Thursday, January 8, 2009

ReelzChannel relocating to Albuquerque

By Meg James
Los Angeles Times

ReelzChannel, hit by the ad slowdown, is lured by Albuquerque cost incentives.

ReelzChannel, the fledgling cable channel that dubs itself "TV about movies," is pulling up stakes from the entertainment capital of Los Angeles and moving to Albuquerque.

More than 125 people who work for the 2-year-old channel in Los Angeles learned of the relocation plans Wednesday. The announcement came a month after ReelzChannel fired 40 workers and canceled its signature show, "Dailies," amid a drop in spending by advertisers.

Lower labor costs and incentives offered by New Mexico motivated the move.

"It's not Los Angeles, but the infrastructure is in place [there] for what has evolved into a movie and national television production center," ReelzChannel Chief Executive Stan E. Hubbard said. "It's more affordable, and we are still very much a start-up operation."

Hubbard Media Group, a pioneer of satellite television, launched the channel and accompanying website in September 2006 with an expectation that it would lose money for five years. The location switch should shave a year off that timetable, allowing the channel to break even in about two years, Hubbard said.

The channel is available in 43 million homes, up from 28 million when it launched. This year it added digital cable subscribers of Time Warner Cable Inc. and Charter Communications Inc. in L.A.

Years ago, when the company was lobbying cable operators for distribution for the channel, ReelzChannel decided to forgo the license fees typically paid by cable firms and rely solely on ad revenue. That decision helped the channel get traction but makes it more vulnerable in a recession.

ReelzChannel is not the first entertainment business to head to New Mexico. Nearly two years ago, the state used its combined 25% rebate on taxable production and post-production expenses to lure Sony Pictures Imageworks, one of Hollywood's leading visual effects companies, to transfer part of its operation and 100 jobs to the state.

The rebate applies to the production of feature films as well as television shows, commercials, documentaries, video games and post production.

The USA Network cable TV series "In Plain Sight" and the Warner Bros. film "The Book of Eli" are in production in New Mexico, according to the state's film office.

Some of ReelzChannel's programming and production employees in Los Angeles will be encouraged to relocate, though Hubbard said he wasn't sure how many would.

ReelzChannel plans to keep a small presence in Los Angeles, including an advertising sales team and correspondents to cover the red carpet, award shows and other uniquely Hollywood events.

ReelzChannel plans to hire about 100 people in New Mexico. The company also will move its website operation from Minnesota to Albuquerque, where it also owns the NBC television station affiliate, KOB-TV.

"We will be up and running in Albuquerque by May 1," Hubbard said.

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