Paramount CEO David Ellison is reportedly being pressured to move his business out of California as the state tries to interfere with a planned takeover of Warner Bros. Discovery. 

Ellison’s Paramount is seeking to acquire Warner Bros. Discovery in a $111 billion deal expected to close during the third quarter of this year. But the mega-merger has irked critics who fear combining two major Hollywood studios would hurt the industry while giving too much power to Ellison.

California Attorney General Rob Bonta on Monday led a group of 12 attorneys general in filing a lawsuit challenging the merger, claiming it would “lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S.” 

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Paramount CEO David Ellison. (Charly Triballeau/AFP via Getty Images / Getty Images)

As a result, “Ellison’s friends and advisers have been pushing the media executive to consider shifting his business out of the state,” according to Semafor. 

“Ellison’s confidantes have pushed him to consider moving its corporate headquarters and reallocating much of its $30 billion in planned spending outside the state if California Attorney General Rob Bonta were to sue to stop the merger,” Semafor reported, citing “people familiar with the discussions.”

“No decisions have been made, these people said, and the considerations may just be a show of brinkmanship, given so much of the industry’s production takes place outside of Hollywood already,” Semafor continued. “Under the current deal, Paramount has committed to keeping both companies’ lots operational if it remains in California.”

Paramount did not immediately respond to a request for comment. 

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Paramount could leave California if executives are bothered by attempts to block a planned merger.  (Eric Thayer/Bloomberg via Getty Images / Getty Images)

The report added that Ellison “remains wary of the idea of leaving California” despite companies such as Oracle and Tesla previously fleeing amid issues with state regulators. 

Paramount told the Times it was prepared to address “legitimate antitrust issues,” but that the Warner Bros. Discovery deal “raises no such concerns.” 

Ellison, the son of billionaire Oracle co-founder Larry Ellison, took control of Paramount last year when Skydance Media and Paramount Global completed an $8 billion merger. Adding WBD to his portfolio would make the younger Ellison one of Hollywood’s most powerful people.

The Justice Department (DOJ) on Friday announced it has closed its antitrust investigation into Paramount Skydance’s proposed acquisition of WBD, concluding the transaction is not likely to harm competition or American consumers.

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Paramount CEO David Ellison, the son of billionaire Oracle co-founder Larry Ellison.  (Alberto E. Rodriguez/Getty Images for CinemaCon / Getty Images)

The Antitrust Division said its eight-month review examined more than two million documents and found the deal could strengthen competition across the media and entertainment industry, including in streaming video, traditional television and theatrical film distribution.

However, state attorneys general retain independent authority under antitrust laws, and the DOJ’s decision does not itself prevent additional legal challenges to the proposed transaction.

The lawsuit, filed in the U.S. District for the Northern District of California, claims that the merger violates Section 7 of the Clayton Act, which holds that mergers that may substantially lessen competition or tend to create a monopoly are illegal. 

Bonta’s group has asked Warner Bros. and Paramount not to close the merger until after the judicial process concludes, and if they do not agree, the attorneys general plan to file a temporary restraining order. 

“California’s film and entertainment industry touches the lives of Americans daily — it comes into the living rooms of families, has a starring role in many young people’s first dates, and is a point of immense pride and employment for Californians up and down our state. Consolidation here not only leads to higher prices — it also leads to fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories, ideas, and perspectives beyond their own experiences. In this country, no one is above the law. With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy,” Bonta said in a statement. 

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Fox Business’ Jasmine Baehr contributed to this report.