Paramount CEO David Ellison has reportedly told company executives that he is prepared to move the studio’s operations out of California if state attorneys general do not settle their lawsuit challenging the merger with Warner Bros. The threat comes as the company faces a legal challenge from California and 11 other states, who argue that the proposed deal violates antitrust laws. Ellison reportedly said he could begin relocating the business as early as October 1 if no settlement talks have started by then.
Paramount has not officially responded to the threat, which was first reported by the industry publication Puck. California Attorney General Rob Bonta criticized the company’s actions, calling them an attempt to pressure the state into allowing an illegal deal, according to mynewsla.com. Bonta said that Paramount has lost focus and continues to face setbacks in court.
The lawsuit is scheduled for a trial date in March, which is significant because after September 30, Paramount would owe Warner Bros. Discovery $7 million per day the deal remains delayed. Paramount had previously agreed to pause the merger while it defends against antitrust lawsuits filed by a coalition of state attorneys general. In response to that pause, the companies, state attorneys general, and the Writers Guild of America canceled a preliminary injunction hearing set for August 3.
Ellison wrote in a letter to shareholders that the company expects the transaction to close and remains focused on preparing for a successful combination. The Writers Guild of America has filed its own lawsuit, claiming the merger would reduce opportunities and lower pay for writers. The Screen Actors Guild-American Federation of Television and Radio Artists has supported the lawsuits challenging the merger.
SAG-AFTRA President Sean Astin said workers have a right to expect thorough regulatory oversight in such a large deal. He added that the companies should commit to making more content in the United States. Paramount has said that the European Commission and several other global regulators have approved the acquisition.
The company also noted that it has received approval from authorities in multiple countries including the U.S., Australia, Canada, and China. Ellison’s plan includes moving the company’s headquarters first and then creating a five-year strategy to shift studio jobs out of California, according to a report from vulture.com. He claims this move would save the company about $500 million annually in taxes.
The idea of a major studio leaving Hollywood has raised concern among industry observers. Paramount Studios is one of the oldest working movie studios still located in Hollywood proper. While nothing is final, the threat has prompted a strong reaction from California’s attorney general.
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