Paramount CEO David Ellison told a group of the company’s top executives that he will start the process of exiting California on October 1 if the state’s Attorney General Rob Bonta will not negotiate to settle an antitrust suit around the planned merger with Warner Bros. Discovery.

Bonta has just responded: “In a span of weeks, Paramount agreed to halt the merger until a court decision or until June 2027, asked for a November trial, and is now back with another attempt to blackmail the state into letting an illegal deal through. Paramount has lost the plot as it continues to lose in court. It didn’t work the first time —  on the eve of our July lawsuit — and it won’t work this time.”

Ellison made the remarks at a meeting last week. Details were first reported by Puck and confirmed by Deadline.

Bonta is leading a group of 20 state Attorneys General in the case that is set to go to trial in federal court in the Northern District of California March 2027. October 1 is the day Paramount starts to accrue a so-called ticking fee of $7 million a day agreed to in the WBD deal terms if the transaction hasn’t closed by then. Paramount had asked the judge for a November trial date.

Deadline hears that Ellison was emphatic at the meeting that he does not want to relocate but also doesn’t feel welcome in Paramount’s home state as the company and the AG wage a PR battle. The $111 billion merger has been approved by the DOJ and international regulatory agencies, including in the EU and UK.

The AGs’ suit is focused on antitrust claims in three areas: wide release films, blockbuster films and cable network programming. Ellison has promised the combined studios will release 30 films a year with significant theatrical windows. He has said he offered to put that in writing for the AG and otherwise engage in settlement talks around potential concessions.

A relocation would start with the company’s headquarters, followed by studio jobs. Ellison would move Paramount, or the merged Paramount-WBD, regardless of the outcome of a trial. Beyond the ticking fee, Paramount would owe WBD a $7 billion termination fee (the largest in corporate history) if the deal falls apart unless Warner’s board, led by CEO David Zaslav, agrees to renegotiate. WBD can walk if the deal is not clinched by June 4.

Rumors had surfaced months ago that Ellison was considering a California exit if the AG did not soften his stance. Destinations mentioned have included Tennessee, Texas and Georgia. Potential new home states have presumably offered significant incentives if Paramount relocates.

In response to previous threats to leave the state, Bonta has called it a “last ditch effort to try to blackmail my office and the attorneys general into allowing an illegal deal.”

Paramount has accused Bonta of playing politics. In an op-ed published in Deadline on Monday, the California AG said “Paramount and Warner Bros see the writing on the wall: that they will lose in a court of law. So instead, they are resorting to the court of public opinion. They want to talk about anything but the facts of this case… As disingenuous as it may be, they are welcome to do so.”

The California Film Commission on Monday announced that Paramount’s Alicia Silverstone-starring Clueless series and EGOT superstar Viola Davis‘ corporate fixer series Ascent  have been allocated nearly $38 million in Golden State tax incentives under its sweetened package to curb runaway production.

In a note this morning, Richard Greenfield at Lightshed Partners wrote that “everything Paramount has done over the past several weeks appears to be inflaming the situation with California Attorney General Rob Bonta and increasing the odds this case goes to trial in March 2027. Given that the merger agreement expires on June 4, 2027, going to trial is a suicide mission that will likely lead to the merger collapsing and the Ellison family being forced to pay the $7 billion breakup fee.”

Noting favorable deal commentary by Ari Emanuel, AMC Entertainment CEO Adam Aron and Regal chief Eduardo Acuna, Greenfield said, “Ellison has effectively rallied every major Hollywood ally he can find. What he has not done is offer any form of structural remedy that Bonta and the other State AGs might be willing to accept.”

Rather, “Paramount’s PR campaign appears to be strengthening Bonta’s hand rather than weakening it. Bonta was already operating from a position of strength: the judge granted the temporary restraining order and appeared favorably disposed to the State AGs’ antitrust claims, set a March 2027 trial date despite Paramount’s hopes for a November 2026 trial and has shown no inclination to move at Paramount’s preferred pace given the ticking fee and the June 4 merger termination date.”

The ope-ed in Deadline, Greenfield said, “makes it crystal clear that Paramount’s approach is making things worse and that the State AGs have no intention of settling this case.”