$4.5M Net­flix deal clears first hur­dle

Me­dia gi­ant pledges to spend $600M in 5 years

Albuquerque Journal - - FRONT PAGE - BY STEVE KNIGHT AND ADRIAN GOMEZ JOUR­NAL STAFF WRIT­ERS

Mem­bers of the Al­bu­querque De­vel­op­ment Com­mis­sion on Thurs­day unan­i­mously voted to rec­om­mend that the City Coun­cil pass a $4.5 mil­lion eco­nomic in­cen­tive pack­age for Net­flix, the me­dia ser­vices gi­ant in ne­go­ti­a­tions to pur­chase Al­bu­querque Stu­dios.

Com­mis­sion­ers also asked the coun­cil to take im­me­di­ate ac­tion on the pro­posal. The coun­cil’s next meet­ing is Mon­day.

Syn­thia Jaramillo, di­rec­tor of the city’s Eco­nomic De­vel­op­ment De­part­ment, told com­mis­sion mem­bers that the deal with Net­flix would “en­sure a higher, stead­ier sup­ply of pro­duc­tion from the world’s largest pro­ducer of con­tent.”

“The new Al­bu­querque Stu­dios hub will serve as home to orig­i­nal se­ries and films, and will give Net­flix op­tions in­side and out for film­ing new se­ries and films,” Jaramillo said.

She said an es­ti­mated 30 per­cent of a project’s bud­get goes to­ward lo­cal ven­dor ser­vices and the ma­jor­ity of that

spend­ing will take place in the Al­bu­querque area, even if shoot­ing oc­curs out­side the stu­dio.

In ad­di­tion to Al­bu­querque’s con­tri­bu­tion of $4.5 mil­lion in Lo­cal Eco­nomic De­vel­op­ment Act fund­ing, Net­flix is ask­ing for $10 mil­lion in LEDA funds from the state, but that trans­ac­tion was not un­der ADC re­view.

Be­cause the city is act­ing as fis­cal agent for the state’s LEDA funds, how­ever, that part of the in­cen­tive pack­age pro­posal will also be sent to city coun­cilors for ap­proval.

As part of the pro­posed agree­ment, Net­flix com­mits to di­rect spend­ing on its own pro­duc­tions in New Mex­ico of at least $600 mil­lion in the first five years oc­cu­py­ing the stu­dio, and $400 mil­lion in di­rect and in­di­rect spend­ing — in­clud­ing leas­ing the fa­cil­ity to other com­pa­nies — in the fol­low­ing five years.

Sher­man McCorkle, ADC chair­man, said the pro­posal is among the best of­fer­ings he has seen in eight years on the com­mis­sion.

“I think it will end up be­ing a ma­jor book­mark, some­what like Face­book, in terms of an in­vest­ment, but it will cre­ate jobs where oth­er­wise jobs would not have been cre­ated,” McCorkle said. “It will keep many of the sons and daugh­ters of na­tive New Mex­ico fam­i­lies at home. That in it­self is a ma­jor ac­com­plish­ment.”

Of­fi­cials from Net­flix told a news con­fer­ence on Mon­day that they are in ne­go­ti­a­tions to pur­chase Al­bu­querque Stu­dios with plans to make it a prin­ci­pal pro­duc­tion hub in the United States.

Net­flix has com­mit­ted to spend at least $2.5 mil­lion in cap­i­tal im­prove­ments at the Al­bu­querque Stu­dios fa­cil­ity, as well as main­tain and op­er­ate the fa­cil­ity for at least 10 years.

Al­bu­querque Stu­dios, in the Mesa del Sol com­mu­nity, in­cludes nine sound stages, pro­duc­tion of­fices and a back­lot.

Com­pany of­fi­cials did not re­lease de­tails about the sale price of the stu­dio dur­ing the Mon­day con­fer­ence but did say the deal would bring about 1,000 film and tele­vi­sion pro­duc­tion jobs per year.

Net­flix has brought projects to New Mex­ico, such as the Emmy-win­ning Western se­ries “God­less,” as well as “Long­mire,” “Cham­bers,” “Mes­siah,” “The Ridicu­lous 6,” “Day­break,” “The Bal­lad of Buster Scruggs” and “Walk. Ride. Rodeo.”

Claw­backs in­clude mone­tary penal­ties if Net­flix’s spend­ing by Dec. 31, 2023, is less than 90 per­cent of the $600 mil­lion per­for­mance tar­get or spend­ing is not at least an ad­di­tional $400 mil­lion by Dec. 31, 2028. They also in­clude mone­tary penal­ties if Net­flix ceases op­er­a­tions at the stu­dio be­fore Dec. 31, 2028.

The stu­dio is also home to the New Mex­ico-based dig­i­tal and satel­lite net­work REELZ.

The net­work broad­casts var­i­ous TV events, minis­eries, movies, and se­ries fea­tur­ing big sto­ries and big stars, along with orig­i­nal con­tent.

Ac­cord­ing to the net­work, there is no im­pact for REELZ in New Mex­ico.

“A Net­flix com­mit­ment to New Mex­ico as an­nounced at this week’s news con­fer­ence is ex­cit­ing and should be read as con­fir­ma­tion for qual­ity of work force and strength of state, city and other lo­cal sup­port to the TV and film in­dus­try,” a state­ment said. “If Net­flix does buy ABQ Stu­dios, REELZ will have a new land­lord and that is the only im­pact on our com­mit­ment to New Mex­ico,” a state­ment said.

On Mon­day, Ty War­ren, Net­flix vice pres­i­dent for phys­i­cal pro­duc­tion, said that be­tween the in­fras­truc­ture and ex­ist­ing crew base in New Mex­ico, it was a win for the com­pany to move here.

He said a broad range of prod­ucts would be made here.

“Of course, we want to take ad­van­tage of the beau­ti­ful land­scape, all of the lo­ca­tions that are in the area for sure,” War­ren said. “Hav­ing state-of-the-art fa­cil­i­ties like this here is su­per-ex­cit­ing for us. Not ev­ery place has beau­ti­ful sound­stages like this. (Ex­pand­ing) will de­pend on the amount of shows we’re go­ing to do here. The fa­cil­ity is gor­geous as it is. Our plan is to go show by show and see how things evolve.”

MARLA BROSE/JOUR­NAL

Net­flix is poised to pur­chase Al­bu­querque Stu­dios and is ex­pected to ben­e­fit from an eco­nomic in­cen­tive pack­age.

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