When David Ellison said that he was willing to move entertainment giant Paramount Skydance (PSKY) out of California, that should have left most of California's state government with cold chills. If Ellison actually does move Paramount, that represents a tax hit of about $500 million annually to California, and that does not factor in state taxes on salaried staff. This might look like an advantage to some, because shareholders gave Paramount shares a fractional boost in the closing minutes of Wednesday's trading.

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We know that Paramount is prepared to move. The board of directors reportedly gave it the green light some time ago, and Tennessee is certainly one of the places that would welcome Paramount's business. Reports suggest the plan would only start in October, with Paramount moving its headquarters operations first, and then starting off on a five-year plan that would bring the studio jobs along with the headquarters. Some jobs would also likely be eliminated instead of transferred at some point.

But with Paramount poised to have to pay Warner Bros. Discovery (WBD) a "ticking fee" of around $650 million per quarter, something must be done to move things along. And that something looks like a potential move that will cost the state of California substantially in the meantime. With the entertainment industry currently looking at a 30-year low in employment, and California's books not exactly the most balanced in the continental United States, losing a major taxpayer and figure in the entertainment industry is not a good look. This suggests reasons that Governor Gavin Newsom has apparently called on Attorney General Rob Bonta to find a resolution out of court.

The Show about Nothing Deal

Seinfeld was a huge show back in the 1990s. It has kept much of that market power to this day, as evidenced by a new deal between Paramount and Sony Pictures Television (SONY) that will allow Paramount to continue running Seinfeld reruns across Paramount's basic cable holdings for the next three years.

The previous deal was set to expire October 1, and Paramount stepped in to try and keep the deal going. However, there is a critical difference between the new deal and the old. The old deal had a five-year duration. This deal only goes for three, suggesting that Paramount may see the writing on the wall when it comes to the whole concept of basic cable.

Is Paramount Stock a Good Buy Right Now?

Turning to Wall Street, analysts have a Hold consensus rating on PSKY stock based on two Buys, four Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 37.47% loss in its share price over the past year, the average PSKY price target of $10.50 per share implies 10.35% upside potential.