Is Paramount Skydance Really Preparing to Leave Los Angeles?

David Ellison woke up playing hardball, and we're going to learn pretty quickly if he's bluffing or about to change the Hollywood landscape forever.

According to a new report by Matt Belloni at Puck (which you really should be following for breaking news), David Ellison has a contingency plan if the $110 billion Paramount–Warner Bros. merger does not go through, and it involves taking his ball and going… anywhere but home.

Now, he thinks that the company will ultimately defeat the antitrust lawsuit led by California Attorney General Rob Bonta and 11 other Democratic states.

But he doesn't want to wait forever for that to close, so he's thinking about going somewhere he won't have to deal with all this stuff.

Ellison said that if Bonta refuses to come to the negotiating table by October, Paramount Skydance is prepared to pack up its headquarters and leave California.

Let's dive in.

The Relocation: Texas, Tennessee, or Georgia?

According to Puck, Ellison’s board has already signed off on a strategy to relocate to Tennessee, Texas, Georgia, or another unnamed state offering heavy tax incentives.

It would take five years, but his goal was to take most of the 30,000 jobs with him.

The start would be corporate HQ, and the rest would trickle from there.

Now, this seems crazy. You are a Hollywood studio. What the hell are you going to do in one of these other places that's not Hollywood?

But if it means they can close their deal or save hundreds of millions of dollars, they don't care. They can Zoom like the rest of the town, and I am sure they'll just fly execs in and out of the office if they have to see someone in person.

In fact, he has a blueprint to do this, because it's what his Dad did with Oracle. They left CA but kept a creative hub here, and Paramount would do the same.

This is the reality he's facing:

• Ticking Fees: They will pay a $7 million-per-day "ticking fee" starting on October 1st, along with massive legal bills and a potential $7 billion breakup fee if the transaction fails to close by next June. That fee won't apply to one of those other places, where the deal for WB can presumably close.
• $500 Million in Tax Savings: Ellison estimates that relocating from California could save the combined studio $500 million annually in state taxes.
• Real Estate Liquidation: To recoup capital, the company is considering selling off the iconic Paramount lot in Hollywood and/or the Warner Bros. lot in Burbank. Both properties have historically been valued at up to $4 billion each. You could easily see one of the big streamers move into them.

The Standoff

Now, I don't think this all happens, especially since Ellion's threat doesn't fully measure how hard it would be to make 30ish movies a year from two studios with people flying all over the country.

It would also probably leave a bad taste in the mouth of some creatives, who like working close to a home they built.

Now, we've seen Georgia become a hub for Marvel and Netflix and their shows, but I don't see Hollywood South expanding.

Chances are, everyone will come to the negotiating table; it would also be disastrous for California to lose all these jobs.

Now, Bonta’s office called Ellison’s rhetoric "another attempt to blackmail the state into letting an illegal deal through."

But I don't see him calling the bluff and not coming to the table to talk about this stuff.

As I said, California doesn't want these jobs to leave, and the loss of production in Hollywood is disastrous for everyone.

We've lost a ton of production and office jobs here, probably thousands.

We'd also see two major studios leave Hollywood, which ends an era that has been going on for 100 years.

Not to mention, the selling of the lots could mean rezoning into apartments or reduced stage availability for independent productions.

Summing It All Up

It would be nice to see both sides sit down and discuss how things can move forward. And you'd think they could bond over movies and California, and the idea that making things here matters.

As the days tick down, We'll keep you updated. This is one of the most volatile times in Hallyu history.

Let me know what you think in the comments.