No decision has been made, but Paramount warned that delaying the merger would hurt Hollywood workers and benefit dominant technology companies.
Paramount Skydance was weighing on Tuesday whether to move its corporate headquarters and redirect much of $30 billion in planned annual content spending outside California after Attorney General Rob Bonta led 11 other states in suing to block its $110 billion Warner Bros. Discovery takeover.
“Ellison’s confidantes have pushed him to consider moving its corporate headquarters and reallocating much of its $30 billion in planned spending outside the state,” Semafor reported.
No decision has been made, and sources told the outlet the possibility could amount to brinkmanship. CEO David Ellison was reportedly wary of leaving California after moving Paramount’s corporate headquarters from New York to Los Angeles last year.
The debate intensified after Bonta filed a 38-page federal antitrust complaint Monday in the Northern District of California. The suit asked the court to stop the acquisition, which would combine Paramount, CBS and Paramount+ with Warner Bros., HBO Max and CNN.
The states alleged that the merged company would control nearly one-third of theatrical motion pictures and basic cable programming in the United States.
“This merger, in short, would create a media behemoth,” the attorneys general said in the complaint.
Bonta argued that eliminating competition between major film distributors and basic-cable owners would hurt theaters, distributors and audiences.
“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television,” Bonta said in an official statement.
Paramount rejected the states’ case in a company statement released after the lawsuit.
“The complaint filed by the state attorneys general … distorts settled antitrust law and is based on a misrepresentation of competition in the entertainment industry today,” Paramount said in its response.
Paramount argued that the combination would create a stronger competitor to Netflix and other technology-backed streaming platforms while permitting greater investment in films, television and creative talent. The company has committed to producing at least 30 theatrical films annually, maintaining a minimum 45-day theatrical window and keeping both studio lots operating.
Semafor reported that Paramount offered to formalize those commitments through a consent decree but believed Bonta’s office rebuffed its attempts to negotiate. The report said executives viewed the $30 billion in annual content spending and related employment as potential benefits to California.
The Justice Department reached the opposite antitrust conclusion after an eight-month investigation that reviewed more than 2 million documents and included participation from state attorneys general.
The department determined the transaction was “not likely to result in harm to competition or American consumers.”
The state lawsuit creates a major obstacle despite federal clearance. Paramount has warned in Securities and Exchange Commission filings that government litigation could delay or prevent closing, impose costly conditions or reduce the merger’s expected benefits. Warner Bros. shareholders begin receiving a quarterly ticking fee if the transaction has not closed by Sept. 30.
Paramount has not announced a headquarters relocation, identified a destination or formally committed to moving the reported spending. Semafor reported that the company has nearly 300,000 square feet of leased studio space in Bayonne, New Jersey, providing a possible expansion option if Ellison reduces Paramount’s California footprint.
