Paramount weighs California exit as Warner Bros deal faces legal fight

MUMBAI: Hollywood may soon have a moving picture of a different kind. Paramount CEO David Ellison is reportedly considering shifting the company’s headquarters out of California if the legal battle over its proposed $111 billion merger with Warner Bros Discovery is not resolved by October 1, putting the studio’s century-old Hollywood roots under fresh pressure.

The reported plan marks a sharp change in tone for Ellison, who only months ago was telling California lawmakers that Paramount had “deep roots in Southern California” and that his vision was to stay true to them. Now, with the merger facing an antitrust challenge from the attorneys general of California and 11 other states, the company’s California home appears to be part of the bargaining equation.

According to a report by Puck, Ellison told senior staff during a leadership meeting that Paramount could move its headquarters out of the state if the antitrust lawsuit is not settled by October 1. That date carries an additional sting: if the Warner Bros Discovery deal has not closed, Paramount faces a ticking fee of $7 million a day from the beginning of October.

The possible relocation is not entirely new. Tennessee has already been courting Paramount, while Texas and Georgia have also emerged as potential alternatives. The question, however, goes beyond where Paramount’s corporate address sits. Moving significant parts of the studio operation away from Los Angeles would mean taking on the much harder task of persuading executives, creative talent and production teams to follow.

Paramount’s historic 65-acre Hollywood lot, parts of which are around a century old, remains its most visible connection to the city. Around 17 per cent of Paramount’s workforce is based in Los Angeles, according to a CVL Economics study cited in the report. Warner Bros Discovery has around 13 per cent of its workforce in the area.

The prospect of leaving has also created political whiplash. In February, Ellison wrote to Senator Adam Schiff and Representative Laura Friedman that Paramount’s move of its headquarters from New York to the Los Angeles studio lot under his leadership reflected its commitment to Hollywood.

He also argued that the proposed merger would create more opportunities for creative talent in Los Angeles through continued licensing, content buying and film production. Now, Friedman has warned that treating the local workforce as a bargaining chip in the merger battle would be a mistake.

Schiff similarly said his priority was protecting the jobs of Californians working in entertainment and urged Paramount to honour its commitment to strengthen Hollywood and keep production in the state.

Paramount’s own production footprint makes a California exit more complicated. Paramount+ projects including the Clueless sequel starring Alicia Silverstone and the original series Ascent starring Viola Davis are filming in Los Angeles. Other Paramount productions, including Matlock, Tracker and NCIS: Origins, are also shooting in the state.

That activity has tangible financial backing. Paramount secured more than $37 million in California film and television tax credits in the latest round, underscoring the economic incentives for keeping production local.

The debate comes at a particularly difficult time for Hollywood. Production in California has fallen sharply, making the industry downturn a political issue in Los Angeles and turning efforts to bring filming back to the city into a major campaign theme.

Los Angeles Mayor Karen Bass has also weighed in, saying Paramount should remain rooted in the city, continue investing locally and support jobs in the region.

For Paramount, however, the immediate priority is the Warner Bros Discovery transaction. The company is racing against the clock to complete the $111 billion deal while fighting the antitrust challenge, with the looming $7 million-a-day fee adding pressure to an already complicated process.

Whether the California threat is a genuine relocation plan or a negotiating tactic remains unclear. What is clear is that Paramount’s merger strategy has turned an old Hollywood question — where does a studio belong? — into a very modern corporate one: how much is its hometown worth when billions and a deadline are on the line?