Paramount Goes All-In on Threat to Leave California — But Are They Bluffing?

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Michael Yanow/AP

TOP STORY

PARAMOUNT PUSHES ITS CHIPS TO THE MIDDLE

David Ellison apparently wasn’t playing around when he threatened to move Paramount from California to Georgia, Texas, or Tennessee (or, perhaps, a secret fourth location that’s TBD). Both Los Angeles Mayor Karen Bass and California Attorney General Rob Bonta have been informed of the strong possibility the move could happen.

But threats aren’t action, and many in our stack took it upon themselves to analyze both the likelihood of Ellison actually following through with a plan that would result in the loss of thousands of jobs — and what it might mean for the industry if they do.

THREE TAKES

TheWrap, Roger Cheng and Lucas Manfredi — There’s a key question here, Cheng and Manfredi wrote: Is Paramount “truly prepared to pick up stakes and move — or if this is Ellison upping the ante in hopes that Bonta will blink and move to settle” Bonta’s lawsuit before the company begins paying Warner Bros. Discovery (WBD) a whopping $7 million per day on October 1. David Ellison also learned this game from his dad, Larry Ellison, who “over decades has built a reputation as an aggressive negotiator willing to play hardball.” Cheng and Manfredi add, “Historically, Larry Ellison has viewed negotiations as a competition where absolute victory is a must. And with Paramount, both he and David understand they hold a lot of cards.”

Page Six Hollywood, Ian Mohr — The story sent those in entertainment reporting “scurrying” when it broke, Mohr and Peter Kiefer noted, and today he takes a look at “whether Paramount’s threat was just a game of high-stakes Hollywood chicken before court-ordered settlement talks take place next month.” If there is one person who isn’t quite buying what David Ellison is selling, it’s Bonta. A “knowledgeable source” told Mohr, “Mayor Bass is taking [Paramount’s threat] seriously, Governor Newsom is taking it semi-seriously. But Bonta believes he has a relatively strong antitrust case. And while Bonta would rather settle, he’s also willing to go to trial — and he also thinks that Ellison is acting a little crazy.” Mohr and Kiefer also wrote that “top showbiz execs are unfazed” by the report, mostly because “It’s all negotiations and positioning… meaningless.”

CNN’s Reliable Sources, Brian Stelter — Of course, that pesky ticking fee is likely what’s driving Ellison’s impatience, Stelter pointed out. As he put it, “That’s the key context for anything you read right now about the stalled merger.” Paramount “has reason to apply maximum pressure between now and October 1,” but “almost no one knows if Paramount CEO David Ellison’s pressure will push California AG Rob Bonta toward a settlement that would clear the way to a Paramount–WBD merger.” Though it “stands to reason that Bass is saying something … to Bonta directly” about the importance of keeping jobs in California, “As it stands right now, however, Bonta can simply repeat his position that the merger is unlawful and prepare for the trial in March.”

TAKEAWAY: Those who live and work in the film industry in Los Angeles might be freaking out about the possibility that Paramount will move out of state, but for now it seems it’s wiser to assume the threats are little more than posturing designed to get David Ellison what he wants. That doesn’t mean Paramount will stay in California, but it also doesn’t mean it won’t. Ellison is well-versed in the art of negotiation, but so is Bonta. And here’s the key dynamic our authors largely missed: Rob Bonta doesn’t have nearly as much to lose as the people on whose behalf he is negotiating. In fact, some would argue that his personal interests might even conflict with those whose livelihoods are on the line in this standoff. A hardline stance against this merger has already done wonders for his national political profile. And there would seem to be little incentive for him to cave.

📰 TOP SCOOPS & ANALYSIS 📰

SCOOP 🍨 CJR’s The Media Today, Riddhi Setty — Journalists at McClatchy Media began “battling with management” over the company’s plans to deploy artificial intelligence, Setty noted today. Ultimately, victories were won, and “newspapers in Washington State and Idaho ratified a union contract with significant AI provisions, including ones preventing the company from using AI to replace staff, using AI to impersonate journalists, or disciplining members for a chatbot’s mistakes.” But then “last week, McClatchy laid off more than ninety unionized media workers across seventeen publications” — and now former and current McClatchy employees are watching closely to see what happens next, because union contracts dictate human jobs can’t be replaced by AI. Bryan Clark, who was part of the layoffs, told CJR, “We’ll be monitoring that very closely. Our contract is very explicit. They cannot replace union work with AI. If there’s any attempt to do that, we’re going to be at the arbitration table very quickly.”

SCOOP 🍨 POLITICO Playbook, Adam Wren, Will Steakin, and Dasha Burns — Gov. Josh Shapiro (D-PA) “will enter a new frontier for Democrats pitching the AI conversation toward 2028 today” when he calls for “the U.S. to push China for ‘practical guardrails to reduce risks to the American people’ and muscular federal regulation,” Playbook reported. Shapiro told Playbook that he has “become more and more concerned by what I’ve heard” from leaders in the industry who are “realizing they were losing control over some of their technology.” He added, “And I was surprised in these conversations that they were urging me and others to encourage more regulation, which is not typically what you would hear from heads of industry.”

SCOOP 🍨 The Washington Sun, Evan McNorris-Santoro, Jasmine Wright, and Manuela Silva — By raising interest rates yesterday, “the central bank both followed the desires of many economic experts and cut off any chance a politician can reasonably promise lower costs are coming to American household budgets anytime soon,” The Sun wrote today. The president was one of those making that promise “until recently,” and now “the president’s party failed to beat the clock on this.” What’s next is likely a “blame game” in the House, something The Sun is already seeing. As Rep. Riley Moore (R-WV) told Silva, “Look, we’ve passed a lot of legislation that can address those concerns as it relates to prices and things like that. They’re sitting in the Senate.”

SCOOP 🍨 Punchbowl News AM — Medicare for All remains a “divisive issue among Democrats,” but it’s also still included “as one option among an array of proposals aimed at increasing coverage and lowering costs” as part of a report sent by the “healthcare working group” to House Minority Leader Hakeem Jeffries this week. The working group is co-led by Rep. Alexandria Ocasio-Cortez (D-NY) and Terri Sewell (D-AK). “There’s a large diversity of opinions in the caucus, so a lot of what we do is just compile all the different proposals among the caucus,” AOC told Punchbowl. “Medicare for All is of course included.” Other options on the “very large list” also include “adding dental, vision and hearing coverage to Medicare; capping certain out-of-pocket costs; and addressing healthcare workforce supply.”

ANALYSIS 👀 The Bulwark’s Morning Shots, Bill Kristol and Andrew Egger — “The president’s rage is building,” Kristol and Egger wrote today. That’s because he “keeps putting people in place with very clear instructions to help him do whatever he wants, and they keep disloyally zagging him.” One person who may soon find himself as the object of the president’s ire is Federal Reserve chair Kevin Warsh, who the president “moved heaven and earth to install.” He’s “still biting his tongue on Warsh,” but that could swiftly change.

ANALYSIS 👀 Barrett Media’s Morning Edition, John Mamola — The AM radio industry has to focus on more than “just keeping it in cars,” Mamola wrote today. That’s because “getting audiences to stick with the AM band was an ongoing challenge” during Mamola’s two decades in the industry; the reality is that it’s “simply not the first option any longer.” But AM radio is still “quite relevant.” As he pointed out, “Not every community has citizens with access to the internet. FM signals only go so far, and programming on the FM dial isn’t always geared toward news and information. And can you remember the last time you walked into someone else’s home and found a radio?”

📈BUSINESS OF MEDIA 🎥

Status, Natalie Korach — Business Insider has seen a 78% drop in monthly unique visitors since 2021. Chief exec Christian Baesler called staffers to an all-hands about it yesterday, and the attendees were described as “wary.” To adapt to a changing search ecosystem, the Axel Springer publication is shifting away from SEO-dependent traffic toward specialized subscriber newsletters and brand franchises. QUOTE 📣 “Baesler told staff Wednesday he is ‘confident’ in Business Insider’s future despite its audience evaporating over the last five years and the outlet’s subscriber base having contracted, reiterating his mission to overhaul the business around franchises and newsletters.”

ADWEEK Daily, Rebecca Stewart — Footwear brand Crocs was named TikTok Shop’s Seller of the Year this spring after executing an experimental (but successful!) social media strategy aimed at engaging Gen Z and Gen Alpha audiences. At Brandweek, Crocs Chief Brand Officer Terence Reilly explained how testing new social commerce formats turned the brand into a top digital retailer.  QUOTE 📣 “The platform crowned Crocs its Seller of the Year in May, an accolade the brand earned through a test-and-learn approach to social designed to engage Gen Z and Gen Alpha…”

Simon Owens’s Media Newsletter, Simon Owens — Regional Asia-Pacific publication Design Anthology has built a multi-channel media operation encompassing print, digital memberships, video, and events by focusing on high-value evergreen content. For EIC Jeremy Smart, publishing a biannual print issue is more about emphasizing editorial discipline and creating a premium brand halo across all formats than anything. QUOTE 📣 “What’s notable is what Design Anthology hasn’t done. It hasn’t tried to maximize pageviews, flood social platforms with disposable content, or turn itself into a high-volume publishing operation. Instead, its strategy has been to protect scarcity, deepen its relationships with readers and advertisers, and extend the same editorial sensibility across multiple formats.”

Barrett Media’s Morning Edition, John Mamola — Former NFL player Damien Woody is exploring new sports broadcasting territory after all those summer layoffs at ESPN. Woody is expanding his personal digital footprint and launching The OG Football Show on YouTube to deliver weekly NFL analysis.  QUOTE 📣 “After a round of layoffs earlier this summer, many, including Damien Woody, were searching for where they could provide their expertise during the upcoming NFL season.”

Feed Me, J Lee & Emily Sundberg — Feed Me’s food podcast, Expense Account, fired back up this week and came through as a newsletter blast. It featured culinary personality and former Bon Appétit test kitchen star Carla Lalli, released her new book, Food Is A Feeling, blending recipe development with personal memoir. The launch is part of a broader strategy that includes her expanding digital presence across YouTube and Substack newsletter publishing.  QUOTE 📣 “She’s been a YouTube star, recipe developer, Substacker, and James Beard Award winner. She is a legend.”

OTHER COOL STUFF

Morning Brew — A viral Instagram saga about a mother policing her school parent group chat over packing Oreos in kids’ lunches was just a staged marketing stunt for Suno, an AI music generation platform. If that all sounds like gobbledygook, congrats on having missed the whole thing.

Reliable Sources — Tomorrow, the NYT will celebrate 175 years since publishing its first paper. The giant is celebrating with a party, plus a campaign that highlights its “triumphs and shortcomings.” Happy birthday!

👀 WHAT GOT MISSED? 👀

POLITICO Playbook, Adam Wren, Will Steakin, and Dasha Burns — Hot2Vote will kick off a $100,000 campaign in and around Atlanta to make sure people are registered to vote — and the org will deploy the help of “adult film stars” to do so.

“The multimedia effort, which was shared first with Playbook and will expand beyond Georgia, includes more than 100 performers telling people they should “always check their status” after the state’s mass cancellation of inactive voter registrations.” The launch announcement may not be getting much attention now, but we’re pretty sure the campaign will get plenty of attention when it actually ramps up.

🏆 NEWSLETTER OF THE DAY 🏆

The Poynter Report, Tom Jones — It proved quite difficult to find only one part of Jones’ newsletter to include in our own today, which is a strong argument for being featured as today’s best. Jones began things by observing the tragic deaths of NBC4 aerial photojournalist Eliana Moreno, pilot George Marciniw, and 29-year-old Edy Gutierrez Mejia, who all died after the helicopter they were traveling in while reporting “crashed and burst into flames around 7 p.m. Pacific time” on Tuesday.

Jones also took a look at Patrick Clancy’s upcoming interview on 60 Minutes this weekend, “massive changes” at the Atlanta Journal-Constitution (which announced the elimination of five key positions this week), and ESPN’s decision to sign Monday Night Football play-by-play announcer Joe Buck. There’s truly something for everyone in today’s Poynter Report.

This newsletter was produced by Lindsey Ellefson.