A reported threat by Paramount to move its massive studio operation out of California unless the state drops a legal challenge to its proposed merger with Warner Bros. amounts to a “blackmail” attempt, Attorney General Rob Bonta said Tuesday.
Variety reported Tuesday that Paramount-Skydance CEO David Ellison informed senior executives at the company last week he’s prepared to relocate the combined studio business out of the state unless Bonta and other state attorneys general negotiate a settlement of their lawsuit attempting to block the merger with Warner Bros. Discovery.
Ellison said such a move could begin as early as Oct. 1 if settlement talks have not begun. Paramount has not commented on the relocation threat, which was first reported by the industry newsletter Puck.
Bonta, however, blasted the alleged threat and said he remains committed to challenging the proposed merger.
“In a span of weeks, Paramount agreed to halt the merger until a court decision or until June 2027, asked for a November trial, and is now back with another attempt to blackmail the state into letting an illegal deal through,” Bonta wrote on X. “Paramount has lost the plot as it continues to lose in court. It didn’t work the first time — on the eve of our July lawsuit — and it won’t work this time.
“This illegal merger will result in higher costs, fewer options and fewer people making movies. My office remains committed to stopping illegal consolidation and protecting a vibrant California economy for businesses that play by the rules.”
Last week, a federal judge in northern California scheduled a March 2 trial date for the lawsuit challenging the merger. U.S. District Judge Araceli MartÃnez-OlguÃn wrote that the trial will take place from March 2 to March 19 of next year in federal court in Oakland.
The trial dates are significant because after Sept. 30, Paramount will have to pay about $7 million for every day the transaction doesn’t close, under an agreement with WBD.
Paramount previously announced that the planned takeover would remain on hold while it defends against antitrust lawsuits filed last month by a coalition of 12 state attorneys general led by California. As a result, the companies, the state attorneys general and the Writers Guild of America agreed to cancel a preliminary injunction hearing that had been scheduled for Aug. 3.
Bonta said previously that if the court finds in favor of the states, the merger would be blocked pending appeal.
In a quarterly earnings report last month, Ellison continued to insist the company “fully expects” the merger to close.
“As it relates to the planned acquisition of Warner Bros. Discovery, we fully expect the transaction to close and remain focused on preparing for a successful combination once it is complete,” Ellison wrote in a letter to shareholders.
After the states filed suit July 13, the Writers Guild of America also sued to block the deal on the grounds it would cause harm to writers and shrink the labor market.
The guild alleges Paramount’s pending acquisition of WBD would reduce opportunities, lower pay and worsen working conditions for writers. The union argues that the elimination of a key competitor and the creation of a dominant firm would reduce the quantity and variety of theatrical films and television series as the merged company would have a greater ability to reduce output.
The Screen Actors Guild-American Federation of Television and Radio Artists announced its support for the lawsuits challenging the merger.
“Our members have every right to expect that the government will do thorough regulatory oversight when a deal of this magnitude takes place. The workers in this industry should not have to rely on promises and aspirational statements,” SAG-AFTRA President Sean Astin said. “These companies have the ability to commit to making more films and shows in this country and they should. This isn’t a conversation about shareholder value, it’s about the survival of the entertainment business in America.”
A Paramount representative previously said the planned merger “is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry.”
The company has said that the European Commission has formally cleared the acquisition, adding to approval from antitrust and competition authorities in the United States, Australia, Brazil, Canada, China, Kuwait, Montenegro, New Zealand, North Macedonia, Saudi Arabia, Serbia, South Africa, South Korea, Ukraine and the regional competition authority for the Common Market for Eastern and Southern Africa.