Ellison’s California Exit Threat Helped Clear Paramount’s Warner Deal

Paramount Skydance settled a lawsuit by 12 states on September 21, clearing a major legal obstacle to its proposed $81 billion acquisition of Warner Bros. Discovery. California Attorney General Rob Bonta led the case; the settlement still needs a judge’s approval.

The agreement came as Paramount CEO David Ellison’s reported threat to move the company out of California became a pressure point. Axios reported that the prospect of thousands of jobs leaving weakened political support for Bonta’s lawsuit, while state leaders urged him to settle.

The stakes were especially high for California, where Hollywood supports jobs and production spending. Bonta said his focus was antitrust concerns and declined to say whether the relocation threat affected his decision. Paramount had not publicly confirmed a move, and the settlement does not require it to stay.

Timing added financial pressure. Paramount would owe Warner shareholders about $7 million a day for each day the deal remained unclosed after September 30. The payment, known as a “ticking fee,” made a swift resolution more valuable to the buyer.

In return for ending their challenge, the states secured court-enforceable commitments. Paramount agreed to spend at least $1.5 billion more on U.S. film production over five years and create a $47.5 million fund for workers affected by the merger.

The company also pledged to release 30 films annually for two years, then 32 annually for three years. It must negotiate deals for Paramount and Warner cable channels separately and set up a board to monitor editorial independence at CBS and CNN.

The settlement did not quiet opposition. Connecticut’s attorney general said he wanted CNN and CBS News fully separated, while critics questioned whether the new oversight board would be independent. That leaves scrutiny of the merger’s safeguards in place even as the states’ lawsuit winds down.

For investors, the state agreement removes a major barrier, but court approval remains the next step. The combined company’s scale and debt load will also matter as Paramount pursues the Warner acquisition.