After Warner Bros. Discovery pledged this summer to commit a half billion dollars annually toward productions in Southern Nevada should the Legislature dramatically expand its film tax credit program in the upcoming session, the media conglomerate released its first economic impact report on the proposal.
The more than 60-page report released Wednesday morning indicates that the proposal, which includes a film studio partnership with UNLV and Birtcher Development, is projected to create 16,000 high-wage jobs and increase Nevada’s gross state product by $13.5 billion during the next 15 years. The proposed film tax credits offered by the state would total $1.4 billion during that time span.
Compiled by the international consultancy firm Nordicity and the accountancy firm Saffery, which have put together analyses of film tax credits in other jurisdictions, the report notes that the program will diversify Nevada’s economy with a new film and TV industry that has an average salary of $84,714 a year (35 percent higher than Nevada’s economywide average of almost $63,000 in 2023), and that state and local governments will recoup 92 cents in tax revenue for every dollar of tax credit issued. It is also projected to create more than 1,000 construction industry jobs during the 36-month studio development phase.
Though proponents originally said the plan would be a 17-year commitment, the proposal’s time frame is now 15 years. The proposal notes that the plan would commit the film studio to a minimum of $500 million in the first three years of the program and annual content spending of $667 million for the remaining 12 years.
That commitment — which the company says will add $1.2 billion each year to the gross state product — comes in exchange for the state offering $95 million in film tax credits annually during that same time frame. The expansion would be about a ninefold increase from the annual $10 million in transferable tax credits Nevada law currently allows.
Under Nevada’s current film tax credit program, credits are capped at $6 million per production and the amount of credits issued for production is primarily based on a percentage of wages and qualified production costs.
Tax credits can be used to offset a company’s tax liability, reducing the amount of taxes owed by the amount of the credits. Making them transferable would allow companies to sell the credits to other entities after receiving them.
A 2024 analysis of the state’s film tax credit program by the Nevada Governor’s Office of Economic Development found that tax credits given to 12 productions during the 2024 fiscal year generated about $15 in economic impact per tax credit dollar. Economic impact accounts for direct spending, the indirect spending of vendors in the economy and the “induced” impact of people spending wages in the economy.
Economists have largely downplayed the economic benefits of film tax credits, with programs in other states not providing much return on investment and even disinvestment over time. During the 2023 legislative session, critics of the proposed legislation included progressive groups and the Republican Party.
Those unexpected allies lambasted the legislation for the amount of tax credits proposed in the bill, which at that time planned to offer as much as $190 million in annual film tax credits. Progressive groups pointed to the need to support other critical services that lawmakers have long described as underfunded, including education, child care, health care, affordable housing and mental health services.
“This bill is a truly astonishing proposal to give handouts to the already wealthy and well-connected, while ignoring the small businesses that are the heartbeat of our economy,” Republican National Committeeman Jim DeGraffenreid wrote in an opposition statement.
Opponents have also highlighted studies showing that the benefits of major film tax credits do not outweigh the costs. That included a 2010 analysis of film subsidies from the progressive-leaning Center on Budget and Policy Priorities, which found that subsidies result in “not much bang for too many bucks.”
But Warner Bros. Studios Chief Operating Officer Simon Robinson responded to the criticism by saying the media conglomerate is planning to sign a long-term studio lease with the potential to purchase the studio, create a new health care and day care facility and build a studio-based attraction similar to ones in Hollywood, London and Tokyo.
He also said Warner Bros.’s partnership with UNLV to establish the Nevada Media and Technology Lab, a 50,000-square-foot facility dedicated to supporting training programs for those wanting to work in the film and television industry, is another example of its long-term commitment.
“This isn’t just us opportunistically taking advantage of tax credits. We truly are looking to partner with the state on building and diversifying the economy and building a brand-new business here,” he told The Nevada Independent.
The analysis noted that the long-term studio lease and associated investment in infrastructure “serves as the functional equivalent of a non-relocation agreement for the State of Nevada.”
The proposal’s timeline starts with the film tax credit expansion being submitted to the Legislature in 2025. If the legislation is enacted, construction is planned to begin on a Warner Bros. Studio Nevada sometime in the fall of that year. The media conglomerate would occupy warehouse space in Las Vegas beginning in the fourth quarter of 2025 to begin filming productions while construction is ongoing.
Robinson said releasing the impact report allows all parties to examine it and ensure that the return to the state matches its investment.
Though the proposal is centered in Southern Nevada, Robinson said the projected revenue generated by the project is expected to benefit the state as a whole, and the northern part of the state has some fantastic filming locations as well. He added that the proposed media lab is open to all Nevadans, and the plan is to work with students interested in the film industry from across the state.
Robinson also addressed Warner Bros.’s financial issues, including its declining cable business, a debt of nearly $40 billion and a $9.1 billion write-down of the value of its TV networks. A write-down is the practice reducing the value of an asset to offset a loss or expense.
He said that cable television, which is one part of the company’s portfolio, has taken a downturn, and almost every cable media company in the last few years has taken write-downs. Reporting and managing it reflects a fiscally responsible company, he said.
On the debt front, he said that the company’s debt is well-structured and it’s cheaper than what the U.S. federal government is paying on its debt.
“We are generating cash way ahead of expectations of paying the debt down,” Robinson said. “So I think the debts are a whole non-story, and if you talk to anyone in the market, they’ll give you the same answer.”
Robinson said there may be times when other studios come in to produce in Warner Bros.’ facility, similar to other lots, but there’s enough demand within the film industry to fill sound stages from day one. He added that the media company is spending time this week to find some temporary solutions so it could start filmmaking near the end of next year.
“We’ve got at least two major motion pictures that would love to come and start shooting in Nevada tomorrow if they could,” he said. “Obviously, the studio is not be built for two or three years, but we’d like to hit the ground running and within … the first three years, certainly be making movies and making TV here a long time before that.”
Sen. Roberta Lange (D-Las Vegas), who proposed a bill in the 2023 legislative session to expand the film tax credit program that fizzled out, will bring forward the proposal to the Legislature next year.
Lange and other supporters of the proposal have heralded the expansion as an economic diversification opportunity. She has said that the legislation will have a contingency plan that would require that tax credits be available only after private companies set up a minimum amount of infrastructure, with production processes being prequalified by the state and then audited before receiving credits.
The pitch for a film tax credit expansion comes as Assembly Majority Leader Sandra Jauregui (D-Las Vegas) has discussed a separate film tax expansion proposal. Jauregui announced earlier this year that she would introduce similar legislation to establish a Las Vegas-based production studio and workforce training program in partnership with Sony Pictures, another one of the country’s “Big Five” major film studios, and developer Howard Hughes Corp.
Robinson didn’t specify whether he thought there would be room for a compromise with Sony but said he’s focused on establishing Warner Bros.’s credibility with the state and that there will be time to discuss the proposal with legislators.
