Paramount Threatens California Exit as Warner Bros. Antitrust Fight Escalates

The potential departure comes amid an antitrust challenge led by California Attorney General Rob Bonta and joined by 11 other state attorneys general. The states sued in July to block Paramount’s roughly $110 billion acquisition of Warner Bros. Discovery, arguing that combining two of Hollywood’s five major film distributors would reduce competition and could result in higher prices and fewer choices for consumers. California officials have also said the combined company would account for nearly one-third of U.S. theatrical films and basic-cable programming.

Paramount has pushed back against the challenge and has indicated that it could relocate operations outside California if the dispute is not resolved, according to Deadline. The publication reported that people close to Chief Executive Officer David Ellison had signaled that the company was prepared to follow through on threats to leave the state as negotiations stalled.

The confrontation adds another complication to a transaction that has already been delayed by litigation. A federal judge temporarily halted the deal in July after finding that the states had shown the transaction was likely to violate antitrust law. Paramount, Warner Bros. and the plaintiffs later agreed that the companies would not complete the merger or begin integrating operations until June 1, 2027, or until shortly after a court decision on the merits of the cases, whichever occurs first.

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The court has scheduled a 12-day trial for March 2027, according to Paramount’s regulatory disclosures.

Related: DOJ Backs Bond Requirement in Paramount-Warner Bros. Antitrust Fight

California officials contend that the merger would eliminate direct competition between Paramount and Warner Bros. in film production and distribution as well as cable television. Bonta’s office has said its legal challenge is intended to protect consumers, movie theaters and distributors from the effects of further consolidation.

Paramount’s possible exit has added an economic dimension to the legal fight. Moving major operations away from California could affect thousands of entertainment-industry jobs and related businesses at a time when Los Angeles is already grappling with production moving to other states and overseas.

Deadline reported that the company’s relocation threat emerged as pressure increased around negotiations with California officials. Other reports have identified Texas, Tennessee and Georgia — states that have sought to attract film and television production through tax incentives and lower operating costs — as potential destinations for some Paramount operations.

The dispute puts Ellison in an unusual position only months after taking control of Paramount. Completing the Warner Bros. transaction would create one of the world’s largest entertainment companies, combining Paramount’s movie studio, CBS and other television assets with Warner Bros.’ film and television operations and its broader media portfolio.

Source: Deadline