By Rajwa Quasim
Paramount is considering shifting its operations and spending out of California as state regulators prepare to sue over the company’s planned $111 billion acquisition of Warner Bros. Discovery.
Semafor reported that close confidants of Paramount CEO David Ellison have urged him to move outside California if Attorney General Rob Bonta files a lawsuit challenging the proposed acquisition. Such a relocation could shift about $30 billion in planned spending away from the state.
However, no final decision has been made regarding relocation. Although Paramount signed a 10-year agreement deal with 1888 studios at Bayonne, leasing more than 285,000 square feet last year. The move makes the studio eligible for tax credits up to 40 percent on films and television productions shot in the state.
READ: Paramount raises stakes in Warner Bros. deal, offers to pay Netflix exit fee (February 11, 2026)
The New York Times reported that Washington, New York and Connecticut are expected to join the proposed lawsuit. A draft of the legal complaint alleges that merger could reduce the competition in the production of major blockbuster films among other concerns.
According to Paramount, the merger would safeguard jobs and attract investments at a time when film and television is shifting beyond California to other states and international markets. The regulatory review has become a major concern for investors because the proposed merger would create one of the world’s largest media companies.
If the deal is blocked or delayed by legal action, the companies could lose expected financial benefit, create uncertainty over investment and jobs. Paramount also argued that the deal is necessary to compete against streaming giants like Netflix, Apple and Amazon.
According to Reuters, legal action may begin as early as this week, while Paramount continues to target completion of acquisition in the third quarter of 2026.
READ: Paramount moves on $108.4 billion hostile takeover of Warner Bros. Discovery (
“We are confident the facts and the law support this transaction, and we will continue to defend it vigorously,” Paramount told NYT.
Paramount told Semafor that it is continuing discussions with the remaining regulators and is confident that the deal does not raise antitrust concerns. The company noted that several antitrust authorities worldwide (Saudi Arabia, Ukraine, North Macedonia) and foreign investment regulators (Germany, Italy, France, New Zealand, Belgium) have already reviewed the transaction. Last month, reports also suggested that the European Commission is expected to approve the merger before the deadline of a detailed investigation.
“We have been engaged with all regulatory and law enforcement bodies in a constructive and transparent manner and will continue to do so,” a Paramount spokesperson told THR last month.