Paramount Threatens to Ditch California, Calls It Leverage — California Calls It Blackmail

Paramount CEO David Ellison told senior executives on August 11 that the studio will begin relocating out of California starting October 1 if state Attorney General Rob Bonta refuses to open settlement talks over Paramount’s $110 billion merger with Warner Bros. Discovery. The plan would move Paramount’s Los Angeles headquarters first, shifting most studio jobs out of state over five years, with Georgia, Texas and Tennessee under consideration as destinations; a relocation could affect roughly 30,000 jobs and save Paramount an estimated $500 million a year in taxes [1, 2]. October 1 is significant because Paramount begins accruing a $7 million-per-day “ticking fee” owed to WBD shareholders if the deal stays stalled, on top of a potential $7 billion termination fee should Paramount lose at the trial now set for March 2, 2027 [3, 2].

Bonta, who leads a 12-state coalition suing to block the merger, rejected the relocation threat outright. “I call it blackmail now,” he said, adding that Paramount “has lost the plot as it continues to lose in court. It didn’t work the first time — on the eve of our July lawsuit — and it won’t work this time” [2, 3]. Paramount Chief Legal Officer Makan Delrahim responded by acknowledging the stakes for the state itself: “If I was governor, I wouldn’t want to lose Hollywood from this state” [3].

Why It Sucks:

Paramount / David Ellison

• The clock is costing real money. With a $7 million-per-day fee accruing toward WBD shareholders once October hits, and a potential $7 billion termination penalty riding on a trial that won’t even start until March 2027, Paramount argues the states are using litigation delay itself as a weapon against a deal it believes it will ultimately win in court [1, 2].
• Settlement is being refused, not just litigated. Ellison’s team frames the relocation threat as a response to Bonta declining to negotiate structural remedies at all, arguing that a total stonewall leaves the company no lever besides threatening to take jobs elsewhere [2, 3].
• Other states want the jobs. With Georgia, Texas and Tennessee all actively courting film production business, Paramount can credibly argue California is not the only viable home for a studio anymore, and that the state’s hostility carries real competitive risk [1].

California / Attorney General Rob Bonta

• A merger fight is being repackaged as a jobs threat. Bonta calls the relocation plan “blackmail,” arguing Paramount is trying to pressure regulators into approving what the state considers an illegal, anticompetitive deal by dangling the very jobs the state is trying to protect [2, 3].
• The state says it’s defending consumers, not overreaching. Bonta frames the underlying antitrust suit as straightforward enforcement — “protecting Californians from job loss and wage reduction… from higher prices” — and insists any acceptable fix must be structural divestment, not a behavioral promise Paramount could quietly ignore later [3].
• This isn’t Paramount’s first attempt, he says. Bonta points out the company floated a similar pressure play “on the eve” of the original July lawsuit, arguing the October 1 deadline is a repeat tactic rather than a genuine business necessity [2].

California Film & TV Workers

• 30,000 jobs are now bargaining chips. Whether or not the relocation ever actually happens, crew members, below-the-line workers and vendors now have to live with the possibility that their livelihoods are being used as leverage in a fight between a CEO and an attorney general neither of whom they voted to represent their interests [2].
• The industry is already bleeding production. Workers in an industry still recovering from the pandemic and prior labor stoppages now face yet another year of uncertainty stacked on top of runaway production to other states, regardless of who wins the standoff [1].
• A five-year wind-down offers no real security. Even the “best case” scenario for workers — Paramount stays — comes only if the state caves to a threat, while the “other” case is a slow-motion five-year exodus with no severance guarantees mentioned by either side [1, 2].

Sources & Citations:

[1] Slashdot: Paramount Considers Leaving California Amid Antitrust Suit
[2] The Desk: California AG Bonta Accuses Paramount’s Ellison of “Blackmail” Over Lawsuit
[3] The San Francisco Standard: Bonta Calls Paramount’s Threat to Leave California “Blackmail”