Paramount Warns It’s Considering Leaving California Over Antitrust Fight

SACRAMENTO, California — Paramount Skydance is considering leaving California, the company’s top lawyer said Tuesday, warning that state Attorney General Rob Bonta’s lawsuit seeking to block the company’s purchase of Warner Bros. Discovery is creating a “devastating” delay.

“His intent is to be committed to California,” Chief Legal Officer Makan Delrahim said of Paramount Skydance CEO David Ellison at POLITICO's The California Agenda: Sacramento Summit. But, Delrahim noted, “There is a point at which you have a fiduciary duty to shareholders.”

He added: “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. And ultimately, you know, go to the place where you’re wanted.”

Delrahim, in an interview with POLITICO’s Alex Burns, also said that Paramount Skydance has offered “commitments that are enforceable in contract” in an effort to settle the litigation. He declined to rule out dropping Warner Bros.-owned CNN from the deal, while saying he took Bonta at his word that CNN’s status was not relevant to the litigation.

The prospect of CNN being owned by the same company as CBS has caused considerable angst among Democratic elected officials. Asked whether Paramount would consider excluding CNN from the deal, Delrahim said it would be the “saddest day in this country” if “state powers” were used to control content. He then added, “Everything's on the table. We would be delighted to engage and discuss about any resolution to get to this merger, to get to this closing after all this time.”

The lawsuit, brought by Bonta and 11 other Democratic state attorneys general in July, is scheduled to go to trial in March. Starting in October, however, Paramount will have to pay roughly $7 million for each day the deal remains incomplete. If the transaction does not close by June 1, Paramount could owe Warner Bros. a $7 billion termination fee.

“This delay is just harming jobs … and also the future of this industry,” said Delrahim. “This merger is actually going to be good — not only for California — it’ll be good for America.”

He said, “We are very eager to close this deal — it should be closed this week … Options have been on the table. I will tell you precisely when: since May 19.”

Earlier on Tuesday, Bonta said at POLITICO’s summit that Paramount Skydance is trying to “blackmail” the state by threatening to leave California unless its purchase of Warner Bros. is completed. Delrahim dismissed Bonta’s claim.

“I would love to see every policymaker who cares about jobs, who cares about high-paying jobs, who cares about union jobs … in California … to speak on this merger,” Delrahim said.

Bonta’s lawsuit alleges that if Paramount were to merge with Warner Bros. Discovery, the combined company would reduce competition in the markets for theatrical film distribution — including the release of anticipated blockbuster films — and the licensing of basic cable television channels.

Delrahim noted, however, that the merger has been approved by 67 countries, among them China, Australia and Canada. The deal, he argued, “does not violate any antitrust law.”