Paramount's proposed acquisition of Warner Bros. Discovery, valued at $110 billion, has hit another roadblock as reports suggest that several US states are preparing an antitrust lawsuit. This has forced the media giant into considering a move out of California.
Close associates and advisers have been urging Paramount chief David Ellison to consider leaving California and relocating the company's headquarters elsewhere in case the state's Attorney General Robb Bonta proceeds with legal action to block its acquisition of Warner Bros, as per a report by Semafor.
If Paramount decides to move out of California, it could possibly shift around $30 million in planned corporate spending out of California.
It is worth noting that Paramount bought a space in New Jersey last year and signed a 10-year lease to occupy more than 285,000 square feet of 1888 Studios' production campus in Bayonne, making the production house eligible to receive a tax credit of up to 40 per cent for movies and TV shows filmed in the state.
The relocation discussions started as the state of California, along with other US states, opposed the merger. According to The New York Times, California is challenging the transaction, with New York, Washington, and Connecticut expected to join the proposed lawsuit.
As per the report, a draft complaint stated that the merger between Paramount and Warner Bros. could reduce competition in the film industry for big-budget theatrical releases.
On the contrary, Paramount mentioned that the merger would strengthen competition instead of weakening it. It also argued that the merger is essential to compete with streaming giants, including Netflix, Amazon, and Apple.
As Paramount continues to target completion of the acquisition reportedly during the third quarter of 2026, a lawsuit is expected to be filed as early as this week, as per the Reuters report.
The European Commission is expected to approve the merger without opening a detailed investigation, Financial Times reported last month. Competition authorities in China and South Africa, along with antitrust enforcers like Ukraine, Serbia, Saudi Arabia, and North Macedonia, have already cleared the merger.
Additionally, foreign investment regulators in Germany, Italy, France, Romania, Slovenia, Belgium, Czechia, and New Zealand have already approved the merger.
