A leaked report reveals that Paramount’s potential exit from California could cost the state up to 58,000 jobs and $21 billion annually in economic losses, as the studio’s $110 billion merger with Warner Bros. Discovery faces antitrust challenges from California’s attorney general and 11 other states.
The leaked report, commissioned by Paramount and obtained by Politico, outlines dire consequences for California’s economy if the studio relocates its operations. The analysis, conducted by the Los Angeles Economic Development Corporation’s Institute for Applied Economics, warns that Paramount’s departure could result in the permanent loss of 28,990 to 57,980 full-time job-years statewide, alongside annual economic output losses between $10.6 billion and $21.2 billion. These figures include direct, indirect, and induced jobs across all industries, not just film and television.
The Leaked Report: A Stark Warning for California
The report highlights that Paramount’s post-merger commitment to produce 30 feature films annually for three years would generate 1,020 to 2,760 job-years in California, with economic output between $377.7 million and $1.01 billion between Oct. 1 and Sept. 30, 2031. However, the studio’s threat to move to Georgia, Tennessee, or Texas has intensified negotiations with California Attorney General Rob Bonta and other state attorneys general, who are fighting to block the $110 billion merger on antitrust grounds.
The document also warns that converting Warner Bros.’ soundstages to commercial or residential use would permanently strip
California of infrastructure built over a century. This infrastructure supports vendors, crews, and post-production facilities built up around it. California remains the world’s fourth-largest global economy, with a nominal gross domestic product of about $4.1 trillion to $4.4 trillion, and faces a worst-case scenario
if Paramount substantially or entirely
relocates, according to the report.
Legal Battles and Financial Stakes
U.S.
California Attorney General Rob Bonta canceled a scheduled Monday meeting with Paramount Skydance after details of confidential settlement discussions leaked to the press, calling the breach “unacceptable.” Bonta reiterated his concerns that the merger of two major Hollywood studios would result in higher prices for consumers, less choice and lower quality films and television series. He also cited a report from Los Angeles county that predicted 4,500 film and television jobs would be lost within three years of the companies combining their operations.
Economic Fallout and Industry Reactions
The leaked report underscores the broader economic risks of Paramount’s potential exit. It estimates that the state would experience the permanent loss of approximately 28,990 to 57,980 full-time job-years statewide across all industries, and losses of between $10.6 billion and $21.2 billion annually in economic output. The report also notes that converting Warner Bros.’ soundstages to commercial or residential property would permanently strip California of infrastructure built over a century that supports the vendors, crews and post-production facilities built up around it.
The study also warned of significant losses in business production, wages, and tax revenue.
California’s Push for Structural Remedies
Bonta and other states are seeking structural remedies that address their concerns about the deal’s potential impact on widely released films and basic cable TV service. A person familiar with the matter said Bonta is likely to include a sale of some cable TV assets, as Paramount and Warner Bros. together own more than two dozen cable channels including MTV, Comedy Central, Nickelodeon, CNN, TNT and HBO. The Justice Department and other global jurisdictions have already approved the deal, but California and 11 other states argue it would harm consumers and reduce industry diversity.
Paramount has resisted these demands, with a spokesperson stating the company shares Bonta’s concerns about the public discussions and misreporting that has surrounded this deal. The studio has also warned of financial penalties if the merger is delayed, including a “ticking fee” that amounts to about $650 million a quarter starting Oct. 1. Analysts estimate that delays could cost Paramount more than $1 billion in such fees if the trial extends into March 2027.
What Comes Next for California’s Economy?
The outcome of the legal battle will determine whether California can retain Paramount’s operations and the economic benefits they bring. If the merger proceeds without structural changes, the state risks long-term job losses and a decline in its entertainment industry. However, if Bonta’s lawsuit succeeds, Paramount’s threat to relocate could trigger a cascade of economic consequences, including the loss of infrastructure and supply chain jobs.
As the Sept. 24 hearing approaches, the stakes are clear: California’s economy hangs in the balance, with the entertainment industry at the center of a high-stakes legal and financial showdown. The final decision will shape not only the future of Paramount and Warner Bros. but also the trajectory of California’s global economic standing.
