Paramount threatens California exit as $110 billion merger stalls

Paramount CEO David Ellison set an Oct. 1 deadline to settle California's antitrust suit over the $110 billion Warner Bros. merger, threatening to move the studio out of state if AG Rob Bonta refuses talks.

"Another attempt to blackmail the state into letting an illegal deal through," Bonta's office told Puck. "Paramount has lost the plot as it continues to lose in court," Bonta wrote on X.

The deadline coincides with the start of a $7 million-per-day ticking fee payable to Warner Bros. Discovery shareholders. With the trial scheduled for March 2, 2027, Paramount would owe roughly $1.2 billion by the time proceedings conclude. Ellison estimated leaving California would save Paramount $500 million a year in taxes, and the company could raise cash by selling the Paramount and Warner Bros. studio lots, each valued as high as $4 billion.

The threat escalates a showdown that could reshape Hollywood's geography. Paramount's board, which Ellison controls, has approved the plan, and the company is in talks with Georgia, Texas and Tennessee. If the merger fails to close by next June, Paramount faces a $7 billion breakup fee.

Ellison outlined the plan during an hourlong lunch meeting Aug. 5 with Paramount's 12-member Executive Leadership Team on the company's Hollywood lot, according to Puck, which cited two people with direct knowledge of the gathering. The 43-year-old son of Oracle billionaire Larry Ellison said the headquarters would relocate first, with tax incentives from whichever state lands the company helping finance the move. A five-year plan would eventually shift most studio jobs to the new home.

A $7 billion breakup fee looms

Ellison told executives he still wants the combined company — and roughly 30,000 jobs — to remain in Southern California, but argued that relocating would be preferable to cutting content spending or restructuring as the company shoulders mounting legal costs and roughly $650 million in quarterly ticking fees.

Paramount previously proposed a consent decree containing 12 concessions, including promises to keep both the Paramount and Warner Bros. lots operating and to release 30 movies a year through the two studios. The company also offered theater chains a minimum 45-day theatrical window and a 90-day window before movies move to Paramount+. AMC Theatres and Regal owner Cineworld have backed the merger after receiving the proposal, while Cinemark's board is expected to discuss whether to join them this week.

Bonta, however, has resisted the overtures, with Puck reporting he would presumably seek major structural remedies — divestitures — rather than Paramount's piecemeal behavioral concessions.

A relocation that ripples beyond Hollywood

Ellison is also weighing moving CBS News operations out of New York City in response to antitrust actions brought by Bonta and New York Attorney General Letitia James, according to sources. The potential exits would mark a dramatic escalation in a fight over a deal that has drawn scrutiny from 12 states.

Paramount Skydance had about 17,600 workers worldwide at the end of 2025, while Warner Bros. Discovery had 35,500. If the merger closes, Ellison and his team are expected to slash thousands of jobs to achieve cost savings. Larry Ellison has personally guaranteed $46.7 billion toward the megadeal, and Paramount has lined up $24 billion in commitments from the sovereign wealth funds of Saudi Arabia, Qatar and the United Arab Emirates, which would own 38.5 percent of the combined company.

The relocation threat comes even as Paramount was among the top beneficiaries in the most recent round of California's Film and Television Tax Credit Program, receiving about $37 million in state tax credits for two Paramount+ shows.

The standoff pits a $110 billion deal against a state determined to block it, with Ellison betting that the threat of uprooting a storied Hollywood institution will force Bonta to the table. If no settlement emerges by Oct. 1, Paramount's exit would begin within two months — a move that would ripple through California's production economy and test whether tax incentives in Georgia, Texas or Tennessee can lure one of the industry's oldest studios.

This article is for informational purposes only and does not constitute investment advice.