The potential move comes as Paramount faces a legal challenge from California Attorney General Rob Bonta and a coalition of 12 states seeking to block the proposed merger on antitrust grounds. The lawsuit is currently the major remaining obstacle to completing the transaction.

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$7 million daily fee adds pressure

Variety reported that one of the key reasons behind Ellison's relocation plan is the financial pressure Paramount would face if the deal remains unresolved after September 30. Starting October 1, Paramount would reportedly begin paying a so-called "ticking fee" of approximately $7 million per day to Warner Bros. Discovery shareholders until the transaction closes. The escalating cost has pushed Paramount leadership to explore ways of reducing expenses.

Ellison reportedly told executives that relocating out of California could help the company significantly reduce its operating costs, with states including Texas, Tennessee and Georgia emerging as possible destinations.

California remains central to Paramount's identity

A move would represent a major shift for a company whose history is deeply intertwined with Hollywood and California. Paramount's studio lot in Los Angeles has been one of the industry's most recognizable landmarks for decades.

However, Variety reported that the potential relocation would not necessarily mean the complete disappearance of Paramount from Hollywood. The company could maintain a creative and production presence in California while moving some corporate and operational functions elsewhere.

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The proposal has nevertheless triggered concern among employees and Hollywood industry groups, particularly over the potential impact on jobs and California's entertainment economy.

Bonta rejects pressure tactics

California Attorney General Rob Bonta has strongly opposed Paramount's proposed acquisition of Warner Bros. Discovery. In a separate statement reported by Variety, Bonta described Ellison's threat to move the company as an attempt at "blackmail" and said the tactic would not influence the state's position.

Bonta's office has argued that the proposed merger raises serious competition concerns and has joined other states in seeking to prevent the transaction. Ellison, meanwhile, has argued that Paramount needs the Warner Bros. Discovery deal to remain competitive in a rapidly changing entertainment industry.

Paramount-Warner Bros. deal faces uncertain future

The proposed transaction would bring Paramount and Warner Bros. Discovery under the same corporate umbrella, combining major film studios, television networks and streaming businesses. But the legal battle has created significant uncertainty over when or whether the deal can close. According to Variety, Ellison is pushing for a settlement with the states rather than allowing the dispute to continue indefinitely.

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For now, Paramount's future remains closely tied to the outcome of the antitrust case. If negotiations fail and the merger remains unresolved after September 30, Ellison's October 1 deadline could mark the beginning of one of the most significant corporate relocations in Hollywood history.