David Ellison, we have been told, loves Hollywood. He loves movies. In trying to rally industry support behind the Paramount-Warner Bros. megamerger, he has claimed the combined studios will release an unprecedented 30-plus films a year. Waving the banner for the entertainment industry in his home state, Ellison also has been lobbying for bipartisan federal film tax incentive legislation, having met with Republicans in D.C. on the issue as recently as mid-July.
And just a short time ago, Ellison was fully expecting to keep both Paramount and Warner Bros. in California. After outbidding Netflix in February to clinch the blockbuster deal, Ellison was queried by two prominent Democrats from the state — Sen. Adam Schiff and Rep. Laura Friedman — about his commitments to jobs in California.
Ellison wrote in his reply that “my promise to you is to build a stronger Hollywood, by keeping both of these legacy studios operating separately, thereby preserving and potentially increasing jobs.” And this: “Paramount has deep roots in Southern California. My vision as a CEO is to stay true to our roots.”
Well, that was then.
Ellison has since become deeply frustrated with California politics. So much so that he recently told his senior-level team that Paramount will begin the process of pulling up stakes from the Golden State as soon as Oct. 1 unless the Warner Bros. Discovery merger is closed by the end of September — a deal that is currently on hold pending a 12-state antitrust lawsuit seeking to block it.
The message that Ellison intends to take his business elsewhere seemed pointed directly at California attorney general Rob Bonta, who is leading the states’ lawsuit. Ellison wants the attorneys general to agree to hash out a settlement that would presumably let both sides save face — and close the deal before the case goes to trial in March 2027. At least publicly, Bonta has been unmoved. “Blackmail,” he called Ellison’s threat to move.
On Monday, Paramount launched another bid to try to get the state AGs to the bargaining table, asking the judge overseeing the case to force the states and the WGA (which has also sued to block the Paramount-WB merger) to post a $1.88 billion bond. A rep for Bonta said Paramount was seeking a “do-over” on its agreement to delay the Warner Bros. Discovery merger until the antitrust trial: “They are lying in a bed of their own making, and once again, trying to blackmail us to get us to back down.”
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The lawsuits by the states and the WGA are the final obstacle to closing, after regulators in Mexico cleared the merger, leaving . Ellison said in a statement that “we have offered commitments and concessions and remain open to working constructively with the state AGs to find a path forward in the interest of our employees and the creative community in California and across the world.”
But if Bonta and the attorneys general don’t engage, where will Ellison relocate? For now, the destination is unknown.
States shortlisted for Paramount’s potential future home include Tennessee, Texas and Georgia. Note that Larry Ellison, who is backing his son’s merger bid to the tune of nearly $47 billion, moved Oracle’s HQ from California to Texas in 2020 and plans to move again to a massive new campus in Nashville. David Ellison owned a home in the Nashville area but sold it around the time the Skydance-Paramount merger closed in August 2025.
Paramount employees fervently hope Ellison’s talk of a wholesale exit from Cali, including the studio operations, over a five-year time horizon, is just sabre rattling. One top exec, asked about the possible move, texted back a woozy-face emoji.
“I hope this is sabre 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 told Variety‘s Marc Malkin on Sunday. “But I’m an Angeleno, so I have a vested interest in that one.”
At the same time, there’s a resigned feeling among some L.A.-based entertainment veterans that Paramount will indeed flee the state — and even sell the famed Paramount and Warner Bros. lots. As much as they dislike the idea, they don’t blame Ellison for what they characterise as an unsentimental but rational business decision. After all, if politicians in California are not going to step up with production incentives that are competitive with the likes of New York, New Jersey, the U.K. or Australia, why should production companies pay a premium to shoot in L.A.? That’s particularly true since filmmakers and actors are accustomed to travelling outside of SoCal these days.
Ellison, at an Aug. 5 meeting with his senior team on the Paramount studio lot, claimed the company’s relocation could save some $500 million in taxes and other costs. However, Paramount’s income tax bill from California won’t change if it leaves, because state corporation taxes are apportioned based on where customers are located. “Unless you’re going to get all your customers to move, you’re not going to change how much gets sourced to California,” says Robert Johnson, who teaches state and local taxes at Cal State Northridge.
According to sources familiar with the plan, Paramount expects to land big tax incentives from a new host state. It also anticipates paying workers less in a place with a lower cost of living than California, which in turn would reduce its payroll taxes.
Any cost savings, though, would be offset by the significant expense of moving thousands of employees, not to mention building production sound stages elsewhere. Moreover, it’s likely many Paramount and WB workers would be unwilling to leave Southern California, if it came to that.
For Paramount, decamping from L.A. would be “strategically unwise,” says JD Connor, a professor at USC School of Cinematic Arts. He points to “industry clustering” economic theory, which holds that industries like Silicon Valley and Hollywood are tied to their geographies because of the local talent pool.
“You can continue to believe that the entertainment ecosystem can be disarticulated,” says Connor. “And yet it’s never taken hold. It turns out, it’s absolutely vital you go out to dinner with people.”
Gene Maddaus contributed to this story.
From Variety US