The standoff between Paramount Skydance and the state of California may have just reached the breaking point.
Officials inside Los Angeles Mayor Karen Bass’s office and California Attorney General Rob Bonta’s office were reportedly told that Paramount was preparing to announce its departure from California, according to a new report from TMZ.
The announcement was apparently expected to come Tuesday, September 15.
It never did.
TMZ reported Wednesday that sources familiar with internal discussions in both offices said officials had been informed that Paramount would announce it was leaving the state. TMZ stressed that it remains unclear whether something changed behind the scenes or whether the announcement was simply delayed.
That’s an important distinction. Paramount has not formally announced that it’s leaving California. But this is also a dramatic escalation from the threats and contingency plans that have been hanging over Hollywood for more than a month.
David Ellison Wasn’t Bluffing
Paramount Skydance CEO David Ellison previously warned that the company could begin pulling its operations out of California as early as October 1 if the state refused to negotiate a resolution to the antitrust lawsuit threatening Paramount’s $111 billion acquisition of Warner Bros. Discovery.
Variety reported in August that Ellison informed senior Paramount executives that he was prepared to relocate the company — and eventually Warner Bros. as well, assuming the merger closes — if a settlement couldn’t be reached.
According to that report, Paramount’s board had already approved the relocation plan.
Paramount Pictures Logo – YouTube, ClosingLogosHD
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The strategy would reportedly begin with Paramount’s Los Angeles headquarters before potentially moving most studio jobs out of California over a five-year period. Georgia, Texas, and Tennessee have all reportedly been considered as possible destinations.
Bonta responded by accusing Paramount of attempting to “blackmail” California. But the possibility of an exit has increasingly looked like more than an empty negotiating threat.
The Los Angeles Times reported Monday that Ellison had signaled he was prepared to sell Paramount’s historic studio lots and move Paramount and Warner Bros. operations out of California if the merger remained unresolved. The newspaper also reported that Ellison personally didn’t want to leave Los Angeles.
Now, officials in Los Angeles and Sacramento were reportedly expecting an actual announcement.
That’s a significant change.
The Warner Bros. Battle Is at the Center of the Fight
The potential Paramount departure comes amid the company’s increasingly bitter fight with Bonta and 11 other Democrat state attorneys general over its proposed acquisition of Warner Bros. Discovery.
The U.S. Department of Justice has already cleared the transaction, while Paramount has secured approvals from more than 65 international regulators. Bonta and the other states, however, sued to stop the merger on antitrust grounds.
A federal judge has temporarily prevented the transaction from closing, and Paramount has agreed not to complete the acquisition until after trial or June 1, whichever occurs first.
David Ellison talks to Bloomberg – YouTube, Bloomberg Podcasts
Time is also becoming extraordinarily expensive for Paramount.
Beginning October 1, the company is scheduled to incur a $7 million-per-day “ticking fee” owed to Warner Bros. Discovery shareholders because of the delay. Paramount has asked the court to require California, the other plaintiffs, and the Writers Guild of America to post a $1.88 billion bond to cover those potential costs. A hearing on that request is scheduled for September 24. The federal justice department has reportedly at least partially backed Paramount’s request.
The dispute has become about much more than a corporate acquisition.
The future of two of Hollywood’s most historic studios — and potentially thousands of California entertainment jobs — is now wrapped up in the fight.
Settlement Talks Suddenly Take on New Importance
There’s another major development that makes the timing of TMZ’s report particularly interesting.
The Los Angeles Times reported Wednesday that Paramount and representatives for Bonta have been ordered to meet for two days of court-supervised settlement talks on October 14 and October 15.
The two sides have tried this before.
A planned August 24 mediation session collapsed after Bonta accused Paramount of leaking details from preliminary discussions and “playing games.” Paramount denied leaking the information.
California Attorney General Rob Bonta – YouTube, KCRA 3
Now they’re heading back to the table. And that makes one unanswered question impossible to ignore.
If Los Angeles and California officials were expecting Paramount to announce its departure on September 15, why didn’t it happen?
TMZ says it doesn’t know whether the situation changed or the announcement was merely postponed. There’s currently no evidence establishing that the renewed settlement process caused the delay.
But with the company apparently moving closer to an exit at the same moment the legal fight is moving back toward negotiations, the next several weeks could determine whether one of Hollywood’s most famous studios remains in Hollywood at all.
California Could Pay a Massive Price
The consequences of Paramount actually leaving could extend far beyond the company’s famous Melrose Avenue gates.
A recent Los Angeles Economic Development Corporation analysis estimated that a Paramount departure could ultimately result in enormous economic losses and tens of thousands of affected jobs in the region. Variety reported on the findings earlier this week.
Separately, Los Angeles County has estimated that the Paramount-Warner Bros. merger itself could eliminate roughly 4,500 positions over three years and put another 5,865 jobs at businesses serving the studios at risk. County officials estimated approximately $4 billion in lost economic output from the merger scenario they studied.
Those are different scenarios, but they illustrate the enormous stakes surrounding both the merger and a potential relocation.
Gavin Newsom speaking at Climate Week in NYC – Photo Credit: Office of the California Governor, Public domain, via Wikimedia Commons
Los Angeles is already struggling with declining production, job losses, empty soundstages, and businesses that depend on the entertainment industry fighting to survive.
Losing Paramount would represent something much larger than another production choosing to film somewhere else.
Paramount’s Hollywood studio dates back more than a century. Its Melrose Avenue lot has become part of the physical identity of Hollywood itself. And if the Warner Bros. acquisition ultimately succeeds, Ellison has previously indicated that Warner operations could eventually follow Paramount out of California as well.
That would have been almost unthinkable only a few years ago.
Today, California officials are reportedly preparing for the possibility. The biggest question is no longer whether David Ellison is willing to threaten to leave California. It’s whether Paramount has already made the decision — and whether the announcement that state and Los Angeles officials reportedly expected is still coming.
How do you feel about California potentially leaving California? Sound off and let us know!
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