Paramount CEO David Ellison threatens to move studio out of California over blocked $111B Warner Bros. merger

Relocation threat

Paramount Skydance CEO David Ellison told senior executives last week that he will begin moving the company out of California on October 1 unless California Attorney General Rob Bonta agrees to settlement talks over the antitrust lawsuit seeking to block Paramount's $111 billion takeover of Warner Bros. Discovery. Ellison said the board has approved the relocation, which would start with the corporate headquarters and be followed by a five-year plan to shift studio jobs out of state. He told his team the move would save $500 million a year in taxes. Potential destinations include Tennessee, Texas, and Georgia, none of which are party to the lawsuit. Ellison has strong ties to Tennessee, where Oracle, the company founded by his father Larry Ellison, is relocating its global headquarters to Nashville. Tennessee officials have reportedly urged Ellison to bring Paramount to the state as well.

California's response

Bonta, who is leading a coalition of 12 state attorneys general (Deadline reports 20 AGs) in the antitrust case, called the relocation threat "blackmail" in a post on X on Tuesday.

In a span of weeks, Paramount agreed to halt the merger until a court decision or until June 2027, asked for a November trial, and is now back with another attempt to blackmail the state into letting an illegal deal through.

Paramount has lost the plot as it continues to lose in court. It didn't work the first time -- on the eve of our July lawsuit -- and it won't work this time.

Bonta warned that the combined company would control 27 percent of theatrically released films in the United States and a third of the country's basic-cable output. The lawsuit, filed in July, argues the merger would harm competition in film distribution and cable programming. The Writers Guild of America has also joined the case.

Financial pressure

The October 1 deadline coincides with the start of a "ticking fee" in the merger agreement: Paramount must pay Warner Bros. Discovery shareholders $7 million per day if the transaction has not closed by then, equivalent to roughly $650 million per quarter. If the deal is delayed until next summer, the total delay fees could reach $1.7 billion. If the deal collapses entirely, Paramount owes WBD a $7 billion termination fee, described as the largest in corporate history. WBD can walk away if the deal is not closed by June 4, 2027.

Legal and regulatory landscape

The merger has received approval from the US Department of Justice and international regulators including the EU and the UK, which gave its green light in recent days. However, the state-level antitrust suit proceeds. A federal judge in the Northern District of California ruled last week that the case will go to trial in March 2027, with a 12-day proceeding. Paramount had requested a November trial date. The merger is suspended until a court decision or June 2027, whichever comes first. Ellison argued in a New York Times op-ed that California's opposition is politically motivated and tied to concerns about CNN's management. Bonta responded that he is pursuing a standard antitrust case to prevent concentration of power in Hollywood. Ellison has promised the combined studios would release 30 films a year with significant theatrical windows and offered to put that commitment in writing as part of settlement talks.

Industry implications

If the merger closes, the Ellison family, described as close to Donald Trump, would control two news networks (CBS News and CNN), two major film studios (Paramount Pictures and Warner Bros.), and properties including HBO and New Line Cinema. An exit from California would likely trigger resignations among studio creatives reluctant to leave the heart of the American film industry. California has increased financial incentives for the film and television sector in recent years to counter production moving to cheaper locations such as Georgia, Canada, and the UK. Paramount is the oldest working movie studio still in Hollywood proper.