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Courting 'Ugly Betty'

Drawn by tax incentives, the show may return to New York, the city where its pilot was shot.

May 10, 2008

Talk about a blow to the ego -- Los Angeles is about to be dumped by "Ugly Betty." But the impending breakup isn't about something so shallow as looks. The popular ABC sitcom is poised to leave Hollywood for something much more substantial: money.

ABC Studios, which produces the comedy for its corporate sibling, may move the show to New York after two seasons here because the Empire State just tripled its tax incentives for film and TV. If it happens, the move would threaten more than 130 crew members and dozens of vendors that supply goods and services.

Although Hollywood has long complained about movies being shot in locales with lower costs, television production here has enjoyed healthy growth. That's why the news about "Ugly Betty," a show already in production, carried more than the usual sting. The implication was that New York's new incentives were so lucrative they overcame the relocation expenses as well as the city's relatively high cost of doing business.

Before every gaffer and set designer in Tinseltown starts to panic about wintering on the East Coast, though, they should remember that "Ugly Betty" isn't leaving so much as it's going home. The pilot for the show, which is set in Manhattan and Queens, was shot in New York with subsidies from taxpayers there. During the first two seasons of filming on Hollywood sound stages, the show used special effects to give outdoor scenes verisimilitude. By moving back to New York, "Ugly Betty" won't need to rely on such tricks of the craft.

We'd like to see our political leaders work to keep productions like "Ugly Betty," but the larger lesson is that once a state gets into the game of film subsidies, it has to keep raising the stakes. New York's initial 10% tax credit was trumped by Connecticut, which started offering a 30% credit in mid-2006. Within a year, Connecticut was attracting more than $300 million worth of TV and film business -- much of it at its neighbor's expense -- prompting Albany to respond in kind.

These states have small production businesses compared with Hollywood, meaning they can offer subsidies without providing windfalls to hundreds of films and TV shows that are already in place or have other reasons to shoot here. Every "Ugly Betty" that's wooed by incentives from other states will cost California millions in lost taxes and productivity, but it's hard to create a competing subsidy that won't unduly reward the ones that weren't going anywhere.

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