Paramount to Leave California According to L.A. Mayor Office, CA A.G., Sources

Internal discussions in the Los Angeles Mayor's Office and the California Attorney General's Office were told Paramount would announce it was leaving California, but there's a twist ... sources tell TMZ.

We're told the Mayor and the A.G. were told the announcement would come yesterday, but it did not happen. We do not know if circumstances changed or if there was just a delay.

As you probably know, the California Attorney General -- other with 11 other state attorneys general -- have filed an anti-trust lawsuit against Paramount, trying to block the Warner Bros merger.

David Ellison, the CEO of Paramount, has threatened to move the studio to Texas, Tennessee or Georgia if the Cali A.G. didn't back off and settle.

There were settlement negotiations over the last few months, but they couldn't reach a deal. Attorney General Rob Bonta said Paramount was being unreasonable.

Ellison threatened to leave California if a settlement wasn't reached by October 1st. Based on conversations in both the Mayor's and Attorney General's offices ... it sounds like no deal is possible.

If Paramount pulls the trigger, it will be a devastating 1-2 punch for Hollywood. "American Idol" is leaving Hollywood for Atlanta. Many other productions have also left Hollywood over the last few years. Fact is ... if Hollywood isn't dead, it's dying.