The Scoop
As California tries to derail Paramount’s $110 billion takeover of Warner Bros. Discovery, Paramount CEO David Ellison’s friends and advisers have been pushing the media executive to consider shifting his business out of the state.
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 if California Attorney General Rob Bonta were to sue to stop the merger, according to people familiar with the discussions.
No decisions have been made, these people said, and the considerations may just be a show of brinkmanship, given so much of the industry’s production takes place outside of Hollywood already. Under the current deal, Paramount has committed to keeping both companies’ lots operational if it remains in California.
But Paramount would not be the first major company to decamp from California in recent years due to tussles with state regulators: Chevron relocated its corporate headquarters from San Ramon to Texas two years ago, while Oracle and Tesla have made similar moves to the Lone Star State.
Paramount does have at least one short-term option: The company last year signed a lease in Bayonne, New Jersey, for nearly 300,000 square feet of studio space and could expand operations there.
For his part, Ellison remains wary of the idea of leaving California, some of the people said — he relocated Paramount’s corporate headquarters from New York to Los Angeles after his original deal to purchase the company closed last year, and has spent most of his life in California.
In this article:
Know More
Paramount has made repeated entreaties to Bonta to strike a deal that would allow its merger with Warner Bros. to close.
The studio proposed a firm commitment, via a consent decree, to produce 30 films annually, with a 45-day theatrical release window and a 90-day streaming window, alongside promises to keep both Paramount and Warner Bros. lots open in California, the people said.
Privately, Ellison and other Paramount executives have expressed frustration at Bonta’s refusal to engage, and have pointed to the commitments around content spending — some $30 billion annually — and employment that would flow into California. Already, the region has faced a production exodus to other states — even to Canada — with thousands of entertainment jobs lost in recent years. Ellison and his executives have said that the combined Warner Bros.-Paramount would create jobs in California, helping to stymie that outflow.
But Paramount believes Bonta’s office has rebuffed its overtures, creating what one Ellison adviser said is an “inhospitable” environment for Paramount to operate in. If Bonta sues, the adviser said, the state’s hostility would push the company over the edge.
Bonta’s office did not respond to a request for comment. Last month, he told MSNOW that there were “red flags in the air everywhere,” and that he was “concerned about job loss and prices being increased.”
In a statement, Paramount said, “We continue to engage constructively with the remaining few regulators around the world still considering the merger, including State Attorneys General, and are prepared to address any legitimate antitrust issues.” It added: “We are confident this transaction raises no such concerns, as demonstrated by the dozens of antitrust authorities around the world that have carefully reviewed the transaction.”
Rohan’s view
It’s easy to dismiss the move as political theater, but given the business climate in California, it becomes a more believable (and reasonable) decision, especially since merger enforcers from Australia to China — and in Washington — have raised no antitrust red flags. Like every CEO with a big deal before the administration, Ellison has already had to figure out a way to win over President Donald Trump and his enforcers, while keeping a restive and overwhelmingly liberal creative class in check. His argument: Warner Bros. Discovery and Paramount by themselves aren’t big enough to contend with tech companies like Amazon and Netflix, and stopping the merger puts each of the companies — and more than 50,000 jobs — at risk.
Bonta appears reluctant to engage, fueling speculation that any suit he files will be motivated by political animus. “He doesn’t know what he wants, but he knows he needs to want something,” one M&A lawyer who isn’t directly involved in the Paramount deal told me.
As personally inconvenient as it might be to uproot family and executives from California for greener — or, at least, less hostile — pastures, Ellison may rightfully feel he has no other option. If he needs some advice, he may want to give Chevron CEO Mike Wirth a call.