California’s long-running effort to keep Hollywood from packing up and moving elsewhere reached a milestone this week when Attorney General Rob Bonta and Paramount Skydance settled their antitrust dispute, clearing the way for the studio’s $111 billion acquisition of Warner Bros. Discovery to move forward.
The settlement, announced Monday, put an end to a standoff that had grown increasingly tense in recent months. Bonta, joined by attorneys general from 11 other states, had sued to block the merger on antitrust grounds. In response, Paramount executives floated the idea of relocating the company out of California altogether. According to a report in the New York Times, Paramount Chief Executive David Ellison told senior staff during an August meeting that “clearly we’re not wanted here.”
The dispute became the latest flashpoint in a decades-long struggle over the future of the entertainment industry in the state that built it. California’s political leaders — including its last three governors — have repeatedly stepped in to try to keep production dollars and jobs from migrating to states offering cheaper deals and richer tax breaks.
That effort dates back to 2009, when then-Gov. Arnold Schwarzenegger signed California’s first Film and Television Production Tax Credit, a response to other states beginning to lure productions away with financial incentives of their own. The original program set aside $100 million annually for qualifying film and TV projects through 2017.
Five years later, Gov. Jerry Brown signed Assembly Bill 1839, more than tripling that funding to $330 million a year through 2020. Brown extended the program again in 2018, pushing it out to 2025. When the pandemic brought Hollywood productions to a standstill, Gov. Gavin Newsom temporarily raised the annual credit to $420 million to help the industry recover.
But the challenges kept mounting. Hollywood faced what many in the industry called a “quadruple whammy” — COVID-19, a prolonged writers strike, devastating wildfires, and aggressive recruitment from other states offering more generous incentives. In 2025, state lawmakers responded by boosting the tax credit substantially, to $750 million annually through 2030. Newsom threw his support behind the increase, describing the industry at the time as being “on life support.”
This year, lawmakers took additional steps to protect the industry, exempting independent film producers from a newly created cap on corporate tax breaks after the film credit conflicted with that initiative. In July, Assembly Speaker Robert Rivas of Salinas formed a new Select Committee on Growing and Retaining the Creative Economy in California, aimed specifically at preventing further production flight. And on Saturday, Newsom signed Assembly Bill 2319, authored by Burbank Democrat Nick Schultz, establishing a new tax credit for post-production work such as editing and visual effects.
Assemblymember Rick Chavez Zbur, a Democrat who represents Hollywood and chairs the new Assembly select committee, said he was relieved that Paramount and the state reached an agreement, but cautioned that California cannot afford to rest on its laurels.
“Now that other states are realizing what important, family-sustaining jobs these are, they’re competing very aggressively for these jobs,” Zbur said.
He added that the committee plans to examine additional incentives when it convenes for the first time, likely in October in Los Angeles, as California continues its effort to hold on to the industry that gave the region its identity.
Original source: CalMatters
