Paramount faces legal storm over Warner merger as HQ move surfaces

MUMBAI: Hollywood’s biggest blockbuster may not be headed for cinemas, but straight into a courtroom. Paramount’s proposed $111 billion takeover of Warner Bros. Discovery is facing fresh legal headwinds, with reports suggesting several US states are preparing an antitrust lawsuit even as the media giant is said to be weighing a possible move out of California.

According to Semafor, Paramount chief David Ellison has been urged by advisers and close associates to consider relocating the company’s headquarters outside California if the state’s Attorney General Rob Bonta proceeds with legal action to block the merger.

While no decision has been taken, the report said a relocation could also shift around $30 million in planned corporate spending out of California. Paramount strengthened its presence in New Jersey last year by signing a 10-year lease for more than 285,000 square feet at 1888 Studios’ production campus in Bayonne, potentially qualifying for tax credits of up to 40 per cent on eligible film and television productions.

The relocation discussions come as opposition to the merger gathers momentum.

According to The New York Times, California is leading efforts to challenge the transaction, with New York, Washington and Connecticut expected to join the proposed lawsuit. A draft complaint reportedly argues that the merger could reduce competition in the market for big-budget theatrical releases and further consolidate power in Hollywood.

Paramount, however, has maintained that the transaction would strengthen competition rather than weaken it, arguing that greater scale is essential to compete with streaming and technology giants such as Netflix, Amazon and Apple.

The company said it continues to engage with regulators reviewing the transaction and remains confident the merger does not raise antitrust concerns.

A lawsuit could reportedly be filed as early as this week, even as Paramount continues to target completion of the acquisition during the third quarter of 2026.

Outside the United States, the regulatory picture appears considerably brighter.

Reports indicate the European Commission is expected to approve the transaction without opening a detailed investigation. Competition authorities in China, South Africa, Saudi Arabia, Ukraine, Serbia and North Macedonia have already cleared the deal, while foreign investment regulators in Germany, Italy, France, Romania, Slovenia, Belgium, Czechia and New Zealand have also granted approvals.

The proposed merger would create one of the world’s largest entertainment companies, but with legal scrutiny intensifying in the United States, Paramount’s biggest production may now be convincing regulators that the deal deserves a green light.