Paramount Skydance CEO David Ellison is employing a strategy involving what sources describe as "tricks up his sleeve" to navigate California Attorney General Rob Bonta's opposition to his proposed $81 billion acquisition of Warner Bros. Discovery. Ellison's approach reportedly includes attempting to frame Bonta, a progressive official who has sued to block the deal, as misaligned with mainstream Democratic figures.
Sources close to the situation suggest that figures including Governor Gavin Newsom, likely successor Xavier Becerra, and Los Angeles Mayor Karen Bass view Bonta's lawsuit as legally weak and economically detrimental. Their concerns extend beyond Ellison's stated threat to relocate Paramount and its Los Angeles studio if a settlement isn't reached by October 1 without a protracted legal battle.
The Paramount camp is also raising alarms about the future of employment in Hollywood, warning that traditional studios risk being absorbed by tech giants like Amazon, Apple, Google, and Netflix if they cannot achieve economies of scale through mergers. This shift, they argue, could lead to entertainment brands being managed with a technological, rather than creative, focus, potentially impacting jobs from actors to key grips.
"These actors and writers and Bonta are such morons when they talk about job losses because of this merger," one individual with knowledge of Paramount's perspective stated. "Ellison loves movies and Warner will eventually be sold to Big Tech if this deal doesn’t go through and they can’t wait for AI to start eliminating jobs."
Ellison has maintained a tight information blackout regarding his strategy following accusations from Bonta that he leaked details of the merger negotiations to the press. These leaks, however, were described as non-material by sources, yet provided the California AG with grounds to postpone settlement discussions. Ellison is now reportedly conferring primarily with his legal chief, Makan Delharim.
Despite the information blackout, those familiar with Ellison characterize him as a fighter and a proponent of the creative process, a message he aims to convey to state political leaders. He also seeks to highlight the precarious financial state of major media companies, including Warner Bros. Discovery. The company's stock has been trading around $28 per share, close to Ellison's offering price, despite efforts by CEO David Zaslav to achieve a creative revitalization and reduce debt.
Warner Bros. Discovery faces significant financial challenges, including approximately $30 billion in long-term debt, largely stemming from its 2022 formation. While internal sources indicate the company could potentially survive independently for a few years, receiving a $7 billion breakup fee if the merger fails, they acknowledge this would only provide a temporary buffer in a challenging media landscape.
The deadline for an agreement is approaching, with Ellison facing a daily "ticking fee" of $7 million if the deal is not finalized by the end of the month. He and his team have signaled a willingness to relocate production operations from Los Angeles to other states, such as Tennessee or New Jersey, which have offered incentives for production companies, if serious settlement discussions do not commence. Representatives for Bonta and Paramount offered no immediate comment.