Maryland Politician: Expropriate Hollywood’s Means of Production

by Tim Cavanaugh
A little-known codicil in Maryland’s draft budget threatens to seize House of Cards assets as negotiations drag on.

A state legislator in Maryland is threatening to seize the assets of the Netflix hit House of Cards after the show’s production company asked for assurances that the state would continue paying incentives for production in the Old Line State.

The Chavistoid scheme has already made it into a draft of the state’s budget. But its sponsor tells National Review Online the maneuver is harmless because it is unlikely to become law.

William Frick, a Democrat representing Montgomery County, introduced language into a state-house version of the budget ordering the state to use eminent domain powers to seize the property of any company that claims $10 million or more from the state’s production tax credit and then departs the state.

The Baltimore Sun’s Timothy B. Wheeler reports:

The provision would appear to apply only to the Netflix series, which has gotten the bulk of the state credits.

Frick’s amendment was accepted without debate. To take effect, the House language would need to be accepted in a conference with the Senate, which has already voted to increase the film tax credit.

Frick tells NRO he does not believe Maryland’s threat to seize the property of a company doing business in the state will have a chilling effect on other productions — or on companies in other industries looking to open up shop. (Maryland also offers tax credits for biotechnology investment, “Sustainable Communities,” “Clean Energy” production, and other businesses.) Frick argues that because the “Underwood amendment” is unlikely to stay in the reconciled budget, it won’t worry entrepreneurs.

“It sent a strong message and had dramatic value,” Frick says, “but it’s unlikely to stay in positive law once the bill is passed.”

He says that the state has already paid the studio $27 million and called his response “proportionate in tone to what they sent us.” Media Rights Capital (MRC) produces the Washington, D.C.-set series. The Beverly Hills company has said it will consider moving production to another state if the Maryland government doesn’t provide funding for an expansion of the tax-credit program for a third season of shooting.

“I think they were doing saber rattling to dramatically increase their leverage, and the state did the same,” Frick says. “I don’t think there is a serious probability of the state of Maryland becoming owners of the House of Cards franchise. So I don’t have fear that other businesses will worry that they’re going to lose their property.”

Megan Duzi, an associate vice president at Rubinstein Communications, which represents MRC, declined to comment on the tax credit or on the eminent domain language but provided a statement:

“We have had wonderful experiences filming the past two seasons of ‘House of Cards’ in the State of Maryland and love shooting here.”

The studio receives a donation from Maryland taxpayers equal to 27 percent of its production costs, in the form of tax credits that can be liquidated through local middlemen. House of Cards has completed two seasons of shooting in Maryland, and the producer has been negotiating with the state over a third season set to begin production in June.

House of Cards depicts Washington intrigue but does much of its shooting in Baltimore — in keeping with the strange dynamics of production tax credits, which encourage such odd results as locating the $70 million movie Battle: Los Angeles in Baton Rouge. Maryland is about mid-pack as state tax credits go.

Frick made his threat after MRC senior vice president Charlie Goldstein sent a letter to Governor Martin O’Malley informing the state’s chief executive that “we are required to look at other states in which to film on the off chance that the legislation [expanding the tax credit] does not pass, or does not cover the amount of tax credits for which we would qualify. I am sure you can understand that we would not be responsible financiers and a successful production company if we did not have viable options available.”

Frick was also blithe when asked about the total lack of evidence that production tax credits help the state economy. The case that they create net benefits for the taxpayer or Maryland businesses relies on extremely unscientific estimates of indirect economic multipliers. Job creation in the dramatic arts has been a fleeting phenomenon since at least Shakespeare’s time, and Hollywood accounting is notoriously opaque.

Frick say that “advocates of the program would tell you” that taxpayers received more than $27 million in value for their expenditure (which would put the total budget for the two completed seasons of House of Cards at about $100 million). “I don’t know that there are studies anyone can point to that are unequivocal on that point,” he added. Frick says he voted for the production tax credit in the past. 

— Tim Cavanaugh is news editor of National Review Online. Follow him on Twitter and Facebook.

Update: This article has been updated to include an after-publication response from Media Rights Capital.