Ellison’s $111 Billion Warner Bros. Bid Stalls on Antitrust Suit; Paramount Plans California Exit

Paramount Skydance Chief Executive David Ellison is navigating a deepening crisis over his $111 billion bid for Warner Bros. Discovery as a state-led antitrust lawsuit pushes the deal’s completion into 2027 and mounting costs threaten its viability. The 43-year-old tech scion has simultaneously prepared contingency plans to move Paramount’s historic Hollywood base out of California, according to people familiar with the situation who spoke to the Los Angeles Times.

U.S. District Judge Araceli Martínez-Olguín scheduled a March 2 trial for California Attorney General Rob Bonta’s lawsuit to block the merger, which Bonta filed alongside attorneys general from 11 other Democratic-led states. The states argue the acquisition would give Paramount excessive power over the news, entertainment and sports media industry. A court filing showed both sides had agreed to suspend the merger until June 2027 or until a judge rules.

Paramount’s board has approved Ellison’s relocation plans, the Los Angeles Times reported, citing people familiar with the matter who were not authorized to speak publicly. Ellison shared the concept with his executive leadership team in a meeting last Wednesday but said his preference was to remain in California, these people said. The proposal includes potentially selling the 65-acre Paramount lot in Hollywood — as well as the larger Warner Bros. campus in Burbank should the merger close — to generate revenue for deal costs, one of the sources said.

Bonta blasted the relocation strategy. “Paramount has lost the plot as it continues to lose in court,” he said Tuesday, according to the Los Angeles Times. “My office remains committed to stopping illegal consolidation and protecting a vibrant California economy for businesses that play by the rules.”

Paramount’s top legal officer, Makan Delrahim, said the company is “committed” to staying in California but noted it has “a fiduciary duty to shareholders,” the Epoch Times reported via Zero Hedge. “You have to take a look at the business environment and look to see what’s best for not only the community and the business,” Delrahim said at a Politico summit on Aug. 12. “And ultimately, you know, go to the place where you’re wanted.”

The delay is proving expensive. Paramount agreed to pay Warner investors $31 a share plus “ticking fees” of 25 cents per share for every quarter after Sept. 30 until the transaction closes, the Los Angeles Times reported. Those fees could add $7 million a day — or $650 million a quarter — to the $81 billion Paramount had already anticipated paying shareholders, plus absorbing about $30 billion of Warner Bros. debt.

Paramount said delaying the transaction until next spring will add $190 million in bridge loan financing costs, the Los Angeles Times reported. If the deal fails to close by June 4, Paramount would owe Warner a $7 billion breakup fee. The company disclosed $1.6 billion in cash on hand and a $3.2 billion revolving loan.

Wall Street has turned skeptical. Paramount shares are down more than 28% year-to-date, trading below $10. Analysts have a consensus “reduce” rating, according to MarketBeat data reported by the Epoch Times. Market analyst Gary Gambino said the true challenge is whether Paramount can deliver on its proposed $6 billion in synergies. “If no synergies are delivered the current PSKY price is probably fair, but with all $6 billion of synergies, the shares would be worth close to $23,” Gambino said in a research note.

Union opposition is intensifying. Hollywood Teamsters 399 Secretary-Treasurer Lindsay Dougherty reasserted her union’s opposition to the deal in a statement Thursday. “At every step of the way, Teamsters have asked for data to show how this merger would be good for our industry, our members and domestic production,” she said, as reported by TheWrap. “Stop playing games and show us more of your commitment to the workforce.”

The Teamsters join SAG-AFTRA and the Writers Guild in opposing the merger. The WGA has filed its own lawsuit to block it. But the Directors Guild and IATSE urged Bonta and Paramount to settle, warning in a joint letter that the lawsuit’s uncertainty is “making matters worse” for employment. The unions sought nine conditions, including keeping the studios wholly separate with their own production, marketing and distribution divisions. They also called on Paramount to keep its headquarters in Los Angeles as Ellison has threatened to move.

Despite the hurdles, Warner Bros. Discovery CEO David Zaslav said on an Aug. 6 earnings call that the company has “every expectation the transaction will close.” Paramount has received clearances from 65 foreign regulators, including the United Kingdom and the European Commission.

Ellison has attempted a high-profile reputation reboot, writing in a New York Times op-ed that the fight “is not really about market share” but about trust in his stewardship of Warner’s CNN. “There has been speculation about my politics, my loyalties, my intentions,” he wrote.

On Wednesday, Rep. Jamie Raskin (D-Md.), who could become chairman of the House Judiciary Committee, sent Ellison a letter asking him to answer questions about “your Donald Trump-enabled shopping spree to consolidate news organizations, movie studios, cable channels, and streaming services,” the Los Angeles Times reported.