Hollywood at Risk: Paramount’s Potential Exit from California

David Ellison, chief executive of Paramount, warned his senior team that the studio will begin pulling its stakes from the Golden State as soon as Oct. 1 unless the pending Paramount–Warner Bros. Discovery merger closes by the end of September. The merger remains stalled because a 12-state antitrust lawsuit seeks to block it, with a trial scheduled for March 2027. Ellison’s ultimatum is directed at California Attorney General Rob Bonta, who has labeled the threat “blackmail.” Paramount has asked the presiding judge to compel the states and the Writers Guild of America to post a $1.88 billion bond in an effort to force a settlement before trial.

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Ellison has long championed a bipartisan federal film-tax-incentive package, meeting with Republican lawmakers in Washington as recently as mid-July. Earlier this year, after outbidding Netflix in February to secure the merger, he fielded questions from California Democrats Sen. Adam Schiff and Rep. Laura Friedman about job commitments. Ellison replied that he would “build a stronger Hollywood” by keeping both legacy studios operating separately. The California AG’s lawsuit, however, has left the deal on hold, prompting Ellison to consider relocating the combined studio to a state offering more favorable incentives. Potential new hosts mentioned include Tennessee, Texas and Georgia.

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Rob Bonta’s office, meanwhile, rejected the overture, maintaining that the threat constitutes blackmail. A Paramount representative also filed a bid asking the court to force the states and the WGA to post a $1.88 billion bond to keep negotiations alive.

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Ellison’s team estimates that moving could save roughly $500 million in taxes and other costs. Tax expert Robert Johnson cautions that “unless you’re going to get all your customers to move, you’re not going to change how much gets sourced to California,” meaning the studio’s California income-tax bill would remain unchanged after a relocation. Anticipated savings stem from prospective state tax incentives and lower payroll costs in a cheaper-of-living region, but analysts note that moving thousands of employees and constructing new sound stages would incur substantial expenses. USC professor JD Connor argues that “industry clustering” makes such a decamp “strategically unwise,” as the entertainment ecosystem relies on geographic proximity to talent and ancillary services.

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• “I hope this is saber rattling because I can’t think of anything that would less engender you to the population of this industry than to say you’re going to take Hollywood out of Hollywood,” — Noah Wyle

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• “Unless you’re going to get all your customers to move, you’re not going to change how much gets sourced to California,” — Robert Johnson, who teaches state and local taxes at Cal State Northridge

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• “You can continue to believe that the entertainment ecosystem can be disarticulated,” — Connor, a professor at USC School of Cinematic Arts

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