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Netflix announced this week that if Georgia passes the prohibitive and dystopian-in-feel abortion law banning the procedure once a fetal heartbeat is detected, it would consider relocating its film and TV production from the state. Following on Netflix’s tail, Disney just announced that it too would reconsider the production it currently houses in the state of Georgia. Should the law pass, it would go into effect in January 2020, a short six months away.
Netflix And Disney Take A Stance
Companies have long refused to voice an opinion on controversial issues such as abortion. Last year, Delta made headlines when it removed flight discounts for NRA members to show support for gun control, despite the negative short term impact it might have on revenue.
Much in the same way, Netflix and Disney have chosen to speak out against abortion.
Netflix Chief Content Office Ted Sarandos said:
We have many women working on productions in Georgia, whose rights, along with millions of others, will be severely restricted by this law. It’s why we will work with the ACLU and others to fight it in court. Given the legislation has not yet been implemented, we’ll continue to film there, while also supporting partners and artists who choose not to. Should it ever come into effect, we’d rethink our entire investment in Georgia.”
Disney Chief Executive Bob Iger also spoke out, albeit with a more muted response:
“I think many people who work for us will not want to work there, and we will have to heed their wishes in that regard. Right now we are watching it very carefully.”
Both companies have pledged to reexamine their investments in Georgia should the abortion law pass. But will it make a difference?
The Implications For Georgia
Georgia acts as a prime production destination for the TV and film industry. In the US, it is the third largest production hub for film and TV after California and New York.
The state offers a tax incentive program to production companies that was introduced around ten years ago. Georgia provides production companies a 20% tax credit for any production or post-production in the state over $500,000. Production companies can take advantage of the tax break even if the spend is spread out over multiple production schedules. Production companies can benefit from another 10% credit with the inclusion of the state logo in the credits.
According to the New York Times, the production business accounted $2.7 billion in annual revenue. That might be understating the impact. According to CNBC, the state attracted ~455 projects the film and TV production business last year and 92,000 jobs came from the production business, accounting for ~$4.5 billion in wages. Moreover, it reportedly accounted for $9.5 billion in economic impact, which presumably includes not only the direct revenue generated by those businesses, but also the secondary and tertiary effects of having them stationed there.
Looking at Georgia’s state revenue, net revenue collection for FY2018 was $22.7 billion. Using these numbers as a rough estimate would mean the production business accounts for approximately 10% of state revenue. Not the primary revenue driver, but still notable.
Some have suggested that leaving the state would only affect workers not necessarily impact the state. And these numbers seem to somewhat agree. In this scenario where neither Netflix nor Disney have the leverage to put pressure on the state into preventing the law from going into practice, does it still matter that they speak out?
The Paradox Of Speaking Out
Both Netflix and Disney spoke out on the abortion issue, but their positioning differed. Note that Disney states the decision is driven by employees, treading carefully around the topic of abortion. Netflix, on the other hand, firmly declared that it would not only relocate investment but also help ACLU to fight the law in court.
In today’s public consciousness, companies are expected to speak out and take a stance. In the past, companies refused to speak out in fear of losing customers and negatively impacting the bottom line. But what we’re starting to see today is that despite alienating some customers, companies endear themselves to many others by demonstrating that it stands for more than just profit. Companies that engage in social discourse and stand up for a set of values are the ones who will gain speed against square competitors.
I’ve long believed Netflix has a cultural advantage over many of its direct and indirect competitors in the media space. Netflix is strongly rooted in what it stands for as a company. And its approach to the important topic of abortion demonstrates, once again, that intangibles build goodwill.
And follow Stephanie Denning on Twitter: @stephdenning
May 30, 2019 at 09:33AM
Forbes – Entrepreneurs