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We’ve been covering for Hollywood for [redacted] years, but it’s hard to think of a CEO of a major entertainment conglomerate who has come across quite as desperate and panicked as David Ellison has the past couple of weeks. First, he tried soft-and-cuddly mode with a wholly unconvincing New York Times op-ed in which he painted himself as some brave, misunderstood defender of journalistic independence and the supposedly “huge” written commitment to have Paramount and Warner Bros. release a combined 30 theatrical films every year for three years. Then, when that didn’t seem to work, he threw a boss-baby tantrum and let it be known that he was going to pick up his toys (Paramount’s Hollywood-movie-and-TV machine) and leave California for good if the state didn’t settle its antitrust lawsuit.
It’s possible Ellison and his team were hoping all of this would scare Rob Bonta, the state’s attorney general, into backing down. But so far, Bonta doesn’t seem cowed and has accused Paramount of “blackmail” in trying to get its way. And outside observers seem to agree: “Paramount’s PR campaign appears to be strengthening Bonta’s hand rather than weakening it,” the analysts at Lightshed wrote in a note to clients this week. So what exactly is Ellison up to, and is there any chance it will work? Vulture West Coast editor Joe Adalian and film reporter Chris Lee connected to figure out just what exactly is going on.
Joe Adalian: This whole saga seems to get messier and messier every week. Just a few months ago, it seemed like David Ellison was going to get his wish and devour Warner Bros. Discovery whole before the end of the summer. Now, the anti-merger forces appear to have real momentum, and Paramount’s response has felt like that of a political campaign down 20 points in the polls a week before Election Day. What do you make of this whole mess — especially this week’s bombshell about Paramount abandoning California?
Chris Lee: Threatening to pull up stakes and relocate to Nashville or Atlanta or Austin as implicit “punishment” to Bonta and his consortium of attorneys general strikes me as an extreme misreading of the room. At a moment when summer box-office just hit $4 billion — with the industry having seemingly finally managed to battle back from malingering COVID- and strike-related supply-chain chaos and young audiences discovering the ineluctable joys of communal moviegoing (then posting about it on Letterboxd) — such a move would effectively hollow out tens of thousands of jobs in California and demoralize both below-the-line workers and the creative community all over again. This only to further the narrative of Hollywood as the new Detroit — a spiritual rather than physical home to a once-thriving industry that has transposed its modes of production to cheaper neighborhoods. Moreover, studio executives I have been talking to feel it’s a wild and dick-ish move predicated upon what one calls “Rich Kid Energy.” Ellison is basically saying, “I want to remake Hollywood in my own nepo-mogul image. And if you try to stand in my way, I am going to take my piece of Hollywood and set it up someplace other than Hollywood.”
J.A.: That’s exactly how it’s come across to me and other media analysts I’ve read this week. My first response was to dismiss the notion of moving Paramount out of state as an idle threat designed to turn up the heat on Bonta and other California Democrats. It reeks of the posture entitled billionaires take whenever left-leaning politicians dare to talk about raising taxes or regulating industry; we saw a ton of this ahead of last year’s New York City mayoral election. Usually, the monied classes realize there are advantages to living in blue states and cities and quickly forget their vows to skip town. And yet, we’ve seen some moguls follow through on their vows to self-deport: Elon Musk moved both himself and his business holdings to Texas earlier this decade, and Ellison’s dad, Larry, relocated Oracle from the business-friendly Texas to the even more business-friendly Tennessee.
There is no doubt a case to be made on paper for why Paramount would save money in the long-term by decamping from its native California. And given just how much debt Ellison’s Paramount has to worry about — even if he somehow managed to pull off a merger before October, when he’s on the hook for millions in so-called “ticking fees” — it’s possible that he’s just desperate enough to engineer his own real-life Project Hail Mary.
But here’s the real question: Is Ellison willing to risk the long-term damage that such a move would incur, both to Paramount and his personal reputation? Remember, this is the man who not so long ago was declaring loudly that his company was going to save Hollywood As We Know It by preventing the evil tech overlords at Netflix from getting their hands on Warner Bros. Discovery and doing who-knows-what with it. Now he’s vowing to blow a massive hole in California’s economy. Do you think he’s serious?
C.L.: Bonta has been quick to dismiss Ellison’s high-stakes pressure campaign as “blackmail.” And when the news first broke in Semafor last month that Paramount was seriously considering a move out of state, industry observers dismissed the threat as corporate saber rattling. Yet it’s lost on no one that Ellison has been methodical enough about his tactical pressure campaign to get full approval from the Paramount Skydance board for an October 1 exit. He’s also explored a sale of the studio’s Melrose Avenue back lot (which has been valued as high as $4 billion) and purportedly began negotiating with such states as Tennessee and Georgia to even cover moving costs.
Still, even maintaining a “creative hub” in California while executive operations take place somewhere else strikes me as kind of far-fetched. Paramount execs are said to be wild-eyed at the prospect of moving to red-state America. The below-the-line labor force in those states is getting better and better but simply is not as varied, skilled, or large as what exists in L.A. Soundstages are neither cheap nor easy to build. And while this kind of exodus is common enough for companies like Hewlett Packard and Palantir, it would be unprecedented in the history of Hollywood.
J.A.: It really would be a massive blow to the way things have been done there for a century. I don’t think it’s hyperbole to say that following through on his threats would make Ellison the least popular man in Hollywood since Joseph McCarthy and would ultimately do great damage to his company’s ability to compete for talent, especially behind the scenes. Yes, plenty of movie and TV production now takes place far from the Golden State. But the people who write, create, and craft these projects are still mostly based in and around Hollywood, as are the execs who help develop and market those efforts. Moving the core of your business thousands of miles away from those folks — or forcing them to relocate — would have a massive negative impact on Paramount’s ability to compete. So even if this scenario isn’t impossible to envision, it still feels like a long shot and one I don’t think Ellison will take unless he is truly desperate.
We should also talk about the parts of Ellison’s strategy that have been less confrontational. Before he started waving around the big stick of leaving Hollywood, last week he offered a seeming concession. He put in writing this plan to guarantee theatrical releases of 30 titles every year between Paramount and Warner Bros. Is it a real concession or just smoke and mirrors?
C.L.: Two main things: 30 titles, as a film-release benchmark, is an easily manipulable promise. And if Ellison backslides on his own stated pledge, he’s so rich, the penalty he’d have to pay to theater owners is peanuts.
This year, Paramount goosed its overall theatrical output by rereleasing 1986’s Top Gun and Top Gun: Maverick for a special anniversary engagement. To meet Ellison’s 30-title threshold, there exists zero contractual language barring the studio from sending other catalogue titles — Chinatown, The Godfather, Crocodile Dundee in Los Angeles — back to the multiplex in lieu of fresh product. Further, the deal does not include any marketing guarantees or baseline prints-and-advertising spends. Which is to say quality constraints on what Paramount could conceivably dump into theaters are totally lacking.
