Would David Ellison Really Pull Paramount Out of California if the State Tries to Block Warner Bros. Merger?

Is David Ellison considering a nuclear option of relocating Paramount’s headquarters from California — and potentially diverting billions of production dollars from the Golden State — if California Attorney General Rob Bonta files his expected challenge to the Paramount-Warner Bros. Discovery deal?

That was the suggestion in an anonymously sourced item published by Semafor on Sunday, which said that Ellison’s “friends and advisers” have been “pushing the media executive to consider shifting his business out of the state.” The report cautioned that Paramount has made no decisions on this front and that such talk “may just be a show of brinkmanship.”

Indeed, the Semafor report comes as California’s AG appears to be moving forward with plans to file a lawsuit to block Paramount’s $111 billion acquisition of Warner Bros. Discovery “as soon as this week,” the New York Times reported Sunday. California would be joined by states including New York, Washington and Connecticut in the legal challenge, in arguing the deal would “harm competition in the market” for tentpole films among other claims, per the Times report.

Representatives for Paramount Skydance did not respond to repeated requests for comment.

The message in the suggestion that Ellison’s Paramount might exit California: If you try to block or slow down our Warner Bros. takeover, we’ll take our business elsewhere. It’s obviously a saber-rattling move, but it isn’t clear whether the threat will give pause to California or other states with Democratic attorneys general who are opposing the deal.

Paramount last year moved corporate headquarters after buying Paramount Global, relocating from New York City to Los Angeles. Other companies, including Elon Musk’s SpaceX and Larry Ellison’s Oracle, in recent years have moved their HQs out of California for tax reasons or over objections to California laws and regulations.

It would be one thing for Paramount to shift its corporate headquarters out of L.A. That would potentially affect a few hundred jobs. But the logistics and repercussions of diverting Paramount-Warner Bros. film and TV productions out of California would be daunting — not only would it take several years to do that, it would poison the merged company’s relations with Hollywood professionals, who are already concerned that Paramount-WBD will curtail job opportunities.

Paramount has lobbied Bonta about the alleged pro-competitive benefits of its Warner Bros. deal, and why specifically it would be a good thing for the state. In May, Paramount chief legal officer Makan Delrahim a letter to Bonta in which he “reiterate[d] our continued commitment and support to Californian movie theaters and audiences” coming “in response to certain misinformation about the marketplace expressed in recent public commentary.” Delrahim also noted Ellison’s repeated pledges that the merged company will release at least 30 films per year.