David Ellison, CEO of Paramount Skydance, is contemplating relocating his Hollywood studio, known for classics like “Sunset Boulevard,” “The Godfather” and “Beverly Hills Cop.” Paramount has considered moving to Tennessee or Texas to avoid a legal battle with California Attorney General Rob Bonta over the $111-billion buyout of Warner Bros. Discovery. Bonta labeled the relocation tactic as “blackmail,” resulting in a stalled merger due to an antitrust lawsuit involving 11 other Democratic state attorneys general.
Ellison, who has served Hollywood for over two decades, prefers to stay in Los Angeles. However, he is willing to sell the historic studio lots and move Paramount’s operations if the merger doesn’t finalize soon. This situation worries a region already struggling with decreased film production, job losses, and closed businesses.
Paramount’s potential move provoked concern among local lawmakers. Assemblymember Rick Chavez Zbur, representing areas with notable film lots, stressed the importance of preserving local film industry jobs. Paramount remains silent on the situation, while Ellison is frustrated having secured approvals for the merger from over 65 global regulators except Bonta’s office.
“California is the fourth-largest economy globally and a prime business environment,” a spokesperson from Bonta’s office stated, emphasizing the necessity of strong antitrust laws for economic vibrancy.
While a federal judge in Oakland interrupted the merger deal, Paramount committed not to conclude the acquisition before a trial or June 1, whichever arrives first. Efforts to settle the case collapsed after accusations against Paramount regarding misrepresented discussions.
“It’s like a game of chicken,” said Kevin Klowden, an economist and managing director at Melcene Advisory firm. The threat of relocation, while leveraged, is real.
Ellison’s media company may gain tax incentives by relocating, with Tennessee, Texas, and Georgia as potential targets. However, leaving L.A. would also affect the concentrated talent and deals in the region. Tennessee’s Department of Economic and Community Development indicated openness to collaborating with companies considering investment opportunities.
A pro-merger group altered plans for an outdoor news conference near Paramount due to anti-merger protests, highlighting the heated public opinion regarding a potential move.
Concerns arise over Paramount’s departure’s impact on local workers and economy. Keyla Wood and Daniela Kelly voiced worries about job stability and Hollywood’s status should the studio leave.
Opponents argue the merger could worsen L.A.’s production outlook. Paramount aims to slash $6 billion in costs, with ticking fees adding $650 million each quarter to Warner shareholders’ $81 billion payment.
L.A. City Councilmember Adrin Nazarian highlighted past mergers’ job losses. According to Los Angeles County Department of Economic Opportunity, 4,500 positions could disappear with 5,865 jobs supplying studios at risk.
Paramount staying maintains L.A.’s tax revenue, but relocation drastically impacts state and county revenue. Paramount’s commissioned report predicts 28,000 job losses with an out-of-state move.
Paramount might move its headquarters for incentives while keeping large creative staffs in L.A. and New York. Ellison transferred operations to L.A. after acquiring Paramount last year, citing advantages of his growing media properties.
The relocation threat mirrors Oracle’s strategy, a company co-founded by Ellison’s father, Larry Ellison. Oracle shifted from California to Austin, Texas, in 2020 and later planned another move to Nashville.
Potential talent loss, as experienced by companies like Nissan’s 2006 relocation, is another concern. Creative professionals may hesitate to relocate, fearing limited opportunities elsewhere.
Paramount faces a difficult choice between leaving skilled industry workers behind or maintaining a costly presence in L.A. A judge recently ordered settlement talk dates, presenting a final chance to avoid prolonged court disputes.
Bonta suggests Paramount must divest assets for a resolution, potentially leading to sales of Warner properties like New Line Cinema and certain cable channels. Such a settlement could halt Paramount’s departure plans.
Local Assemblymember Zbur expressed hope for an agreement preserving Paramount and Warner Bros.’ presence and economic contributions in Los Angeles.