As the drone industry grows, civil usage of unmanned aerial vehicles (UAVs) has skyrocketed.
Drone technology is now applied in a range of industries – from agriculture and infrastructure to transportation and security. Drones are particularly popular in the film industry, where the technology is used to capture aerial footage, unique angles and masterful stunts.
“Almost every film out today has some footage that was shot by drones,” explains lawyer Lydia Hilton, who works with individuals and businesses that use UAVs or provides services related to UAVs.
As the technology has become more popular, rules have been put into place that regulate the commercial usage of drones. “Each UAV has to be registered with the FAA,” Lydia explains. “And until recently, the person flying had to hold at least a sport pilot’s license.”
On August 29, a brand new series of rules known as “Part 107” from the FAA went into effect to regulate the commercial use of drones. The new regulations were put in place to protect the safety of the national airspace. Prior to flying, one must now obtain a “Remote Pilot’s Certificate” by passing a knowledge test, but no “flying” test is required.
“At this time Part 107 does not permit flight beyond the visual line of sight, at night, or over people not directly involved in the flight operations,” says Lydia. “The new rules, however, do provide a mechanism for obtaining waivers to some of the restrictions, and the FAA is actually inviting innovation to make these operations safe.” Lydia helps businesses obtain the necessary waivers and exemptions when appropriate.
For film and video production companies, drone technology offers access to new opportunities as well as new liabilities.
David Hilton is co-founder of AirView Consulting, a Georgia business that provides a turnkey integration platform to organizations that wish to implement UAVs into their business model. “Anyone wishing to operate UAVs for the film industry will need to either have what’s called a Section 333 exemption for closed-set filming, which allows flights over people on the specific conditions listed in the exemption, or follow the guidelines under Part 107.” Whichever option is elected, David explained, one still needs to have proper aviation insurance and good flight and data management capabilities.
While legal regulations and insurance liabilities can seem like daunting hurdles, there are business benefits for film companies in Georgia that may want to explore this new technology.
Georgia works to vitalize a unique niche that blends two thriving industries
Georgia is quickly becoming home for both technology and film companies. The state has welcomed both industries to the region with open arms and tax credits.
Georgia is the 5th largest IT employment cluster in the US, with over 500 Aerospace companies – and Aerospace products are the state’s number one export. The state is now ranked 3rd worldwide for film production, with the industry generating $6 billion for the Georgia economy in 2015.
Since 2008, Georgia has offered film, TV and digital entertainment companies a tax credit of up to 30%.
“When a production company spends money on drones, this is part of the 30% pool of money that can be put towards the tax credit,” explains William Fricke, who provides accounting services Atlanta businesses, including start-ups, tech firms and film and television production companies.
“We help entrepreneurs and new business owners understand the financial aspects of starting and running a business,” says Fricke. “We help them identify key Federal and State regulations regarding issues such as business entity selection, employer obligations and tax responsibilities. These complex issues are critical to success.”
“For tech companies looking to enter the drone business, besides federal manufacturing deductions, Georgia offers a domestic manufacturing deduction as well as research and development credits to support these burgeoning industries,” says Fricke.
Representatives from both industries in the state have recently come together to form a working group on how to harness this unique niche. The event was hosted by the Department’s Center of Innovation for Aerospace and Film Division.
Lydia Hilton presented at the event about business considerations for those starting a UAS business. “The audience included investors, film producers and directors, UAS operators, software and video developers, and business owners interesting in incorporating UAS into their businesses,” says Lydia. “The role of UAS for actual filming and the production side is just beginning, so there is a lot of opportunity not just for operators but for ancillary and supporting businesses.”
With the rapid evolution of technology, exponential growth in the entertainment sector and Georgia’s positive energy around new business development – Atlanta business leaders enjoy many new opportunities but have many new challenges as well. For more information on any of these matters, please contact one of our experts.
Ted Fricke, Fricke & Associates, LLC
Accountant for Film and TV Production Companies
Lydia Hilton, Lydia Mitchell Hilton PC
David Hilton, AirView Consulting