One of Hollywood’s most famous studios could leave California as the fight over Paramount’s planned Warner Bros. Discovery deal grows.
Paramount Skydance CEO David Ellison is considering moving the company out of California if the dispute cannot be settled.
However, Paramount has not announced a move.
For now, relocation remains a backup plan while the company pushes for a settlement in the antitrust case.
What Is Happening With the Paramount Warner Bros Merger?
Paramount agreed in February to buy Warner Bros. Discovery for $31 per share in cash.
The deal values Warner Bros. Discovery at about US$81 billion in equity and US$110 billion in enterprise value.
If it goes ahead, two of Hollywood’s most famous studios would sit under one company.
The group would also control major brands such as Paramount Pictures, Warner Bros., CBS, HBO, CNN, Paramount+, HBO Max, Nickelodeon, MTV and DC.
Warner Bros. Discovery shareholders approved the deal in April.
In addition, Paramount says it has received the regulatory clearances required under the merger agreement. The company says competition authorities in nearly 70 jurisdictions worldwide have now cleared the transaction, including Australia, the United States, the United Kingdom, China, Canada and the European Union.
However, a lawsuit led by California Attorney General Rob Bonta and 11 other state attorneys general is still blocking the path forward.
Why Are California and 11 Other States Trying to Block It?
The states filed their lawsuit in July in a federal court in California.
They argue the merger would cut competition in two areas. Those are wide-release film distribution and basic cable channel licensing.
According to the complaint, Paramount and Warner Bros. would hold about 27% of the US market for wide-release film distribution.
As a result, the states fear the combined company could gain more power when dealing with cinemas.
They also argue the deal could mean higher prices, fewer choices and less content.
Paramount rejects those claims.
Instead, the company says the market now includes major rivals such as Netflix, Amazon, Apple and Disney. It argues that a larger Paramount-Warner group would be better able to compete.
Paramount has also promised at least 30 cinema releases each year across the two studios. It says each film would get at least 45 days in cinemas before paid video-on-demand.
The Legal Fight Is Now Heading to Trial
Unless the two sides settle, the case is set to go to trial.
A federal judge has scheduled a 12-day trial for March 2027.
Meanwhile, Paramount has agreed not to close the deal until the court rules or until June 2027, whichever comes first.
That delay could be expensive.
Under the merger agreement, Warner Bros. Discovery shareholders begin receiving a “ticking fee” if the deal is still not done after September 30.
The fee is about US$650 million per quarter. That works out to roughly US$7 million for each day of delay.
Reuters has reported that the fees could cost Paramount as much as US$1.7 billion if the deal is delayed until next summer.
Could Paramount Really Leave California?
This is where the story gets more unusual.
The Los Angeles Times has reported that Paramount’s board approved a backup plan developed by Ellison. The plan would allow the company to move its headquarters from Hollywood.
Tennessee and Texas are among the places being considered, according to the report.
However, Ellison has also made clear that he would rather keep Paramount in California.
Other reports say a move could begin as early as October if the company cannot make progress on a settlement.
Even so, Paramount has been more careful in public.
Chief Legal Officer Makan Delrahim has confirmed that leaving California is one option the company must consider.
He said Paramount has a duty to weigh the interests of shareholders as the legal fight adds costs.
That still does not mean a move is certain.
Moving a major studio would be difficult. Paramount depends on sound stages, production sites and thousands of workers across Southern California.
It would also carry huge symbolic weight.
The Paramount lot on Melrose Avenue has been part of Hollywood for more than a century. It is also the only major studio still based in Hollywood itself.
California’s Attorney General Calls the Pressure ‘Blackmail’
California Attorney General Rob Bonta has hit back at the relocation talk.
He called it another attempt to “blackmail the state” into allowing a deal his office believes breaks antitrust law.
For now, his office says it will continue to challenge the merger.
The state argues the deal could mean higher costs and less competition. It also warns of lower wages, job cuts and fewer movies and TV shows.
Paramount takes the opposite view.
In an August 14 statement, the company said almost 70 jurisdictions around the world had cleared the deal.
It also called the state lawsuit the last barrier to closing and asked the attorneys general to negotiate.
At the same time, Paramount said it remains willing to offer commitments and concessions to reach an agreement.
Hollywood’s Unions Are Divided
The legal fight has also split Hollywood’s labour groups.
The Writers Guild of America filed its own federal lawsuit in July to block the merger.
The WGA argues that joining two major buyers of film and TV writing would cut competition for writers’ work.
Therefore, it says the deal could mean fewer jobs and weaker pay.
Paramount disputes that view. It says the combined group would make more film and TV and create more work.
Meanwhile, the Directors Guild of America and IATSE have taken a different position.
Neither union has backed the merger.
Instead, both want Paramount and the attorneys general to seek a settlement. They say the long delay is already hurting workers and productions.
The unions have also suggested terms for any deal.
These include keeping operations in Hollywood and production in the United States. They also want cinema release promises to be legally binding.
Could CNN Be Part of a Settlement?
Paramount has also said it may consider changes if they help settle the case.
Delrahim said this week that all options were “on the table,” including a possible sale of CNN.
However, Paramount’s public comments on CNN have not been fully consistent.
A company source later told TheWrap that CNN was not for sale.
So, for now, there is no announced deal to sell the network.
The mixed comments show how quickly the merger talks are changing.
What Happens Next?
For now, Paramount and Warner Bros. Discovery remain separate companies.
Paramount says it has the regulatory approvals required under the merger agreement. However, the California-led lawsuit still stands in the way.
The March 2027 trial remains set unless the two sides reach an agreement first.
Meanwhile, the cost of waiting will rise after September 30 because of the ticking fees.
That gives both sides a strong reason to talk.
Even so, there is no guarantee they will reach a settlement.
The stakes are high.
If Paramount succeeds, two of Hollywood’s biggest studios would join under one company.
If the deal fails, Paramount could face major costs.
And if Ellison follows through on the backup plan, Hollywood could face something once thought almost unthinkable.
Paramount Pictures could leave the city it has called home for more than a century.
For more details on the states’ legal challenge, visit the California Attorney General’s official announcement.
For more movie news, visit the Accessreel.com news section.
