David Ellison Threatens Paramount Exit From Hollywood as $111 Billion Warner Bros. Deal Stalls

Paramount Skydance CEO David Ellison is threatening to move one of Hollywood's oldest studios out of Los Angeles as an antitrust fight stalls his $111 billion takeover of Warner Bros. Discovery and pushes the deal toward a costly new deadline.

Ellison has signaled that he is prepared to sell Paramount's historic Los Angeles properties and relocate operations if the merger remains unresolved, according to people familiar with the discussions. Tennessee, Texas and Georgia have emerged as possible destinations.

The pressure intensifies Oct. 1, when Paramount must begin adding roughly $7 million a day to what Warner Bros. Discovery shareholders receive while the acquisition remains unfinished.

An antitrust lawsuit led by California Attorney General Rob Bonta and joined by 11 other state attorneys general stands in the way. The states argue the combination would reduce competition by putting two major film studios and a sprawling collection of television networks under one corporate owner.

The proposed merger would unite brands including HBO, CNN, CBS, Comedy Central, MTV and TBS. Paramount argues the combination would create a stronger competitor to companies including Netflix and Disney.

Ellison has told associates that he would prefer to remain in Los Angeles. Still, the possibility of a Paramount exit has given the company a powerful pressure point in a legal fight that could stretch well into next year.

Bonta has rejected the relocation warnings and previously characterized the tactic as "blackmail."

"California is the fourth-largest economy in the world and the best place to do business," a spokesperson for his office said. "Strong antitrust enforcement is essential so everyone can benefit from a vibrant economy."

The merger has received approvals from more than 65 regulators worldwide, but the California-led challenge has prevented Paramount from completing the largest Hollywood merger in years.

U.S. District Judge Araceli Martínez-Olguín temporarily blocked the transaction in July. Paramount and Warner Bros. later agreed not to close until five days after a decision on the states' claims or June 1, 2027, whichever comes first, with a trial scheduled for March.

Every month of delay carries a mounting price. Under the merger agreement, Paramount must begin increasing its payout to Warner Bros. Discovery shareholders after Sept. 30, adding about $650 million each quarter the transaction remains open.

Paramount has asked Martínez-Olguín to require the plaintiff states and the Writers Guild of America, which brought a separate antitrust challenge, to post a $1.88 billion bond to help cover those costs if the company ultimately prevails. A hearing on the request is scheduled for Sept. 24.

The states contend the merger would eliminate direct competition between Paramount and Warner Bros. in film distribution and basic cable programming. California's lawsuit alleges the combined company would control nearly one-third of the national market for theatrical motion pictures and basic cable programming.

The fight over competition has now created a second dilemma for Los Angeles: even as officials warn that consolidation could eliminate entertainment jobs, Paramount's potential departure raises the prospect of losing even more.

An August analysis by the Los Angeles County Department of Economic Opportunity estimated that the merger could expose about 4,500 local film and television jobs to consolidation over three years, along with thousands of positions at businesses that support the industry.

The county estimated that as much as $4.06 billion in economic output and roughly $547 million in tax revenue could be exposed. It described the figures as estimates of jobs and economic activity vulnerable to consolidation rather than announced layoffs.

A full Paramount departure could carry much broader consequences. A draft economic analysis commissioned by the company estimated that relocating its operations out of California could cost at least 28,000 jobs.

The prospect lands at a particularly fragile moment for Hollywood. Southern California has already endured years of declining production, layoffs and shuttered soundstages following the pandemic, the 2023 strikes and the continued movement of film and television work to other states and countries.

The merger itself carries another source of anxiety. Paramount has said it expects to cut about $6 billion in costs after combining the companies, raising the prospect of overlapping jobs and operations even if both studios remain in Southern California.

Los Angeles is now caught between those competing risks: significant job losses if the studios consolidate and potentially more serious economic damage if Paramount responds to the legal fight by leaving California altogether.

A settlement could still change that trajectory. A federal magistrate judge has directed Paramount, the states and the Writers Guild to identify dates for two days of in-person settlement talks in late October after earlier negotiations broke down.

Bonta has indicated that resolving the antitrust case would require concessions addressing the states' competition concerns, potentially including asset sales or other changes to the deal.

For Ellison, the pressure is becoming harder to ignore. Paramount is approaching an Oct. 1 deadline that will add roughly $7 million to the acquisition price every day, while a March antitrust trial and the possibility of pulling a century-old Hollywood institution out of Los Angeles remain on the table.