California’s Paramount Contradiction: Tax Credits for the Company It Is Suing

California has a peculiar way of doing business. Even as Attorney General Rob Bonta and a coalition of Democratic state attorneys general wage legal war to block Paramount’s $111 billion acquisition of Warner Bros. Discovery, the Golden State is handing the same company tens of millions in film and television tax credits to keep cameras rolling here.

On August 10, the California Film Commission awarded Paramount Television Studios and CBS Studios roughly $37.3 million for two projects: the Viola Davis thriller series Ascent and a sequel series to the 1995 film Clueless. These were among nine productions that collectively received $145.5 million in incentives, expected to generate more than $600 million in spending and over a thousand shoot days. Governor Gavin Newsom hailed the awards as proof that California remains the entertainment capital of the world.

The timing is rich. Paramount, now controlled by David Ellison’s Skydance, has been locked in a bitter fight with California over the Warner Bros. deal. The state-led antitrust lawsuit argues the merger would harm competition in film and cable. Paramount has responded by floating the possibility of relocating operations, or even entire studios, out of California if the legal obstruction continues. Other states have openly courted the company with friendlier business climates and lower taxes.

Sacramento is simultaneously trying to kneecap a major studio through litigation while writing it large checks to stay put. The expanded Film & Television Tax Credit Program, boosted to $750 million annually, is California’s belated admission that production has been fleeing for years. Hollywood has lost tens of thousands of jobs since the post-streaming peak. Los Angeles County’s motion picture employment cratered, stages sit half-empty, and crews report multi-year dry spells. Other states and countries with more competitive incentives and lower costs simply outbid California.

Newsom’s team can point to recent upticks in awarded projects and projected economic activity, billions in spending and tens of thousands of jobs on paper. Feature film shoot days have shown some recovery in early 2026. Yet the broader picture remains grim. The industry is still far below its earlier highs, and structural problems such as high costs of living, complex regulations, and a business climate that treats success as something to be punished have not vanished because the state decided to throw more money at select productions.

Is this too little, too late? The expanded credits are better than nothing, and they have coaxed some projects back. But California’s approach reveals a deeper pattern: create an environment so hostile that businesses threaten to leave, then scramble with targeted subsidies and press releases claiming victory. Paramount gets millions to film Clueless reboots while the state tries to block its biggest corporate move. Crews get a temporary lifeline while the underlying reasons for the exodus—taxes, housing costs, regulatory thickets—remain unaddressed.

Hollywood did not stop being California’s signature industry because of a temporary dip in incentives. It began leaving because the state made it increasingly difficult and expensive to operate here. Handing Paramount $37 million while suing it over a merger is classic Sacramento theater: loud virtue on antitrust one day, quiet corporate welfare the next. The writing has been on the wall for years. Throwing tax credits at the problem after the damage is done looks less like a strategy and more like an expensive afterthought.