A new economic analysis warns that California could lose nearly 58,000 jobs and over $21 billion in annual output if Paramount follows through on its threat to leave the state, a self-inflicted wound driven by a Democratic attorney general's antitrust lawsuit the federal government already declined to bring.
The preliminary report, produced by the Los Angeles County Economic Development Corp.'s Institute for Applied Economics, lays out the worst-case scenario in stark dollar terms. A full relocation of Paramount's California operations would permanently eliminate between 28,990 and 57,980 full-time jobs statewide, counting direct positions and employment supported through vendors and household spending. Annual economic output would drop by $10.6 billion to $21.2 billion. State and local tax revenue would shrink by $585 million to $1.17 billion every year. Politico first obtained the report.
Those numbers land at a moment when California can least afford them. The state's entertainment sector has already been battered by strikes, production flight to other states, and a broader industry contraction. Now a coalition of twelve Democratic state attorneys general, led by California's own Rob Bonta, is suing to block the very merger Paramount says it needs to survive, even after the U.S. Department of Justice looked at the deal and walked away.
The timeline tells the story. In June, the DOJ closed its investigation into the proposed Paramount, Warner Bros. Discovery combination without filing suit. Federal regulators concluded the merger was not likely to harm competition in streaming, linear television, or theatrical film development, production, and distribution.
Weeks later, on July 13, Bonta and eleven other Democratic attorneys general filed their own lawsuit seeking to permanently block the deal under the Clayton Act, the century-old federal antitrust statute used to challenge mergers that may substantially reduce competition. The states allege the combined company would reduce competition in wide-release theatrical films, anticipated top-grossing films, and the licensing of basic cable channels. AP News reported that a combined Paramount-Warner could control nearly a third of both the theatrical film distribution market and basic cable programming.
Bonta framed the lawsuit in sweeping terms.
"Audiences on every sofa and in every movie (theater) seat would feel the impact of this unlawful merger."
But the federal government, which has far more resources and broader jurisdiction to investigate antitrust matters, reached the opposite conclusion. Arizona AG Kris Mayes, one of the coalition members, openly questioned whether the Trump DOJ's approval was politically motivated, telling reporters, "We are seeing more and more instances where the Trump DOJ is just rolling over for corporate consolidation." That accusation remains unsubstantiated by any evidence in the public record. The DOJ stated the deal would "increase competition across the media and entertainment ecosystem."
The result is a peculiar standoff: a dozen state-level officials are trying to stop a transaction the federal government's own antitrust enforcers judged to be lawful. And the economic consequences of that decision are now landing on the very workers and taxpayers those officials claim to protect.
Paramount has not been subtle about the pressure it faces. Under the merger agreement, additional payments to Warner Bros. Discovery shareholders, known as "ticking fees", begin on October 1. Those fees run approximately $7 million per day, or roughly $650 million per quarter, according to the deal's terms. The total financial exposure from merger-related ticking fees and financing costs sits at approximately $1.88 billion.
That is the same figure Paramount cited when it demanded a $1.88 billion bond from the state attorneys general and the Writers Guild of America, arguing that if their legal challenge ultimately fails, the plaintiffs must accept the financial consequences of the delay.
A Paramount spokesman put it bluntly:
"If plaintiffs insist that this transaction is paused during the pendency of their lawsuit, they must accept the financial consequences if their challenge ultimately fails."
Paramount CEO David Ellison has gone further, threatening to relocate the company's headquarters and thousands of jobs out of California beginning October 1 if Bonta does not negotiate a settlement. The potential destinations: Georgia, Tennessee, or Texas, three states that have spent years building film and media incentive programs designed to lure exactly this kind of production away from Hollywood.
A federal judge has already halted the merger pending the litigation, and the antitrust trial is not scheduled until March 2027. That means months of accumulating ticking fees with no resolution in sight.
The LAEDC report is careful to note its own limitations. Paramount does not publicly break out operating expenses or employment by state, so the analysis relies on assumptions about how much of the company's roughly $19.7 billion in 2025 operating expenses is tied to California. The institute modeled a range of 30 percent to 60 percent, roughly $5.9 billion to $11.8 billion annually, as the company's California footprint.
Even the low end of that range represents a massive economic anchor. And the report models more than just the catastrophic full-exit scenario. If Paramount merely reduced its California spending to offset the $1.88 billion in ticking fees and financing costs, spread evenly over five years, the state could still lose between 550 and 1,110 job-years annually and between $202.7 million and $405.4 million in yearly economic output.
The report also examined the upside of letting the merger proceed. Paramount has offered to guarantee 30 theatrical releases per year from the combined company. The LAEDC estimated that commitment alone could generate between 1,020 and 2,760 job-years in California and between $377.7 million and $1.01 billion in statewide economic output over five years. That is economic activity California forfeits for every month the lawsuit drags on.
Hollywood's labor force already faces deep uncertainty. Major unions have split over whether the merger helps or hurts workers, but the prospect of losing tens of thousands of jobs to a relocation is a threat that cuts across every guild and trade.
Bonta's office responded to the economic warnings with a statement that read more like a tourism brochure than a legal argument. "California is the fourth largest economy in the world and the best place to do business," the office said. "Strong antitrust enforcement is essential so everyone can benefit from a vibrant economy."
The office went further:
"When companies create a monopoly and illegally use that power to get out of negotiating, that hurts our economy, it hurts Californians, it makes things more expensive, and it makes things worse."
That framing assumes the merger is illegal, a conclusion no court has reached and the DOJ explicitly rejected. The states are asking a judge to permanently block a deal the federal government's own antitrust division found unobjectionable. Meanwhile, Bonta pulled out of settlement negotiations with Paramount, accusing the studio of bad faith, further narrowing the path to a resolution that might keep those jobs in California.
Paramount declined to comment on the LAEDC report. But the company's actions speak clearly enough. Ellison has publicly named Georgia, Tennessee, and Texas as landing spots, states with lower taxes, fewer regulations, and aggressive entertainment-industry incentive packages. The message to Sacramento is not complicated: fix this, or we leave.
Behind the scenes, the political dynamics are just as revealing. Governor Gavin Newsom has privately pushed Bonta to drop the lawsuit over fears it will cost Hollywood jobs, a sign that even within California's Democratic leadership, the AG's aggressive posture is raising alarms.
Fox News reported that Netflix co-founder Reed Hastings' wife donated $1 million to a political action committee supporting Bonta, a detail that takes on sharper significance given that Netflix had previously been in negotiations to purchase Warner Bros. Discovery. If Bonta's lawsuit succeeds in killing the Paramount-WBD merger, Netflix could benefit directly. Bonta's office has not publicly addressed the conflict-of-interest question.
The Paramount bid cleared the DOJ's Hart-Scott-Rodino waiting period back in February, meaning there was no statutory impediment in the United States to closing the proposed acquisition. Paramount sweetened its offer with the ticking-fee provision and pledged to cover the $2.8 billion breakup fee owed to Netflix. Director James Cameron publicly warned that a Netflix acquisition of Warner Bros. would be "disastrous for the theatrical motion picture business."
None of that deterred the twelve Democratic AGs. They filed suit five months after the federal government gave its blessing, and they show no sign of backing down before the March 2027 trial date.
Strip away the legal jargon and the political maneuvering, and the picture is simple. The federal government investigated this merger and concluded it would not harm competition. A dozen Democratic attorneys general disagreed and sued to stop it. Paramount, facing $7 million a day in mounting costs and no trial date for six months, has told California it will pack up and leave. An independent economic analysis now puts the cost of that departure at up to 58,000 jobs and $21 billion a year.
Bonta's office insists California is "the best place to do business." But tens of thousands of Californians whose livelihoods depend on Paramount's presence in the state may soon learn that their attorney general's antitrust theory matters more to Sacramento than their paychecks.
When elected officials gamble with other people's jobs to make a political point the federal government already rejected, the workers who lose are never the ones who filed the lawsuit.