Paramount’s relocation to result in $10 billion to $20 billion economic loss in California: Report

California would lose between $10.6 billion and $21.2 billion in annual economic output if Paramount Skydance decided to move its headquarters completely out of the state, according to a preliminary report.The significant economic losses would only come if Paramount doesn’t come to a negotiated settlement with California and 11 other states by Oct. 1. The coalition of Democratic state attorneys general is suing to block Paramount’s proposed merger with Warner Bros. Discovery. The antitrust lawsuit is the only obstacle the two studios need to surmount to close the $111 billion deal.If no settlement materializes, Paramount is expected to follow through on its threat to leave California for a red state more likely to welcome its business. The entertainment company is considering Texas, Georgia, and Tennessee as options. Paramount commissioned the Los Angeles Economic Development Corporation’s Institute for Applied Economics to conduct the report, a confidential draft of which was obtained by Politico. The economic report hasn’t been officially published yet.In the event of Paramount’s departure, California would experience a permanent loss of roughly 28,990 to 57,980 full-time jobs across all industries.The company’s potential relocation would also lead to reduced economic output ranging between $1.01 billion and $2.03 billion over the next five years, starting Oct. 1. In terms of jobs, between 2,750 and 5,550 job-years across all industries in California would be lost. A job-year equals one person working a full-time job for 12 months.On the flip side, Paramount’s commitment to releasing 30 theatrical movies a year for three years after completing the merger would generate between $377.7 million and $1.01 billion in economic output for California over the next five years. It would also generate between 1,020 and 2,760 job-years across all industries statewide.The report’s author emphasized these estimates are conservative and subject to change depending on any major developments in the Paramount-Warner Bros. merger saga.As of now, both parties are moving toward a March 2027 trial date. However, the trial could be averted if Paramount and California reach a resolution in the coming weeks.California Attorney General Rob Bonta (D) previously canceled settlement talks with Paramount representatives while accusing the company of leaking confidential details about a prior meeting to the media.There is no settlement meeting scheduled at this time, but both sides are meeting with a judge via Zoom on Friday to discuss scheduling a settlement conference.Antitrust lawyer Abiel Garcia argued that Paramount’s threat to leave California, rather than a business decision, is a political move meant to pressure the plaintiffs into agreeing to a settlement.“It just becomes a very calculated, very complicated calculus, and the timing is what raises the question of it all,” he told the Washington Examiner. “It cheapens the threat almost to me because then you’re just doing this for political ploy.”Before working at a private law practice, Garcia specialized in antitrust law at the California Department of Justice as a deputy attorney general and an honors attorney.Regarding Paramount’s floated relocation, the Los Angeles economic report says the best-case scenario would see the company slow-walk its departure and reduce spending in California. Meanwhile, the worst-case scenario would involve Paramount “substantially or entirely” relocating to another state. The consequences of the latter scenario would be disastrous for tax revenues in California, which has the largest economy of any U.S. state.It would also be a symbolic defeat for the entertainment industry’s longtime home.NEW JERSEY ATTORNEY GENERAL DRIVES WEDGE BETWEEN STATE LEADERS OVER PARAMOUNT MERGER LAWSUIT“Paramount’s departure from the motion picture capital of the world would carry symbolic weight at a time when California’s creative economy is still reeling from 2023’s dual strikes,” the report states, referring to the Writers Guild of America and Screen Actors Guild-American Federation of Television and Radio Artists strikes that brought Hollywood to a halt. “More importantly, the eventual conversion of its soundstages to commercial or residential use would permanently strip California of production infrastructure that took a century to build and that supports the vendors, crews, and post-production facilities surrounding it.”Paramount is the last major film studio headquartered in the historic Hollywood neighborhood, so its absence would be felt. Warner Bros. is headquartered in Burbank, California.