In denying the tax breaks on new film projects, senators cited the $1.03-billion haul from movie ticket sales in January, a 19% year-over-year increase, according to industry tracking firm Media by Numbers. “They had their best January ever," said Sen. Tom Coburn (R-Okla.), who led the charge against the tax breaks.
Movie studios actually share a portion of ticket sales with theater owners. And despite the box-office figures, the motion picture industry has suffered during the recession like other industries. Film financing has dried up as part of the credit crunch, and DVD sales, which had propped up studios' profits for years, dropped 9% in 2008.
Case in point: Walt Disney Co. on Tuesday reported its fiscal first- quarter profit had fallen by nearly a third.
Hollywood's economic troubles gave the Motion Picture Assn. of America fodder to argue that its member studios needed the tax breaks. Inserted into the legislation by Senate Finance Committee Chairman Max Baucus (D.-Mont.), the provision in the $885-billion stimulus package would have allowed film projects started in 2009 to qualify for an immediate 50% write-off.
But the arguments of Coburn and Sen. John McCain (R-Ariz.), punctuated by January's surprising box-office figures, proved persuasive. The Senate voted 52 to 45 to remove the provision -- 13 Democrats and one independent, Sen. Joe Lieberman of Connecticut, joined with 38 Republicans to pass Coburn's amendment removing the studios' tax breaks from the legislation.
“Hollywood's doing OK," McCain said. California Democrats Barbara Boxer and Dianne Feinstein opposed the remova
