Is Hawaii Losing The Tv Show 'Lost'?

The state of Hawaii may be about to lose one of its highest profile employers, the ABC runaway hit, Lost.

"Nobody wants to move," Lost producer Jean Higgins told the Honolulu Star-Bulletin today, "but this is a business and we must consider options to cut expenses."

Some of those expenses have come in the form of a misinterpreted tax code. Hawaii has a tax law on the books called Act 221, which allows a 100% tax credit for investments in high tech businesses. Intended to help jump start Hawaii's tech sector, this credit was used by the films Blue Crush and The Big Bounce, saving the two films a combined total of 28 to 30 million dollars. That was money that the citizens and government of Hawaii feel they were cheated out of by a misuse of the tax credit and are determined not to let it happen again.

Enter Lost. Unlike some of the other productions that are currently making Hawaii a base of operations, Lost has a large ensemble cast and a number of special considerations which add a considerable amount to the budget. Touchstone Pictures, producers of Lost, fully expected to be able to take advantage of the Act 221 tax credits to help offset some of those extra production costs that have made the series one of the most expensive on television.

Losing Lost would cause a severe impact on local firms that have become major parts of the series' production. Touchstone required camera supplier Panavision to open a Hawaii office to service the production and while there are other productions in the area that can take advantage of Panavision's presence on the island, it's likely that office would close if the production goes to the mainland. Lost also uses a renovated former Xerox building as a soundstage at a fee of $70,000 per month. Special air conditioning for the soundstage costs the production another $20,000 per month. Since the site can only house one major set (the cave set seen almost every episode), the production has to do a lot more location shooting which is driving the per-episode budget up by $30,000 to $60,000. Lost also exclusively uses local airlines Hawaiian and Aloha to shuttle cast and crew back and forth from Los Angeles. In all, Lost will spend around $45 million during its first season in Hawaii, an amount that many in the state's government are loathe to lose.

The Star-Bulletin made the point that many people may think Lost is making money since the ratings so far have been good and the series is considered a "hit". The problem that most viewers don't realize is that many television series don't start to show a profit until it has been on the air for a few years. The license fees paid to Touchstone by networks like ABC in the United States and CTV in Canada only pay for a fraction of the production costs. It will take overseas sales and the hope of syndication for the real money to kick in.

The people who make Lost, which will wrap its current season in April, would like to stay in Hawaii if at all possible. Jorge "Hurley" Garcia told the paper that whenever the idea of moving is brought up, "We all immediately shoot it down."

Unfortunately, it may not be in the hands of the actors. If something can't be done to bring the costs of the series down, the producers may not have any other option. Other states have been actively courting the film industry with huge tax incentives and other perks that make moving productions there almost impossible to resist. Louisiana recently enacted a tax incentive plan for film and television production that was closely modeled on the Canadian tax plan that played a vital part in the launch of that country's entertainment industry. Vancouver has become a sort of "Hollywood North" and New Orleans would like to become the southern counterpart. Louisiana has already had several high profile film and television projects move to the area.

New Mexico is also making moves in the entertainment business. New Mexico Governor Bill Richardson has managed to get 14 films to shoot in the state since taking office and has traveled to Hollywood himself to court the likes of DreamWorks, Warners and Paramount. One of the films Richardson got to come to New Mexico was the Adam Sandler re-make of Burt Reynolds' The Longest Yard. Sandler had wanted that project to film in Hawaii but cost differential between the two locations was just too huge to ignore.

South Carolina also has a very active film and television community with sizable tax incentives that have lured long term productions like Dawson's Creek to the area. It's unlikely that the locations in SC would be able to stand-in for Hawaii but some of the other facilities could entice the production to make a move.