Paramount says it may leave California in Warner antitrust fight

Bonta says no settlement talks; state wants trial to block deal

Paramount said it could begin moving out of California as soon as October if it cannot settle the antitrust lawsuit that California and 11 other states brought to block its $81 billion acquisition of Warner Bros. Discovery. Chief legal officer Makan Delrahim publicly acknowledged for the first time that a move out of state is on the table.

Delrahim said Tuesday at a conference sponsored by Politico that a potential move out of state is on the table as the company fights to close the $81 billion deal. “Ultimately, you know, go to a place where you’re wanted,” he said. The remarks mark the first time Paramount has publicly acknowledged the possibility of leaving California, its home for more than a century, though executives have privately discussed a move.

Delrahim said the company does not want to leave. The intent, he said, “is to be committed to California,” but “there’s a point at which you have a duty, a fiduciary duty to your shareholders.”

California Attorney General Rob Bonta, also speaking at the conference, described Paramount’s relocation talk as “an attempt to blackmail the regulators who are daring to enforce the law.” Bonta said there are no settlement talks. “We intend to go to trial and push this case to the end. We want to block this merger,” he said.

California and the other states, including New York and Colorado, sued in July in federal court, alleging that combining Warner and Paramount would give one company too much power over theatrical movie distribution and cable television. Paramount argues the deal is pro-competitive and pro-consumer and would help it compete with larger technology and media companies including Disney, Netflix and Amazon.com. The proposed transaction has been cleared by the U.S. Justice Department and regulators in the European Union, the U.K. and elsewhere.

Losing Paramount would be a blow to California and the state’s entertainment production economy, which is already struggling because of the flight of film and television shoots to other states and countries that offer generous tax incentives to Hollywood studios.

Paramount Chief Executive David Ellison and his deputies are aiming to resolve the dispute that has delayed his quest to combine Paramount, which owns CBS and its streaming services, with Warner, parent of HBO and CNN. As recently as last week, Ellison met with top executives to outline a possible fall move, according to a person familiar with the matter. Digital news outlet Puck first reported that meeting.

Ellison has most often mentioned Tennessee as a potential new headquarters, The Wall Street Journal previously reported. The state is already home to Oracle, the software giant co-founded by Ellison’s father and Paramount stakeholder Larry Ellison. Other potential homes include Texas and Georgia, the person familiar with the matter said.

In October, Paramount is scheduled to begin accruing ticking fees that it would pay to Warner shareholders, amounting to $650 million a quarter. Savings from moving production and operations to a more business-friendly state could help offset those costs, the person familiar with the matter said.

Gov. Gavin Newsom’s office has reached out to Bonta’s office to encourage a settlement, The Wall Street Journal reported last month. Democratic gubernatorial candidate Xavier Becerra, speaking at the Politico conference, also urged a settlement, saying it would be devastating for California if Paramount left.