Paramount is reportedly preparing contingency plans to relocate its headquarters from California if efforts to resolve an ongoing legal dispute over its proposed acquisition of Warner Bros. Discovery fail to progress.

According to reports from Puck and Variety, chief executive David Ellison has told senior executives the company could move key operations to another US state if California Attorney General Rob Bonta does not enter settlement discussions before 1 October.

The reported deadline is significant because the merger agreement includes a daily fee of approximately A$10.7 million that is expected to take effect if the transaction remains unresolved beyond that date, increasing the financial pressure on the company while legal proceedings continue.

Potential destinations for a new headquarters reportedly include Texas, Tennessee and Georgia, all of which offer lower operating costs and tax incentives designed to attract major businesses.

The proposed relocation forms part of a longer-term strategy that could see much of Paramount’s corporate workforce gradually transferred over a five-year period. Reports suggest the company believes such a move could reduce annual tax expenses by around A$765 million.

Even if the relocation proceeds, Paramount is expected to maintain a creative presence in Hollywood due to the concentration of production partners, talent and studios based in Los Angeles.

The relocation plans are linked to Paramount’s proposed US$110 billion merger with Warner Bros. Discovery, which remains under challenge from California and 11 other US states through an antitrust lawsuit. Regulators argue the acquisition could reduce competition within the entertainment industry.

To support the merger, Paramount has reportedly offered several commitments, including maintaining both studio lots, preserving theatrical movie releases and guaranteeing extended cinema release windows before films move to streaming services. Major cinema operators are said to have expressed support for the proposed concessions.

The California Attorney General’s office has reportedly dismissed the possibility of relocation influencing the legal process, describing the reported strategy as an attempt to pressure regulators into approving the deal.

Neither Paramount nor California officials have publicly confirmed the reported relocation strategy. However, if implemented, it would represent one of the most significant shifts by a major Hollywood studio in decades, reflecting both the financial pressures facing the media industry and the growing appeal of lower-cost business locations outside California.