David Ellison, CEO of Skydance Media, has informed Paramount's senior executives that the company will begin moving its operations out of California by October 1 if the antitrust lawsuit filed by 12 states, led by California, is not resolved through a settlement. This aggressive move comes as the September 30 deadline approaches, after which Paramount would incur a "ticking fee" of $7 million per day payable to Warner Bros. Discovery shareholders until the merger closes. The trial for the lawsuit is currently scheduled for March 2, 2027, which would result in Paramount paying approximately $1.3 billion in fees if the deal remains in limbo until then.
California Attorney General Rob Bonta has vehemently rejected Ellison's threat, calling it an "attempt to blackmail the state into letting an illegal deal through." Bonta has publicly stated that while he is open to settlement talks, any resolution would require "robust structural remedies" to address concerns about competition in wide-release films, blockbuster films, and cable programming. He dismissed "behavioral" remedies, such as Ellison's pledge to release 30 movies a year, as difficult to enforce.
Ellison's plan involves relocating Paramount's Los Angeles headquarters first, potentially to states like Georgia, Texas, or Tennessee, which offer lower taxes and more business-friendly policies. He also outlined a five-year strategy to shift most studio jobs out of California and suggested selling Paramount Studios or Warner Bros. Studio lots in the Los Angeles area. This decision has caught some executives off guard and could lead to a wave of employee resignations, especially with anticipated layoffs post-merger.
California Governor Gavin Newsom has expressed concerns about the potential job losses if the merger is blocked and has reportedly encouraged Bonta to seek an out-of-court settlement. An analysis by the Los Angeles County Department of Economic Opportunity projected nearly 2,500 local jobs and up to 6,000 global jobs could be at risk due to the merger. Despite this, the state attorneys general maintain that the merger would create an entertainment giant controlling significant market shares in film distribution and basic cable, potentially leading to increased consumer prices and reduced content output.
