Sony and Warner Bros. Gear Up for Political Fight for Las Vegas Studio

As a seasoned entertainment industry professional with over two decades of experience under my belt, I find myself intrigued by this development in Summerlin, Nevada. The proposed construction of soundstages by Sony and Warner Bros. is reminiscent of a classic Hollywood rivalry, albeit one played out on the business side rather than on-screen.


Sony and Warner Bros. are gearing up for a major showdown in Las Vegas, each vying for government support to construct competing film production sites.

Businesses are considering extending their reach beyond Los Angeles, and they find Las Vegas just 75 minutes flight time distant. Much like many site selection choices, the decisive element is often whether the state is prepared to grant tax concessions.

Leaders in Nevada are aiming to reduce the heavy dependence of Las Vegas’s economy on tourism and gambling by introducing new industries. However, they have shown hesitation regarding the costs associated with these proposed plans.

That has set up a competition between the studios over which would pack a greater punch.

Warner Bros. is planning a larger-scale production venture encompassing more films and TV shows compared to their usual output. This proposition has been endorsed by Sen. Roberta Lange in the legislature, who believes that Warner Bros.’ unique ability to maintain a full studio from day one sets them apart as a significant advantage.

Sony’s studio could be scaled down, resulting in lower costs for the state, as it would be integrated into a broader commercial project encompassing retail and hotel facilities.

David O’Reilly, the Sony project developer, stated, “We will prove, illustrate, and win your support with this project. This endeavor promises significant economic expansion.

Currently, Nevada provides filmmakers with a yearly incentive of $10 million. This is relatively small compared to other states in the region. For instance, New Mexico grants up to $120 million annually and offers an unlimited credit for its “film partners” such as Netflix and NBCUniversal. In 2022, Arizona approved a yearly incentive of $125 million.

In 2023, Lange suggested escalating the annual Nevada credit to a total of $190 million over a period of twenty years. Notable supporters included Mark Wahlberg, a Las Vegas resident, as well as Jeremy Renner, who advocated for incorporating funding for film projects in northern Nevada, where he resides. Additionally, local construction trades and the Las Vegas branches of IATSE and the Teamsters backed this incentive, expressing their support.

Initially, the duo of studio projects collaborated to advocate for legislation that aimed to provide financial assistance to both entities. However, this bill failed to progress as the state prioritized a $380 million incentive to construct a new baseball stadium for the A’s, located on the Las Vegas Strip.

Based on reports from those involved in the discussions, it appeared that the state’s top officials, including Governor Joe Lombardo (Republican), were recognizing that the public was becoming weary of receiving subsidies. Previously, the state had offered a $750 million stadium subsidy to bring the Raiders to Las Vegas. However, spending almost $200 million annually on movies became increasingly unaffordable for them.

Initially, lawmakers sought a significant amount, but due to circumstances, they had to reduce their request. Consequently, the two projects, who were previously collaborative, found themselves competing against each other instead.

In a span of two years, the Nevada Legislature reconvenes for sessions. Therefore, the chance to propose a film incentive bill will arise again in the springtime next. Each proposed initiative will be presented through distinct bills, each sponsored independently.

Lange is supporting the Warner Bros. development initiative, planned for a UNLV business district located in southwest Las Vegas. The specifics are still being worked out, but it’s anticipated that the project will require approximately $100 million annually in tax incentives, along with additional funding in the millions for production within other areas of Nevada.

Sandra Jauregui, who holds the position of Assembly majority leader, is advocating for the Sony initiative, an undertaking that is estimated to cost the state approximately $80 million annually. An additional $25 million will be reserved for productions taking place elsewhere. Wahlberg is also among its backers, playing a significant part in facilitating Sony’s involvement in this project.

Sony and Warner Bros. Gear Up for Political Fight for Las Vegas Studio

Sony, along with Howard Hughes Holdings – a development company, intends to construct ten soundstages in Summerlin, an expertly designed community located on the outskirts of Las Vegas’ western edge. This project forms part of a larger $1.8 billion commercial endeavor, encompassing up to three hotels.

Supporters are funding a research project that claims the state will receive substantial financial gains as a result of their investment. The Warner Bros. group plans to publish a similar report, suggesting even greater economic advantages.

Both teams are emphasizing the strong points of their respective projects, but lately, they’ve been hinting at the potential flaws in their competitors’ work as well.

In a recent interview, the CEO of Howard Hughes, O’Reilly, pointed out that Sony boasts a financially stable position, a stark difference from Warner Bros., which is weighed down by approximately $40 billion worth of debt.

In contrast, Warner Bros. boasts about its size, investing around $20 billion annually in content production, which creates a less favorable position when compared to the more compact Sony.

Warner Bros. intends to allocate at least $500 million annually for production once their Las Vegas studio is finished, which equates to approximately $8.5 billion over a 17-year period. On the other hand, Sony’s studio anticipates around $270 million in annual production expenditure; however, it’s important to note that only a third of this amount will be provided by Sony itself. The remaining funds will be contributed by other production companies who will lease the studio space from them.

In contrast to film incentives in most other states that aren’t connected to specific facilities, Nevada bills stand out as unique, having been initially conceived by Birtcher Development five years ago in discussions with UNLV regarding ways to encourage the building of soundstages at the Harry Reid Research and Technology Park. The idea was to incentivize film production construction there.

Instead of capturing all scenes for films and series based in Las Vegas on location, followed by studio work in Los Angeles, constructing film sets within the city itself could attract those job opportunities to Nevada. This strategy aims at cultivating a local team of professionals over an extended period.

The financing for building both ventures will come from private sources. However, financial aid is available for projects that make use of this facility. As previously suggested in 2023, the tax credit would equal 30% of production expenses, which aligns with the rates offered in Georgia and other regions.

Warner Bros. partnered with UNLV/Birtcher’s team in August, pledging to invest approximately $500 million per year into production. If they manage to maintain this level of investment at a yearly subsidy of $100 million (which equates to 20%), it would prove to be a more economical choice compared to the Sony project, which remains slightly over 30%.

However, it’s important to note that this “if” is still up in the air, as no formal legislative language has been written yet and the figures are subject to change, making an accurate comparison challenging. The Sony team emphasizes that their proposal involves considerable extra development work, which could create jobs without requiring any subsidies.

In this situation, both parties are arguing about who would make a more dependable ally. The Sony team points out that Howard Hughes already owns the property where the studio will be constructed, whereas Warner Bros. and Birtcher are renting land from the UNLV Research Foundation. This means they have less freedom and control over their decisions.

Sony’s project is considered “ready to go,” but the exact timeline for construction of either project remains uncertain.

In the state of Arizona, a tax credit bill, passed in 2022, aimed to encourage the building of soundstage facilities within the Phoenix metropolitan region. Shortly after its approval, two separate projects publicly declared their intention to commence construction by the next year.

Since then, however, there have been few updates about either project.

Read More

2024-09-13 19:47