Hollywood may soon see one of its most historic studios pack its bags. Paramount, the home of classics like “Sunset Boulevard” and “The Godfather,” has reportedly approved a contingency plan to relocate its headquarters and operations out of California as early as this fall if its $111-billion acquisition of Warner Bros. Discovery doesn’t finalize soon.
This potential upheaval stems from an antitrust lawsuit filed by California Attorney General Rob Bonta, who, along with 11 other Democratic state attorneys general, has stalled one of Hollywood's largest mergers in decades. Paramount initially floated the idea of moving its home base to Tennessee or Texas in July, a tactic Bonta rejected, calling it "blackmail."
David Ellison, Skydance Chief Executive and a film aficionado who has built his career in Hollywood for two decades, has expressed to associates that he doesn't want to leave Los Angeles. However, people familiar with the situation, who were not authorized to comment, say Ellison has signaled his readiness to sell the historic studio lots and move Paramount’s and Warner Bros.’ operations from California if the merger isn’t completed by next month. Paramount’s board has reportedly approved this move.
Ellison's frustration comes despite securing approvals from over 65 regulators worldwide for the mammoth merger, which would bring HBO, CNN, CBS, and MTV under one roof. A federal judge in Oakland temporarily blocked the deal, and Paramount has agreed not to finalize the acquisition until a trial or June 1, whichever comes first. Settlement talks collapsed in late August, with Bonta accusing Paramount of leaking and misrepresenting their discussions.
The prospect of Paramount leaving has rattled a Southern California region already grappling with a steep decline in film production, significant job losses, empty soundstages, and shuttered small businesses. Assemblymember Rick Chavez Zbur, whose district includes the Melrose Avenue movie lot and areas near Warner Bros. in Burbank, called a Paramount move "devastating." He added, "We need to do everything we can to protect these important jobs in California’s iconic industry."
Relocating from Los Angeles would enable Paramount to qualify for lucrative tax incentives offered by other states, with Tennessee, Texas, and Georgia on Ellison’s short list. However, leaving its long-time home would also be costly for Paramount, given that much of the talent and deal-making remains concentrated around Los Angeles. The Tennessee Department of Economic and Community Development declined to discuss specific negotiations but stated its commitment to working with companies exploring investment opportunities in the state.
Locally, the concern is palpable. Keyla Wood, an actor who moved to Los Angeles a decade ago, noted the cumulative impact on workers. "It’s been one thing after the other: The pandemic, the strikes and then it was the fires," she said, expressing worry that "So many people never work again." Daniela Kelly, an actor and dancer who owns Kreashen Studios USA in Marina del Rey, highlighted the stakes for L.A.'s identity. "Everyone in the world sees Los Angeles and Hollywood as the platform for their dreams," Kelly stated. Her business, which provides video and podcasting space, depends on the region's entertainment economy, making her "pro having Paramount stay because this is the center, the heart of Hollywood."
Economists and local officials echo these concerns with stark projections. Kevin Klowden, an economist and managing director at the Melcene Advisory firm, described the situation as "a game of chicken," but emphasized that the threat is "very real." L.A. City Councilmember Adrin Nazarian pointed out that previous mergers have historically led to job losses. An August report by the Los Angeles County Department of Economic Opportunity projected that combining Paramount and Warner could eliminate nearly 4,500 positions over three years and put an additional 5,865 jobs in businesses serving the studios at risk. Kelly LoBianco, the department director, stated that this represents an estimated $4 billion in lost economic output and $550 million in lost tax revenue at local, state, and federal levels. Even if Paramount remains in L.A., the merger itself could erase $79 million in tax revenue for Los Angeles County. Should Paramount move hundreds of its workers out of state, Klowden warned, the loss could be "potentially tens of thousands of jobs," becoming "devastating to everybody." A report commissioned by Paramount from the Los Angeles Economic Development Corp. predicted losses of at least 28,000 jobs.
Amid the high stakes, lobbying efforts have been intense, prompting Governor Gavin Newsom, L.A. Mayor Karen Bass, and gubernatorial nominee Xavier Becerra to urge both sides to settle the lawsuit. A pro-merger group, Neighbors for Strong Communities, has been actively encouraging Californians to press Bonta to drop the case, organizing events to highlight the local impact of a Paramount departure.
Paramount has much to lose, as it urgently needs Warner assets to compete against tech behemoths. U.S. District Judge Araceli Martínez-Olguín has set the trial for March. Compounding the pressure, beginning October 1, Paramount must increase its payout to Warner Bros. Discovery shareholders by $7 million a day in "ticking fees," which will add more debt to the highly leveraged transaction. Paramount has asked the judge to require California and other plaintiff states, including Nevada, Oregon, and New York, along with the Writers Guild of America, to post a $1.88-billion bond to compensate for these potential costs. A hearing on this bond is scheduled for September 24.
