Lobbying blitz and California threat clinched $81B Paramount-Warner deal

Skydance carries nearly $80B in debt, Ellison targets $6B synergies

After waging a months-long lobbying campaign that crisscrossed both parties and culminated in a threat to move Paramount out of California, David Ellison on Tuesday closed his $81 billion deal to combine Paramount and Warner Bros. Discovery, The Wall Street Journal reported.

Ellison, 43, addressed employees of the combined company — now renamed Skydance — at a town hall on the Warner Bros. studio lot on Tuesday. “Now let’s be honest. It wasn’t easy to get here,” Ellison said, according to a transcript viewed by the Journal. “At times it was downright ugly. And at nearly every turn, someone told us it couldn’t be done. And here we are.” “I’d do it all over again in a heartbeat,” he added.

The newly combined company will close with nearly $80 billion in debt, which analysts have said could constrain Ellison’s ambitions to create a Hollywood powerhouse. Ellison has promised $6 billion in annual synergies within three years, and layoffs are expected as the integration proceeds. Skydance on Tuesday said former Mattel chief Ynon Kreiz will serve as co-CEO alongside Ellison. Emerson Collective founder Laurene Powell Jobs and Activision founder Bobby Kotick will join the board.

The merged company will control streaming services Paramount+ and HBO Max, dozens of cable channels, movie and television studios with historic filmmaking lots, and brands including Batman, Superman, Harry Potter, Teenage Mutant Ninja Turtles, CNN, and CBS News.

Path to closing

Tuesday’s closing was the culmination of what Ellison described in his remarks as a long-term plan that was three years in the making, the Journal reported. After a grueling process, he secured control of Paramount in August 2025, merging the entertainment company with his Skydance Media production company. By then, the idea had already come to Ellison to pursue Warner Bros. Discovery.

Warner Chief Executive David Zaslav passed on Ellison’s first few offers, which started at $19 a share. But Ellison persisted and Warner put itself up for auction. Netflix soon swooped in and signed a deal to acquire the movie and TV studios and HBO Max streaming service. Ellison refused to back down, sweetening his offers, taking his bid directly to shareholders, threatening a proxy fight, and enlisting Trump allies to lobby on his behalf. On his ninth offer, Ellison prevailed. Paramount agreed to pay $81 billion for Warner after Netflix declined to match an offer that was 63% higher than Ellison’s first.

State antitrust fight

Getting approval from the U.S. Justice Department came with relative ease, the Journal reported, as did approvals from the European Union, United Kingdom, China, and other regions. The harder fight came at the state level.

California Attorney General Rob Bonta, joined by 11 other states including New York, Connecticut, and Colorado, sued to block the merger on antitrust grounds. The states alleged that the deal would illegally consolidate markets including theatrical films and basic cable channels.

The states won a temporary restraining order halting the merger in late July, according to the Journal. Rather than spend months fighting over whether the merger should remain frozen while the case proceeded, Paramount agreed to keep the companies apart and pushed to get directly to a trial on the merits. It was a risky gambit: a loss at trial could kill the deal, and a lengthy legal journey would prove expensive. Paramount faced the prospect of paying $650 million a quarter in ticking fees to Warner shareholders if the deal did not close by the end of September, with the trial set to begin the following March — a bill that could have approached $2 billion. Bonta continued to call the deal illegal and said significant structural changes would be needed before he and the other states would consider blessing it.

The lobbying and relocation campaign

After the restraining order, Ellison waged a concerted behind-the-scenes campaign, people familiar with the matter told the Journal. He crisscrossed the country courting politicians, hired well-connected operatives and lobbyists, and cultivated allies in both parties. In a pivotal move, he threatened to move his media empire out of California; the company spoke to officials in Tennessee about a potential move, the Journal reported.

California Governor Gavin Newsom publicly called on the two sides to settle the matter. He also privately encouraged the attorney general to go to the table, and Ellison met with Newsom on more than one occasion, people familiar with the matter told the Journal. Separately, Los Angeles Mayor Karen Bass also publicly encouraged the two sides to find a solution, the Journal reported.

Bonta characterized the relocation threats as bluster and blackmail, while people close to Ellison said the threats were genuine, according to the Journal. That message was conveyed to Newsom, people familiar with the matter said.

In early August, Ellison hired former California Assembly Speaker Fabian Nunez, a Democratic power broker and founder of the consulting firm Actum, to help build political support in Sacramento. Nunez met frequently with Bonta’s office in an effort to broker peace. Ellison also enlisted former Democratic California Sen. Barbara Boxer and former Los Angeles Mayor Antonio Villaraigosa to help, both of whom are partners with Actum, people familiar said.

Ellison also won over most of the movie theater chain operators who had initially expressed concerns about the deal, promising at least 30 movies a year and favorable terms on how long the movies would remain in theaters before moving to streaming.

Settlement and key personnel

In September, Bonta agreed to a settlement, according to the Journal. Paramount committed to investing at least $1.5 billion more in domestic production over the next five years, funding a workforce-training program for the entertainment industry, and other concessions. The settlement did not require Paramount to remain in California, but the company said it would remain a Los Angeles company and keep the Warner and Paramount studio lots.

Chief legal officer Makan Delrahim, one of Ellison’s first hires after the Paramount acquisition, led the regulatory effort. A former Trump administration antitrust chief, Delrahim was intimately familiar with Warner. As head of the Justice Department’s antitrust division, he led the government’s ultimately unsuccessful effort to block AT&T’s acquisition of what was then called Time Warner in 2018. Ellison set up a war room on the Paramount lot where he, Delrahim, and one or two other executives met daily to map out strategy, the Journal reported. Delrahim’s first move was to hire Jon Leibowitz, who chaired the Federal Trade Commission under President Barack Obama, as an outside antitrust adviser.

Speaking to employees on Tuesday, Ellison promised to make more movies, invest in great television, and “embrace technology to create a formidable, forward-thinking media and entertainment company.” The two companies, he said, “are not coming together to manage decline.” “We are coming together to build for growth. And we are going to be ambitious about it. Very simply, we are here to win.”