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7/31/2017 11:47:00 AM
Sony DADC tries holding onto Terre Haute tax breaks

Dave Taylor, Tribune-Star

For the third time in as many years, Sony Digital Audio Disc Corp. is trying to hold on to property tax breaks though employment at its sole remaining North American manufacturing plant has declined.

The Terre Haute City Council earlier this month, acting by voice vote, found the company not in compliance with a series of property tax abatements granted between 2007 and 2011. The action triggered a hearing set for 5:30 p.m. Thursday.

In a subsequent email and letter to the council on behalf of DADC, attorney Richard Shagley said the company has paid more than $25 million in property taxes, after accounting for abatements.

“It is Sony DADC’s position that they have substantially complied” with statements of benefits filed in conjunction with the tax breaks, he wrote in the July 20 communications.

The company’s most recent filings with the city list 919 employees compared with 1,250 projected when tax breaks were granted.

In an apparent reference to a historical figure, Shagley wrote that DADC “exceeded the abatement employee count commitment by more than 2,000 jobs” and wages paid have exceeded commitments by $150 million.

Current projections are for 875 full time positions and two temporary positions and DADC “is currently in the hiring process,” he said.

Shagley was not in his office Friday and could not be reached for comment. During a presentation to the council last July, he said the company could not have foreseen different platforms would be developed for viewing videos in competition with DVDs and Blu-ray discs.

“What Sony forecast in those years and what the future brought is different than what Sony projected – what the world projected,” he said. Between 2011 and 2015, as demand for its products declined, DADC closed plants in Toronto, Mexico City and Pitman, N.J., and consolidated its North American operations in Terre Haute.

The company has invested nearly $500 million in Terre Haute, including $4 million in new product lines for Ultra HD Blu-ray for 4K televisions, for which it has not requested a tax abatement, Shagley said.

Another unanticipated development, he said, was that demand has become more seasonal, requiring up to 10 times as many employees in October and November than in the summer months, he said. Production schedules are dependent on clients’ release schedules, noted Lisa Gephardt, a Sony spokeswoman in New York.

While sales of DVDs and Blu-ray discs fell 12 percent in 2015 and 7 percent last year, according to the Digital Entertainment Group, there are signs of continued life for the medium. Redbox, which rents DVDs from kiosks outside WalMarts, Walgreens stores and other businesses, plans to add 1,500 locations this year after removing 1,000 locations in 2016.

Why drive to the store and rent a video rather than click a button on their TV remote and never leave the couch?

Cost, Redbox CEO Galen Smith recently told the Chicago Trbune.

“They care about saving that money,” he said in a July 20 article. “For lots of hard-working families across the country, this is how they consume entertainment. They would rather drive to a kiosk and save money. A five-minute drive is not going to be that much gas or time. In 11 minutes, you’ve got that movie at your home.”

Karrum Nasser, City Council president, acknowledges the reasons behind the drop in DADC’s employment numbers but said this week’s hearing is still on. “We still need to have them come and state in a public forum the reasons for the numbers being off,” he said.

 

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Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR


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