The stakes around the proposed $110 billion Paramount Skydance–Warner Bros. Discovery merger are rising.
A newly leaked economic report commissioned by Paramount estimates that California could lose as many as 57,980 full-time job-years and up to $21.2 billion in annual economic output if the studio follows through on threats to significantly reduce or relocate its operations outside the state.
The report, prepared by the Los Angeles County Economic Development Corporation’s Institute for Applied Economics, arrives as Paramount races toward an Oct. 1 merger deadline while facing lawsuits from a coalition of 12 state attorneys general and the Writers Guild of America.
California Attorney General Rob Bonta is leading the states’ challenge, arguing that combining Paramount and Warner Bros. would reduce competition in film distribution and cable programming, potentially leading to higher prices, less content and fewer opportunities across the industry.
Paramount has pushed back, arguing that the merger would strengthen the business and increase production.
The newly surfaced report attempts to quantify what could happen if Paramount ultimately moves substantial operations out of California.
According to the analysis, the state could permanently lose roughly 28,990 to 57,980 full-time job-years across all industries, along with between $10.6 billion and $21.2 billion in annual economic output.
Those numbers include more than just studio employees. They also account for indirect and induced effects throughout the supply chain, from production vendors and post houses to the wider spending generated by entertainment-industry workers.
That distinction matters.
The report does not say 58,000 studio employees would suddenly disappear. Rather, it models a broader economic ripple effect if Paramount significantly reduces its California footprint.
The report is also not an independent government study. Paramount commissioned it and has used the prospect of leaving California in its argument against efforts to block the merger. That context is important when evaluating its conclusions.
One of the most dramatic scenarios involves Warner Bros.’ physical production infrastructure.
The report warns that converting studio soundstages to residential or commercial uses could permanently remove production capacity that took generations to build, potentially affecting the ecosystem of crews, vendors and post-production companies clustered around it.
That comes as California is already fighting to keep film and television production from migrating to competing states and overseas.
Paramount has floated Georgia, Tennessee and Texas as possible destinations if the company significantly reduces its California operations. Paramount is already building a studio in Texas in conjunction with Taylor Sheridan.
At the same time, the company has pledged that a combined Paramount–Warner Bros. would produce 30 feature films annually for three years.
According to the report, that commitment could generate between 1,020 and 2,760 job-years in California and between $377.7 million and $1.01 billion in economic output through September 2031.
REELated:
Paramount pumps brakes on Warner Bros. Discovery merger
In other words, Paramount’s own analysis presents two starkly different futures: additional production if the merger proceeds as planned, or potentially enormous losses if the company decides to move much of its operation elsewhere.
The legal battle remains unresolved.
In July, Bonta and 11 other state attorneys general sued to stop the merger, alleging that the combined company would reduce competition in several key entertainment markets. Paramount and Warner Bros. later agreed not to close the deal until either the court rules on the merits or June 1, 2027, whichever comes first.
The WGA filed its own antitrust lawsuit, arguing that the merger would reduce opportunities for writers, suppress compensation, and decrease the quantity and variety of film and television production.
Paramount is also seeking a $1.88 billion bond from the states and WGA, arguing that it needs protection against potential losses if the merger is delayed and the company ultimately prevails.
U.S. District Judge Araceli Martinez-Olguin has scheduled a hearing on that request for Sept. 24. Reuters reports that both sides have continued negotiating while preparing for litigation if they cannot reach a settlement.
The fight now extends well beyond a corporate merger.
For Los Angeles, it has become another referendum on whether California can hold onto the production infrastructure, jobs and creative workforce that made Hollywood Hollywood in the first place.
And with billions of dollars and tens of thousands of jobs now at stake for both sides, the question is no longer simply whether Paramount and Warner Bros. should merge.
It is what happens to California if they don’t.
The Hollywood Reporter was the first to break this story.
