The Paramount Skydance chief executive David Ellison has threatened to abandon Hollywood by moving his company from California to a redder state like Tennessee, Georgia or Texas.
The backlash was immediate. This over-the-top-sounding idea was deemed by many I spoke to in the industry as the outburst of someone unaccustomed to being told no.
How could he even do such a thing? The question has thrown Hollywood into chaos. After all, Mr. Ellison just wrote a New York Times Opinion guest essay about how his bid to merge Paramount Skydance and Warner Bros. Discovery would bring health and prosperity to the movie business. He also promised to be guided by “facts and truth” in the news division of a combined company, which would include both CBS and CNN.
But he is apparently tired of fighting California’s attorney general, Rob Bonta, who along with 11 other Democratic state attorneys general filed an antitrust lawsuit over the merger. A judge ruled that a trial would start in March. According to the terms of the merger deal, Paramount has to start paying Warner shareholders a “ticking fee” of $7 million per day starting Oct. 1.
Hollywood, already stressing about production moving out of town, merger-related job cuts and the threat of A.I. slop replacing human creative work, was shocked by reports of Mr. Ellison’s threat to head to a red state. Is he serious? Weren’t we supposed to take him at his word that he loved this industry?
From the Paramount point of view, it’s sensible. Why stay in a state that hates it so? Why not sell the movie lots to real estate developers and move the company to somewhere it’s wanted?
The Warner and Paramount movie studio lots are estimated to be worth $4 billion to $5 billion each. The savings in state tax are estimated at $500 million a year.
I’m hearing that Nashville is the most likely destination if this move were somehow to come to pass. David Ellison’s father, the Oracle founder Larry Ellison, is already transferring the tech company’s headquarters there.
There has long been a dream from the right to create an alternative to left-leaning Hollywood. Nashville is home to not only country music but, in the MAGA era, it has sought to become, as one Times article put it in 2022, “Hollywood for Conservatives.”
Paramount insiders have insisted to me Mr. Ellison’s vow was not a stunt. “He’s deadly serious,” said a company executive who claimed to be house hunting in Tennessee already.
The implications, too, are deadly serious for the heart and soul of the entertainment industry. Hollywood has already lost about 42,000 jobs — about a third of the labor force — in the past five years. The midlevel production jobs that fled to states with better tax incentives have only started to return with California improving its tax credits last year.
This skilled work force would resist pulling up stakes and moving to Tennessee. And top-line talent, actors, writers and directors who live in Los Angeles, like the Duffer Brothers of “Stranger Things” who signed a four-year deal with Paramount last year, will be easy pickings for competitors. As for the mogul class, forget it. Hollywood remains an industry that is tight-knit and relationship-driven. It’s a members-only community that gathers in reliable spaces, whether the studio lots, the Hotel Bel-Air, Riviera golf course or restaurants like Craig’s.
What is so crazy about this standoff is that both politicians and business leaders have been aligned on the need to bring production back to California in particular and the United States in general. Even Donald Trump has proposed an initiative to bring entertainment production back stateside (OK, so it’s more tariffs).
The front-runner in the California governor’s race, Xavier Becerra, appealed to both sides to settle the lawsuit and spare the state, plus whatever’s left of Hollywood. “Let’s be adults, not be kids,” he said on Tuesday. “Conference room, not courtroom.”
On Wednesday, the Directors Guild of America and IATSE, the union that represents technicians, artisans and craftspeople, basically begged the two sides to settle the lawsuit and stop the crazy, essentially saying the brinkmanship had gone too far. That’s how everyone has been feeling for the past few days: Let’s stop playing chicken with thousands of jobs, movies and media corporations.
Amid all this, Gov. Gavin Newsom’s press office account congratulated the Paramount+ streaming service on Wednesday “for receiving the latest round of the California Film Tax Credit” for its sequel to the movie “Clueless.”
Mr. Ellison has not come out looking good in this uproar. My phone rang all week with Hollywood players feeling whipsawed by this merger battle. There’s also a consensus that Mr. Bonta is loving his moment in the spotlight at the possible expense of getting a deal done. There is also a chance that the outrageousness of Mr. Ellison’s threat is exactly what is necessary to focus everybody on figuring a way out.
It seems impractical to keep the merger in limbo for the next several months until the March trial date. The feeling in Hollywood is very much what a senior communications executive told me this week: People are worn out. Two years of pandemic, two years of disruption from labor strikes and two years of studio consolidation with jobs disappearing by the thousands.
No one wants more uncertainty, and certainly no one wants this chaos. And let’s face it, no one really wants to move from Beverly Hills to Nashville.
Sharon Waxman is the founder, chief executive and editor in chief of The Wrap.
Source photographs by Anton Zacon via Getty Images, and Jae C. Hong/Associated Press.
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