Paramount CEO may remove operations from California over stalled merger

Merger Battle Escalates: Paramount CEO Threatens to Leave California

Paramount CEO David Ellison has threatened to move the company's operations out of California if the state does not end its attempt to block the proposed $110 billion merger with Warner Bros. Discovery, according to reports from multiple outlets. The threat, first reported by Variety, signals Ellison may be willing to leverage economic pressure on California's film industry to push through the deal.

Variety reported that Ellison told senior executives he would begin the process of moving the company out of California on October 1 if Attorney General Rob Bonta does not agree to settlement talks. The report indicated Paramount is considering relocating to Tennessee, Texas, or Georgia — none of which are involved in the ongoing antitrust lawsuit.

Bonta has dismissed the relocation talk as "blackmail," telling The Hollywood Reporter, "If their goal is to apply pressure, no pressure felt, no pressure applied." He added, "Honestly it reveals more than it tries to impose. What it reveals is that they're on the back foot, they're reeling. They're losing in court."

Settlement Talks Collapse Over Alleged Leaks

The conflict intensified when Bonta abruptly canceled a mediation session scheduled for Monday with Paramount representatives. In a statement, Bonta accused Paramount of leaking and misrepresenting information from a Friday settlement session, demonstrating what he called a lack of good faith.

"Not only did Paramount leak the alleged substance of settlement discussions, but they misrepresented these discussions, demonstrating a lack of good faith," Bonta said. "As soon as Paramount stops playing games and engages sincerely, my office is happy to meet again."

A Paramount spokesperson denied being the source of the leaks, saying, "As we have assured the Attorney General's office, Paramount has not been the source of the leaks of any of our confidential discussions with the AG's office." The spokesperson added, "We remain hopeful and stand ready to continue good faith discussions to resolve the Attorneys General suit."

The mediation was to involve Paramount Skydance CEO David Ellison, and one of the ground rules had been confidentiality of the process. Bonta said he "pulled down this meeting" because of the alleged leaks.

The Antitrust Lawsuit

Bonta is leading a coalition of 12 state attorneys general in a lawsuit to block the merger, filed in July. The states argue the combined company would control 27 percent of US theatrical releases and a third of basic-cable output, creating a monopoly. They contend that four distributors would control 86% of films distributed in the country.

"Consolidation here not only leads to higher prices," Bonta said. "It also leads to fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories, ideas, and perspectives beyond their own experiences."

The Writers Guild of America has filed a parallel lawsuit, arguing that "writers will be paid less and have fewer employment opportunities."

The trial is scheduled for March 2027, but the delay is costly for Paramount. A "ticking fee" will begin October 1 if the deal doesn't close, adding $7 million per day or $650 million per quarter to the price tag. Paramount has also requested a $1.9 billion bond from the states to cover costs, with a hearing set for September 24 before Judge Araceli Martinez-Olguín.

Theater Chains and Industry Support

Amid the legal battle, all three major movie theater chains have come out in support of the merger. Cinemark joined AMC and Regal in recommending the deal go through, citing the importance of a healthy theatrical ecosystem.

"The enduring success of our industry requires a healthy theatrical ecosystem supported by financially sound studios and exhibitors that can effectively create, distribute and exhibit high-quality films to consumers around the world," Cinemark said in a press release.

To win over the chains, Ellison reportedly committed to releasing 30 films per year with the combined studio and keeping them exclusive to theaters for 45 days.

Mystery Nonprofit Enters the Fray

The battle has also drawn in a newly created nonprofit called Neighbors for Strong Communities, which has been accused of being an "astroturf" front group. The organization sent text messages to Californians pressuring Bonta to support the merger, citing Ellison's threat to move the studio.

The group denied the allegations but declined to reveal its donors. Free-speech advocates, including the Committee for the First Amendment, issued a press release criticizing the group's lack of transparency.

"The behavior we're seeing is what powerful corporations do when they are losing control of the story," said Rashad Robinson, co-chair of the committee. "The more the public understands what's at stake — fewer jobs, fewer stories told, and even more power in the hands of a few billionaires — the harder the deal becomes for Paramount to defend."

Warner Bros. Discovery denied funding the text message campaign. The group was incorporated in Washington in June, and its website lists no founders, board members, or funders.

Perspectives

California Attorney General Rob Bonta

Bonta argues the merger would harm competition and consumers, and he insists any settlement must include "robust structural remedies" such as divestiture of cable channels or commitments to keep studios separate. He has dismissed relocation threats as "blackmail" and accused Paramount of acting in bad faith.

Paramount and David Ellison

Ellison maintains the deal is pro-competitive and has threatened to move operations out of California if the lawsuit continues. The company denies leaking settlement details and says it stands ready for good-faith negotiations. Ellison has promised increased output and theatrical exclusivity to win support from theater chains.

Theater Chains and Industry Supporters

AMC, Regal, and Cinemark have all endorsed the merger, arguing that a financially sound combined studio would benefit the theatrical ecosystem. They have called for an expedited resolution to the dispute.

Free-Speech Advocates and Critics

Groups like the Committee for the First Amendment have criticized the tactics used to pressure Bonta, including the text message campaign, which they describe as a "corporate-backed astroturf campaign" that undermines transparency.