Paramount Skydance has threatened to pull its operations out of California amid an ongoing legal battle over its proposed $111 billion acquisition of Warner Bros. Discovery, and a leaked economic report suggests the consequences for the state could be catastrophic.
According to a new report from Variety, an analysis from the Los Angeles County Economic Development Corporation examined what could happen if David Ellison follows through on relocating Paramount’s headquarters and other operations outside California.
The numbers are staggering.
Once a full relocation was completed, California could permanently lose between approximately 28,990 and 57,980 full-time jobs across all industries.
The corresponding loss in annual economic output could reach between $10.6 billion and $21.2 billion.
And all of this comes as California Attorney General Rob Bonta continues leading a coalition of states attempting to stop Paramount’s acquisition of Warner Bros. Discovery.
Paramount Leaving California Would Hit More Than Hollywood
The potential damage outlined in the report isn’t limited to actors, directors, writers, or studio executives.
The analysis specifically includes the ripple effect created when a company as large as Paramount reduces its spending throughout California.
That means contractors, vendors, restaurants, transportation companies, construction workers, post-production facilities, hotels, and countless other businesses connected directly or indirectly to Hollywood could feel the effects.
Even before Paramount completed a full relocation, the report estimated California could lose between 2,750 and 5,550 jobs and between $1.01 billion and $2.03 billion in economic output from October 1, 2026, through September 30, 2031.
The logo for Paramount Skydance – Paramount
Those figures make the political battle surrounding the Warner Bros. Discovery acquisition increasingly difficult to ignore.
Bonta and 11 other state attorneys general sued to block the merger in July, arguing that combining Paramount and Warner Bros. Discovery would reduce competition in theatrical distribution and basic cable.
But California now finds itself in an extraordinary position.
The state is fighting a merger partly on the grounds that consolidation could hurt workers while simultaneously facing the possibility that its largest remaining opponent in that legal battle could simply take tens of thousands of jobs and billions of dollars in economic activity somewhere else.
California Was Already Losing Hollywood Jobs
That threat becomes considerably more serious when considering how badly Los Angeles’ entertainment industry has already been battered.
A separate Los Angeles County economic report released in August found that California had already lost 52,016 film and television jobs since 2022.
An astonishing 99.6% of those losses occurred in Los Angeles County.
That report actually examined the opposite concern: how many jobs could disappear because of consolidation following the Paramount-Warner Bros. merger.
The Hollywood Sign – Photo Credit: Thomas Wolf, www.foto-tw.de, CC BY-SA 3.0 <https://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons
It projected that as many as 4,500 local film and television jobs could be exposed, along with more than 10,000 total job-years and as much as $4.06 billion in business output.
Those aren’t insignificant numbers. But compare them with the potential consequences of Paramount leaving California entirely.
The leaked report estimates the state could permanently lose as many as 57,980 full-time jobs and $21.2 billion in economic output every year following a complete relocation.
Suddenly, the effort to protect California workers from the theoretical consequences of the merger risks creating a much larger problem.
Paramount and Bonta’s Fight Keeps Escalating
Paramount has been pushing California to settle the antitrust lawsuit and allow the Warner Bros. Discovery acquisition to proceed.
Those negotiations have been anything but smooth.
In August, Bonta canceled a planned settlement meeting after accusing Paramount of leaking details from previous discussions and acting in bad faith.
Paramount denied the allegation.
The company has also attempted to make the case that the merger would actually benefit Hollywood rather than destroy it.
California Attorney General Rob Bonta – YouTube, KCRA 3
Ellison has pledged that the combined company would release 30 theatrical films annually, with those movies receiving theatrical exclusivity windows of at least 45 days.
The leaked economic analysis reportedly examined that commitment as well.
If Paramount followed through, the 30-film pledge could generate between approximately 1,020 and 2,760 jobs in California and between $377.7 million and $1.01 billion in economic output through September 2031.
Bonta, however, has indicated that behavioral promises aren’t enough. California has pushed for more substantial structural remedies, potentially including asset divestitures.
The battle is also getting increasingly expensive.
David Ellison in an interview with Bloomberg – YouTube, Bloomberg Podcasts
Paramount has asked the federal court overseeing the case to require the states and Writers Guild of America to post a $1.88 billion bond covering potential damages caused by delaying the merger.
Reuters reported that Paramount expects to have paid approximately $1.3 billion to Warner Bros. Discovery shareholders by the time the antitrust trial concludes if the case proceeds on its current schedule.
And beginning October 1, Paramount is reportedly facing a $7 million-per-day ticking fee if the transaction has not closed.
California Can’t Afford Another Hollywood Exodus
The irony here is becoming impossible to overlook.
California has already spent years watching film and television production migrate to competing states and foreign countries.
Georgia built a major production industry around aggressive incentives. Other states have been fighting for the same business. California itself finally acknowledged the severity of the problem by dramatically expanding its own film and television tax credit program.
The California Film Commission announced in July that the expanded program’s first year awarded incentives to 170 projects expected to generate $6.6 billion in direct production spending and nearly 35,000 cast and crew jobs.
Gavin Newsom giving a speech – Office of the Governor of California, Public domain, via Wikimedia Commons
California is therefore spending enormous amounts of money trying to convince Hollywood productions to stay while simultaneously fighting one of Hollywood’s largest studios in court as that company threatens to move.
There are legitimate questions surrounding any merger that combines two enormous entertainment companies. Consolidation can eliminate redundant positions, reduce competition, and give fewer corporations greater control over the entertainment business.
Those concerns shouldn’t simply be dismissed.
But neither should the potential consequences of California’s strategy.
If the leaked economic analysis is remotely close to reality, Bonta and California officials aren’t simply deciding whether Paramount should be allowed to acquire Warner Bros. Discovery.
They’re gambling with whether Paramount remains a California company at all.
Paramount Pictures Logo – YouTube, ClosingLogosHD
And with Los Angeles already hemorrhaging entertainment jobs, losing another nearly 58,000 positions and as much as $21.2 billion in annual economic activity would make the potential downside of this political and legal standoff enormously larger than the problem California claims it is trying to prevent.
At some point, protecting Hollywood workers has to involve making sure Hollywood still employs them in California.
What do you think will happen if Paramount leaves California? Sound off and let us know!
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