Paramount threatens California exit as $7-million-a-day clock ticks on Warner Bros. deal

Paramount Skydance’s chairman and CEO, David Ellison, is reportedly considering relocating Paramount’s headquarters out of California amid the company’s protracted legal battle over the $110 billion Warner Bros. Discovery merger.

According to reports first published in Semafor, and updated on Tuesday in Puck, sources claim Ellison told top executives last week that Paramount would begin exiting California on October 1, unless his company can negotiate a settlement with California Attorney General Rob Bonta.

Among the states said to be expressing interest in Paramount are Tennessee, Texas and Georgia.

A coalition of 12 state attorneys general, led by Bonta, filed a federal antitrust lawsuit in July alleging that Paramount’s proposed mega merger with WBD would constitute an illegal monopoly. The Writers Guild of America also filed a separate lawsuit alleging that the acquisition would reduce competition for writers.

‘This delay is just harming jobs…and also the future of the industry,’ Delrahim said.

The lawsuits were brought in response to strong concern in Hollywood over potential job loss and reduced opportunity based on lack of competition.

In contrast, Paramount has insisted that the merger would boost the entertainment industry.

A two-week trial has been set for March 2027, four months later than Paramount had requested, which could prove very costly unless a settlement is reached soon. The company is currently obligated to pay millions in “ticking fees” to WBD shareholders for every day the acquisition is delayed beyond September 30.

Reports of a possible move out of state were confirmed by the company’s top lawyer on Tuesday. In an interview with Politico, Chief Legal Officer Makan Delrahim described Bonta’s lawsuit as “devastating.” “This delay is just harming jobs…and also the future of the industry,” Delrahim said.

In an Op-Ed appearing in Deadline on Monday, Bonta described his lawsuit as “a straight-up antitrust enforcement case.” “The proposed merger–the largest in Hollywood history–would combine two Hollywood titans and create an illegal level of concentration in film distribution for wide-release films…blockbuster film distribution and cable TV,” Bonta wrote.

In reaction to Tuesday’s news that Ellison had set a date possibly to begin exiting California, Bonta posted on his X account that “In a span of weeks, Paramount agreed to halt the merger…and is now back with another attempt to blackmail the state into letting an illegal deal through.”

Despite pushback from some of the country’s attorneys general, the proposed merger has been cleared by the U.S. Department of Justice and has received support from leaders of theater chains such as Regal Cinema and AMC Theater.

Possible loss of jobs in the Golden State…

Internationally, the sale has been approved or gone uncontested in more than 65 jurisdictions, according to Paramount.

Some, however, are requiring concessions. The European Commission, an arm of the 27-member European Union, gave its approval on July 22, but Paramount will have to give up its partnership with United International Pictures within 13 months. The company would also have to avoid distribution deals with Universal in Europe for 10 years.

The United Kingdom decided not to intervene in the merger based on a list of assurances it has secured from Paramount, including maintaining editorial independence for news programming for the UK’s Channel 5 Public Service Broadcaster and that it will remain separate from CBS and CNN International.

The requirements also prohibit combining its linear channels with on-demand services and require that its children’s programming remain editorially distinct.

Sources say California Governor Gavin Newsom, who may make a run for president in 2028, wants to see a settlement soon. He is said to have concerns about a possible loss of jobs in the Golden State.

Both the attorneys general and Paramount have indicated they are interested in a compromise as well. What that will look like, though, remains to be seen.

The two parties are due back in court on August 13 to submit a case management statement on August 19 for a case management conference.