AMNA NAWAZ: The proposed $111 billion merger between Paramount and Warner Bros.

Discovery has hit a major roadblock after California's attorney general, Rob Bonta, and 11 other states sued to stop it, citing antitrust concerns.

That move was followed by a Paramount Skydance CEO, David Ellison, threatening to take his operations out of California if the deal isn't approved.

William Brangham has more on a conflict that's rattling the industry.

WILLIAM BRANGHAM: If Paramount did leave California -- and that is a big if -- it could mean thousands of jobs and billions of dollars leaving with it, dealing a serious blow to the state's already struggling entertainment industry.

But a new report commissioned by L.A.

County indicates that a successful merger with its consolidation and elimination of overlapping positions would also cost jobs, nearly 4,500 of them, and see several billion in lost wages in the first few years.

David Ellison's departure threat has made Los Angeles Mayor Karen Bass change her tune on the merger.

After initially opposing it, she's now calling for a quick resolution of the multistate antitrust case.

So, for more on what is at stake here, we're joined by Matthew Belloni.

He's the founding partner of Puck News.

Matt, thank you so much for being here.

As I mentioned, the merger is stalled right now because the attorney general, Rob Bonta, and all these other states have got this antitrust case against the merger.

Now, as you reported, and you broke this story, David Ellison is threatening that, if the merger doesn't go through by this fall, we're going to pull up stakes and leave L.A.

How seriously should we take that threat by him?

MATTHEW BELLONI, Founding Partner, Puck News: Well, it's definitely a threat, and he's definitely using it as leverage, and he made the threat because he felt that he had no other option because the attorney general would not even meet with him.

So take that with a grain of salt.

But I do think Ellison is serious about this.

Remember, he's the son of Larry Ellison, who is the controlling shareholder of Oracle, and Oracle did exactly that.

When it was fed up with taxes and regulation in California, Ellison moved to Texas and then Tennessee.

And now we have his son making a very similar threat when he's not getting what he wants out of the state.

And there are plans afoot.

They have had conversations with Tennessee, Texas, Georgia.

There's one other state in the mix we don't know about.

But this is a serious threat.

WILLIAM BRANGHAM: There's been such incredible fissures here.

I mean, you have got the current governor, reportedly, the incoming governor, now the mayor of Los Angeles all saying we need to make this merger work, against a lot of the creative industry, including the union, saying, no, no, no, no, this is going to be terrible for jobs, and this is going to just consolidate power.

Are you surprised by how these fissures have shaken out?

MATTHEW BELLONI: A little bit, I guess.

But keep in mind, even amongst the major labor guilds in the entertainment, there's a split.

The Writers Guild is vehemently opposed to the merger and does not want it to happen.

The Directors Guild and another union, IATSE, was which represents below-the-line and more worker-oriented people, they have said that they would want a settlement with particular terms that they have outlined in a letter to the attorney general.

So it is this kind of Rorschach test when you talk to people in Hollywood.

They're looking at -- no one wants this merger.

It's objectively bad.

But many people acknowledge that it's probably going to happen, or, if this merger doesn't happen, Warner Bros.

is likely going to be sold to some other company.

So it's a question of, what's the lesser of two evils here?

And you have a big split in the industry.

WILLIAM BRANGHAM: And then there's also the political dimension of this.

As people know, the Ellisons are very close with President Trump.

CNN would be part of this deal, and there is some concern about CNN falling into the hands of another pro-Trump organization.

How much of that is an undercurrent here?

MATTHEW BELLONI: I think it's a major undercurrent.

And I think it's something that has animated the Democrats on this issue.

It's become a political football.

Everybody has an opinion.

And many people see what Ellison has done to CBS News since buying the parent company, Paramount.

CBS News is undergoing a pretty radical overhaul.

And "60 Minutes," a news brand that everybody knows about, everybody's kind of heard that things are afoot at "60 Minutes."

So it's become this political thing that politicians know people care about.

And, yes, the Ellisons have aligned themselves very closely with the Trump administration.

And the review of this merger by Trump's Justice Department was very swift and was approved, even though there were people at the Justice Department that really did want to review it further.

So I think that is key here.

It's not a coincidence that the 12 attorneys general who are opposing this merger are all from Democrat-led states.

It's become something of a political football.

WILLIAM BRANGHAM: And then there is this -- the underlying economic issue.

As you know so well, Hollywood has already lost I believe it's 50,000 jobs or so in the last four years.

What happens to the industry if several thousand more jobs get lost?

What does the town look like?

MATTHEW BELLONI: Well, it's a smaller industry, and that is the reality of the situation right now.

We're in a period of consolidation, where the Internet has completely disrupted the traditional entertainment system.

Television is transitioning to streaming.

We all see it in how we consume content these days.

And the question is, is, what is the industry that creates professionally produced content going to look like in five, 10, 15 years?

And all of these mergers and all of the threats and the politics of it all, it's all related back to the fact that this industry is undergoing disruption.

And it's making a lot of people really nervous.

WILLIAM BRANGHAM: Matt Belloni, founding partner of Puck News, thank you so much for being here.

MATTHEW BELLONI: Thank you.