Paramount Skydance Chief Executive David Ellison has exhibited a dizzying range of emotions this summer as the goal line for his company\u2019s coveted $111-billion Warner Bros. Discovery deal has moved farther away.<\/p>\n
The 43-year-old tech scion initially exuded confidence that Hollywood\u2019s biggest merger in decades was on a fast track to completion by September. Ellison and others downplayed efforts by California Atty. Gen. Rob Bonta to challenge the acquisition \u2014 until Bonta and 11 other Democratic state attorneys general gained momentum in their antitrust lawsuit<\/a>, which now threatens to derail Paramount\u2019s Warner Bros. deal or, at least, make it significantly more expensive.<\/p>\n Ellison and his executives have vacillated from anger to acceptance. Last week, Ellison attempted a high-profile reputation reboot, extolling his love for movies and blaming politics for opposition<\/a> to the deal. <\/p>\n The mogul has told investors the company is willing to negotiate a settlement with Bonta in hopes of completing the massive merger as soon as possible. <\/p>\n But Ellison also is making contingency plans to shift Paramount\u2019s historic home base from Melrose Avenue to Tennessee \u2014 or perhaps Texas \u2014 as early as this fall. <\/p>\n Paramount\u2019s board has approved Ellison\u2019s relocation plans, according to people familiar with the situation 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.<\/p>\n The proposal includes potentially selling the 65-acre Paramount lot in Hollywood \u2014 as well as the larger Warner Bros. campus in Burbank, should Paramount prevail in the merger battle. Such sales would generate revenue to help pay merger costs, one of the knowledgeable sources said. <\/p>\n Paramount\u2019s sudden relocation plan has further rattled Hollywood, which already is reeling<\/a> from thousands of job losses in recent years. <\/p>\n Bonta, in a statement, blasted Paramount\u2019s latest strategy, calling it \u201canother attempt to blackmail the state into letting an illegal deal through.\u201d<\/p>\n \u201cParamount has lost the plot as it continues to lose in court,\u201d Bonta said Tuesday. \u201cMy office remains committed to stopping illegal consolidation and protecting a vibrant California economy for businesses that play by the rules.\u201d<\/p>\n Behind Paramount\u2019s pivot is a desperate scramble to bolster its legal case and muster funds to help finance the deal approved by Warner shareholders in April. Paramount also is cognizant of shifting winds in Washington should Democrats regain control of Congress in November, which could bring fresh scrutiny to the merger by key lawmakers.<\/p>\n On Wednesday, Rep. Jamie Raskin (D-Md.), who could become the chairman of the powerful House Judiciary Committee, sent a pointed letter to Ellison, asking him to answer \u201cquestions about your Donald Trump-enabled shopping spree to consolidate news organizations, movie studios, cable channels, and streaming services.\u201d <\/p>\n Paramount declined to comment. <\/p>\n Earlier this year, Paramount prevailed in the auction by offering to pay Warner investors $31 a share as well as \u201cticking fees\u201d of 25 cents per share for every quarter after Sept. 30 until the transaction closes.<\/p>\n That sweetener was intended as a show of confidence that Paramount\u2019s deal would sail through its regulatory reviews, unlike a Netflix acquisition that was expected to face a rigorous examination in the U.S. and abroad. Netflix subsequently dropped its bid. <\/p>\n Paramount was banking on the swift approval of the U.S. Department of Justice, which arrived in June. President Trump is friendly with the Ellison family, and he has been eager for a shakeup at CNN, one of Warner\u2019s properties. <\/p>\n \u201cEllison thought he had an ace in the hole with Trump [and] the DOJ, but it backfired on him because the clearance was so obviously rubber-stamping,\u201d London-based media analyst Alice Enders said. \u201cNow, the issues have resurfaced and it\u2019s a costly potential delay.\u201d <\/p>\n The ticking fees could add $7 million a day \u2014 or $650 million a quarter \u2014 to the $81 billion that Paramount had already anticipated paying Warner shareholders. (Paramount also agreed to absorb about $30 billion of Warner Bros. debt left over from its last merger in 2022.)<\/p>\n Ellison has repeatedly defended his proposed purchase, saying the merger does not threaten competition because Hollywood has been transformed by Netflix and other deep-pocketed tech giants. <\/p>\n Already, Paramount has received clearances from 65 foreign regulators, including Britain and the European Commission.<\/p>\n To accelerate California approvals, Paramount requested a November trial date for Bonta\u2019s suit. Instead, U.S. District Judge Araceli Mart\u00ednez-Olgu\u00edn scheduled a March 2 trial \u2014 dealing another blow to Paramount.<\/p>\n Ticking fees alone could add $2.1 billion to the cost of buying Warner Bros. In addition, Paramount said that delaying the transaction until next spring will add $190 million in bridge loan financing costs.<\/p>\n Paramount disclosed that it had $1.6 billion in cash on hand and a revolving loan of $3.2 billion available for its use.<\/p>\n If the deal fails to close by June 4, Paramount would have to pay Warner Bros. a $7-billion breakup fee. That\u2019s when Warner\u2019s board could pull the plug on the Paramount deal.<\/p>\n Puck News first reported<\/a> Ellison\u2019s latest plan to move Paramount\u2019s operations as soon as October.<\/p>\n \u201cThis is a plan \u2014 not a threat,\u201d said a person who was in the room when Ellison discussed his plans but who was not authorized to comment.<\/p>\n The relocation campaign echoes a tactic employed by software giant Oracle Corp., co-founded by Ellison\u2019s billionaire father, Larry Ellison. <\/p>\n Oracle was based in Redwood City for three decades, but in late 2020 the company moved its headquarters to Austin, Texas<\/a>, joining other California tech firms leaving in protest of the state\u2019s high taxes and steep cost of living.<\/p>\n Then, two years ago, the elder Ellison announced that Nashville would host Oracle\u2019s new headquarters. At the time, Oracle saw Tennessee\u2019s healthcare industry as a promising<\/a> growth business. Oracle since has bet heavily on artificial intelligence<\/a>.<\/p>\n In contrast, it would be difficult for Paramount to pack up its operations because it depends on producers, directors, writers and stars to make its TV shows and movies. The two studio lots also boast dozens of soundstages \u2014 century-old fortresses that would not be easily duplicated. <\/p>\n And many Paramount executives are not eager to leave Los Angeles. <\/p>\n Some observers questioned Paramount\u2019s willingness to carry out a move, news of which surfaced a week after David Ellison\u2019s guest essay in the New York Times that described his love of Hollywood and movies ever since he was a boy. <\/p>\n Ellison believes the proposed Warner merger is the best way to save Hollywood, saying the combination of two storied studios would strengthen \u2014 not harm \u2014 the film industry.<\/p>\n \u201cOne moment he\u2019s promising to reinvigorate theatrical releases. The next he\u2019s talking about uprooting two historic companies and moving them 2,000 miles away in order to avoid a lawsuit,\u201d said Gabriel Kahn, journalism professor at USC Annenberg School for Communication.<\/p>\n Paramount\u2019s corporate headquarters are in New York but, after the Ellison family\u2019s acquisition last year, the center of gravity shifted west. Ellison and other top executives live in Los Angeles. <\/p>\n Another corporate move wouldn\u2019t disrupt Bonta\u2019s lawsuit, experts say. <\/p>\n Instead, they suggested Paramount\u2019s flurry of recent activities \u2014 including winning the support of two large theater chains, AMC and Regal, with promises of a robust movie pipeline post-merger \u2014 appeared to be part of a public relations and political pressure campaign.<\/p>\n \u201cThey lost a lot of leverage now that the trial is set for March,\u201d said Abiel Garcia, a former prosecutor and partner at the Manhattan Beach firm Kesselman Brantly Stockinger. <\/p>\n \u201cAnd when you don\u2019t have leverage in court, you go the political route,\u201d he said, adding that Paramount seems to be angling for Gov. Gavin Newsom to join the fight.<\/p>\n Newsom, who has presidential ambitions, has been sensitive to the flight of companies from California. However, he has avoided picking a side in the messy merger squabble. <\/p>\n What\u2019s more, the governor lacks authority to intervene in the lawsuit brought by Bonta and the other state attorneys general.<\/p>\n \u201cAll I know is that if I was governor, I wouldn\u2019t want to lose Hollywood from this state, I wouldn\u2019t want to lose a major company like Paramount to another state,\u201d Paramount Chief Legal Officer Makan Delrahim said late Tuesday at a Politico Live conference in Sacramento. He had been asked about the stances of Newsom and his potential successor, Xavier Becerra, the Democratic gubernatorial nominee. <\/p>\n \u201cThe entertainment industry is our baby in California,\u201d Becerra said during a later conference appearance. \u201cWe have to fight to keep it vibrant. … I hope it settles before court. It is easier to stand in a conference room and settle than it is to stand in a courtroom.\u201d<\/p>\n Delaying the trial until March has been \u201cdevastating,\u201d Delrahim said, adding that Paramount proposed settlement terms on May 19 \u2014 but the state attorneys general instead moved forward with their suit.<\/p>\n \u201cIt\u2019s costing jobs. It\u2019s costing a lot of uncertainty for a lot of our employees, for Warner Bros. employees,\u201d Delrahim said. <\/p>\n Still, Garcia and others expressed doubts about Paramount\u2019s full-court press.<\/p>\n \u201cIt just feels a little over the top. It feels like a PR blitz,\u201d Garcia said. \u201cIt suggests to me that they think their case is weaker than I even thought.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Paramount Skydance Chief Executive David Ellison has exhibited a dizzying range of emotions this summer as the goal…\n","protected":false},"author":3,"featured_media":996699,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[9],"tags":[91905,37717,638,399375,32129,3853,171,14107,3196,20858,15329,290,326781,12433,67,132,68,1021],"class_list":["post-996698","post","type-post","status-publish","format-standard","has-post-thumbnail","category-entertainment","tag-antitrust-lawsuit","tag-bonta","tag-company","tag-contingency-plan","tag-david-ellison","tag-deal","tag-entertainment","tag-hollywood","tag-movie","tag-oracle","tag-paramount","tag-state","tag-studio-lot","tag-trial","tag-united-states","tag-unitedstates","tag-us","tag-warner-bros"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/117084397874101868","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/996698","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=996698"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/996698\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/996699"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=996698"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=996698"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=996698"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}