Paramount is considering leaving California as its legal battle over the proposed acquisition of Warner Bros. Discovery intensifies, potentially ending more than a century of the studio operating from Hollywood.

Sources close to the company have told US media that Paramount is serious about relocating, with the threat emerging as California Attorney-General Rob Bonta and attorneys-general from 11 other states pursue an antitrust case seeking to stop the proposed merger. The transaction has been reported at around US$111 billion, equivalent to roughly A$156 billion at current exchange rates.

California’s Department of Justice says the proposed combination would bring together two of Hollywood’s five major film distributors and two of the five largest owners of basic cable channels. Bonta’s office argues the deal would reduce competition and potentially result in higher prices, fewer productions and lower content quality. Paramount and Warner Bros. dispute the case and are continuing to pursue the transaction.

Paramount currently operates from its historic Melrose Avenue studio lot and is the last major Hollywood studio still headquartered in the area.

Reports suggest the company recently came close to announcing a departure from California before returning to negotiations. Los Angeles Mayor Karen Bass has said her administration is focused on protecting entertainment industry jobs and keeping Hollywood production in the city.

Bonta’s office has not confirmed whether settlement negotiations are under way, but has said it remains open to good-faith discussions while maintaining that Paramount is responsible for any decision to relocate.

The stakes extend well beyond Paramount’s studio lot. A report cited by the New York Post estimated that a departure could affect as many as 58,000 jobs, remove around US$21 billion, or approximately A$29.5 billion, in annual economic activity and reduce California tax revenue by as much as US$1.17 billion, or around A$1.64 billion, each year.

The merger itself is already on hold. Bonta secured an agreement in July preventing Paramount and Warner Bros. from completing the transaction until June 1, 2027, or until a court decision is reached, whichever occurs first. A trial is currently scheduled for March 2027.

The immediate threat of Paramount leaving California appears to have eased for now, with the company and state officials continuing negotiations. However, the unresolved antitrust case means the future of Paramount’s Hollywood headquarters remains tied to the outcome of the merger dispute.