David Ellison has given California’s attorney general a deadline: agree to settlement talks over the Warner Bros. Discovery merger, or Paramount starts leaving the state.
Ellison told Paramount’s senior executives last week he is prepared to relocate the company — and Warner Bros. too, if the merger closes — unless Attorney General Rob Bonta agrees to negotiate a settlement in the antitrust case brought by 12 states. He said the exit process would begin Oct. 1 if talks have not started, and that the Paramount Skydance board has approved the move. Paramount declined to comment.
Leaving California could save Paramount Skydance roughly $500 million a year in taxes and potentially raise another $4 billion from selling its studio lots. That is the leverage, and it is aimed at a state that counts film production among its signature industries.
The date is not arbitrary. Oct. 1 is when Paramount begins accruing a “ticking fee” payable to Warner Bros. Discovery shareholders of $7 million a day. With the antitrust trial scheduled to start March 2, 2027, Paramount would owe roughly $1.2 billion to WBD shareholders by the time that trial is expected to conclude. The fee was written into the deal as a $0.25 per share quarterly accrual beginning after Sept. 30, 2026, alongside a $7 billion regulatory termination fee if the transaction fails on regulatory grounds.
If the state attorneys general succeed in blocking the merger, Paramount pays that $7 billion. The March trial date was itself a blow — it means the case may not resolve until next summer or later, with the ticking fee running the whole time. Paramount had asked the judge to start trial Nov. 4, 2026; the states and the Writers Guild asked for April 5, 2027.
Bonta’s answer was blunt. He called the planned exit an attempt to blackmail the state into letting an illegal deal through, writing on X that Paramount has lost the plot as it keeps losing in court and that the tactic did not work on the eve of the July lawsuit and will not work now. Bonta has not said what concessions would take the suit off the table, but has said any remedy would have to be structural — divestitures — rather than behavioral commitments like production quotas.
The underlying complaint is about market structure. The 12-state coalition alleges a combined Paramount-Warner Bros. would unlawfully reduce competition in basic cable and theatrical distribution, while the Writers Guild’s separate suit argues it would harm the market for writers. Speculation that the states might drop the case if Paramount spun off CNN has been denied by Bonta.
Ellison has been countering the theatrical argument directly, securing backing from two of the largest theater chains to support his commitment to release 30 films a year under the combined company. He has also pointed to 90 series planned from Paramount’s television studios in 2026 and a $1.5 billion increase in content investment made before the deal was signed.
Ellison remains confident the $110 billion transaction will close. He had hoped to have completed the takeover by now and instead faces a legal fight that could push the closing into 2027 or unravel it.
For California, the threat lands on a film and television sector already losing production to Georgia, New Mexico and overseas. For shareholders on both sides, the calculation is narrower: every month of delay costs $210 million in ticking fees, and the alternative to closing is a $7 billion check. Moving the headquarters does not address the antitrust claim — it changes who bears the cost of the fight.
JBizNews Desk | Los Angeles
© JBizNews.com All Rights Reserved. Reproduction or distribution without written permission is prohibited.
