Paramount CEO Warns He May Leave California if Merger Continues to Be Blocked

Paramount CEO David Ellison could pull all of the company's operations out of California if the state does not drop its efforts to block the merger with Warner Bros Discovery and agree to settlement talks as early as October. Variety reported Tuesday that Ellison may be willing to apply economic pressure on California's struggling film industry to push the deal through.

In July, California Attorney General Rob Bonta announced he would lead a coalition of 12 states in an antitrust lawsuit to block the merger. Bonta warned that if Paramount and Warner Bros Discovery combine, the new company would control 27% of U.S. theatrical releases and one-third of the country's basic cable television output.

"The merger would not only lead to higher prices," Bonta said. "It would also create fewer opportunities for important stories to be told, and fewer ways for audiences to access stories, ideas, and perspectives beyond their own experiences."

However, Variety reported that Ellison told senior Paramount executives he would begin the process of moving the company out of California on October 1 if Bonta does not agree to negotiate. The report also said Ellison would withdraw Warner Bros Discovery from California as well if the $110 billion merger is completed.

Paramount is considering moving to Tennessee, Texas, or Georgia—states that are not part of the current antitrust lawsuit, according to Variety.

A Controversial Deal

The dispute over Warner Bros Discovery's fate began in late 2025 when the sale of the company was first announced. Critics quickly pointed out that the deal could shift the balance of power in Hollywood, as Warner Bros Discovery owns influential assets such as CNN, production company New Line Cinema, and streaming service HBO.

Netflix was initially seen as the leading candidate to take over Warner Bros Discovery, but by February, Paramount had signed an agreement. This is Paramount's second major merger in less than a year, following its combination with production company Skydance in 2025—a deal that raised concerns about editorial independence of subsidiaries.

Paramount's decisions that year, including canceling The Late Show with Stephen Colbert and reaching a $16 million settlement with U.S. President Donald Trump, were seen as attempts to curry favor with the administration to push the merger forward.

Two Lawsuits

The merger with Warner Bros Discovery has triggered a new wave of scrutiny on Ellison and Paramount's leadership. Last week, in an op-ed in The New York Times, Ellison questioned whether the states' antitrust lawsuit is really "about market share" and speculated that the suit actually targets control of major news outlets like CNN. He also asserted his political independence.

"I have voted for candidates of both parties frequently; I hold views that could be called conservative and others that would be called liberal, like most Americans," Ellison wrote. "Regarding news operations, I have no desire to lead these companies to bend their newsrooms to my viewpoint."

The states argue that combining Warner Bros Discovery and Paramount would create a monopoly and stifle competition. If the merger succeeds, just four distributors would control 86% of the country's films, according to the states.

The deal could also lead to job losses. As of the end of 2025, Paramount had 17,600 employees, while Warner Bros Discovery had 35,500. A day after the 12 states filed their lawsuit, the Writers Guild of America (WGA) filed a similar suit, arguing the merger would lead to fewer jobs and pressure writers to accept less favorable working conditions due to reduced competition.

According to an analysis by the Los Angeles County Economic Opportunity Department published in June, the merger could result in nearly 2,500 job losses in Los Angeles County alone. Up to 6,000 employees worldwide could be cut. Meanwhile, when Paramount and Skydance completed their merger in 2025, the company laid off about 2,000 people.

A Costly Standoff

On July 24, Paramount Skydance agreed to pause the merger until a ruling in the lawsuit or until June 1, 2027—a move welcomed by the WGA. "We continue to believe this merger is illegal and we will keep fighting to stop it," the WGA said.

The delay could be costly for Paramount Skydance. Under the terms, the company must pay a fee of approximately $7 million per day, or $650 million per quarter, if the deal does not close before September 30.

But the standoff with Ellison could also hurt California—which is already seeing a decline in film production in the state. New York, another state in the lawsuit, could also face backlash as it hosts the executive offices of CBS News and Paramount. Paramount Skydance shares rose 0.4% in midday trading following Variety's report, while Warner Bros Discovery rose 1.1%.