HOLLYWOOD SLOWS DOWN; PRODUCTION DECLINES AS STUDIOS' GROWTH FLATTENS OUT.

Byline: Dave McNary Daily News Staff Writer

Los Angeles County saw a sharp falloff in production outside studio lots during the past two months as the industry apparently took a breather from the heavy pace of recent years, sources said Tuesday.

Activity by film crews shooting on local streets fell by 25.7 percent in September and 18.1 percent in October compared with the year-ago periods. The drop was due largely to back-to-back plunges of 41 percent and 44 percent in days of movie production, according to the Entertainment Industry Development Corp.

``A lot of what we're seeing is a flattening out of the activity because we had so much growth so quickly in the last few years that it could not keep up the same level,'' said Patti Stolkin Archuletta, director of the California Film Commission. ``We're also seeing Orange, Riverside and Ventura counties increasing activity. And there's no question that low-cost production in Canada is eroding our base.''

The recent declines have pulled county production, which grew by a supercharged 78 percent between 1994 and 1997, down by 5.6 percent for the first 10 months of this year to 37,953 production days. Movie production is down 12.6 percent, commercials have fallen by 6.8 percent and TV has slid 5.6 percent.

Cody Cluff, head of the EIDC, said he was not alarmed. ``I certainly wish the numbers were better, but you have to remember we're comparing the numbers to a record year that came at the end of three years of expansion,'' he said. ``The industry sometimes goes through these cycles.''

Cluff said he expected film production to pick up next year, while TV will remain strong and commercials may continue to decline slightly.

Archuletta said Canadian film commissions have become particularly aggressive in pursuing Hollywood producers, especially for movies of the week and commercials. ``Recent weaknesses in the Canadian dollar, coupled with labor incentives offered to California producers are making it incredibly cheap to film in Canada,'' she said.

Production on property owned by the state of California was up 2 percent through September after a 14 percent gain last year, while days of filming for the first nine months of the year slid 2 percent after surging 26 percent last year. Archuletta said the United Kingdom, Australia, Ireland and Mexico have been emulating Canada's efforts to lure Hollywood producers.

Debi Hausdorfer, managing director of the Orange County film commission, said economic activity related to production is up 30 percent this year in the country while requests for permits have doubled. ``We're seeing growth in all areas,'' she said.

Archuletta also said Ventura County's production has surged and noted it may be close to formally creating a film commission. Jim Thompson, head of the Real to Reel location services in Van Nuys, said Simi Valley, Thousand Oaks and Piru have seen extensive activity in recent months.

The figures from the EIDC, which issues permits for off-lot location shoots, do not reflect production on studio lots. But two of Hollywood's major studios - Disney and Warner Bros. - have trimmed the number of releases from their schedules and other studios have tried to put the brakes on spending for big-budget projects.

More modest spending translates to fewer production days. Additionally, the pace of production may have been sped up artificially late last year and early this year because of the threat of a strike by actors.

Yet, there is no panic in Hollywood over a crash in production activity. Thompson said activity is particularly strong in TV and commercials, and he forecast that any slowdown will be over during this winter.

``We are getting a lot of requests for warehouses with offices in them in the (San Fernando) Valley that can be used for three to six months,'' he said. ``We've already started to get work orders for next year's feature films.''

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CHART: FALL SLOWDOWN

Entertainment production in L.A. County has dropped off considerably in the last two months compared to the previous year.