Technologies group, including the unit’s president, Chris Cookson, were let go.

According to a former Sony employee, who signed non disclosure agreement and has to remain anonymous, many employees were expecting the layoffs. Investor Daniel Loeb, who was also formerly one of Sony’s top shareholders, made multiple inquiries into the company’s spending, and in January, called upon Sony Chief Executive Officer Kazuo Hirai to make “difficult decisions.”

Given Sony Pictures Entertainment's presence in Culver City, the recent layoffs and cutbacks have created concern that company's cost-cutting measures will negatively affect the local economy. However, city officials say that the current Sony Pictures layoffs are unlikely to have a substantial economic impact

“Bigger for us would be the business tax generated from film related businesses in the city,” said Jeff Muir, chief financial officer for Culver City . “The studios themselves generate over $3 million per year in business tax."

Culver's Non-studio film industry related business tax revenue totaled $830,575 between 2013-14, while the revenue earned from film permits totaled just $42,365 during the last fiscal year.

However, The Culver City area does generate small revenues from post-production, as well as tourism brought into the area for studio tours and live tapings of shows such as “Jeopardy!” and “The Queen Latifah Show.”

“We are concerned when Sony, or any major employer in the city, is laying off large numbers of employees,” said Muir. “The film industry is very important in Culver City, particularly as the home of two large studios [Sony Pictures and The Culver Studios.]”

Though it won't damage the city finacially, Sony's shrinking studios will leave a hole in the city's culture and reputation.

Muir explained the indirect benefits of studio employees spending money in Culver City, and "employment opportunities for citizens, indirect businesses that provide services or supplies to the studios, hotel tax from individuals associated with the studios in Culver City hotels on business, etc.”

Certain Sony employees were let go immediately, though others were given the option of remaining at the company until the end of the pay period in June, said the former employee, adding that another round of layoffs at Sony Pictures could be coming.

Sony Pictures Entertainment did not respond to a request for comment on the possibility of future layoffs.

Reports that certain Sony Pictures positions, but not employees, will be relocated out of state or internationally have given rise to concerns about runaway production in Culver City, a Hollywood phenomenon that has negatively impacted Los Angeles. But unlike Hollywood, filming makes up a small portion of Culver Ciity’s revenue, said Muir. 

Despite the fact that Culver City has not sustained the same negative impacts of runaway production as other parts of Los Angele, Culver City Major Jeffrey Cooper has called film and television production “the lifeblood of Culver City,” and the city has taken steps to remain accommodating to film studios.

“The city is supportive of legislation that keeps California as competitive as possible,” said Muir. “The city council has also supported some changes to our local business tax regulations that are more friendly to the studios.”

Though city officials predict that the immediate impact of the Sony layoffs at a local level is unlikely to be substantial, this may change as those affected continue to leave the area in the coming months, particularly if reports of future layoffs are substantiated. 

“Generally speaking, to date we have not seen this having a direct material financial impact on the city,” said Muir. “But certainly there are effects, and obviously there is a tipping point if there are dramatic numbers of layoffs at some point.”

Reach Staff Reporter Olivia Niland hereFollow Olivia Niland on Twitter @olivianiland.



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