Paramount Skydance is suing Warner Bros. Discovery and launching a proxy war with its board after the up-for-sale Hollywood studio chose to stick with Netflix’s bid last week.
Paramount CEO David Ellison announced on Monday that his company filed a lawsuit asking the Delaware Court of Chancery to order Warner Bros. to provide information about its sale process and pending deal with Netflix, “so that WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer.”
Under his company’s amended offer, Ellison is offering Warner Bros. shareholders the opportunity to sell their shares to Paramount for a set price of $30 per share in cash. The Warner Bros. board of directors told the shareholders to reject Paramount’s latest offer, which included a personal guarantee from Oracle co-founder Larry Ellison that he would provide $40.4 billion of the deal’s equity financing.
Paramount said its offer is superior to Netflix’s bid while arguing that the sale process for Warner Bros. was unfairly skewed in favor of Netflix.
“WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its ‘risk adjustment’ of our $30 per share all-cash offer,” Ellison wrote in a letter to Warner Bros. shareholders.
“WBD shareholders need this information to make an informed investment decision on our offer — and importantly, Delaware law has consistently required that such information be provided to shareholders,” he said.
Paramount also intends to nominate Warner Bros. board directors, who “will exercise WBD’s right under the Netflix Agreement to engage on Paramount’s offer and enter into a transaction with Paramount” in accordance with their fiduciary duties, Ellison added.
The nomination of directors for the Warner Bros. board opens in three weeks.
Paramount’s actions show it is refusing to back down after Warner Bros. repeatedly rejected its bids.
In response, Warner Bros. claimed Paramount is trying to “distract” shareholders with the lawsuit and proxy battle. The company also criticized Paramount for not raising its price again to outbid Netflix.
“Despite six weeks and just as many press releases from Paramount Skydance, it has yet to raise the price or address the numerous and obvious deficiencies of its offer,” Warner Bros. said later Monday. “Instead, Paramount Skydance is seeking to distract with a meritless lawsuit and attacks on a board that has delivered an unprecedented amount of shareholder value. In spite of its multiple opportunities, Paramount Skydance continues to propose a transaction that our board unanimously concluded is not superior to the merger agreement with Netflix.”
Paramount is seeking to buy the entirety of Warner Bros., including its cable networks such as CNN, while Netflix only wants to purchase the company’s studio and streaming businesses. Paramount’s revised bid is valued at $108.4 billion, and Netflix’s current offer is valued at $82.7 billion.
Besides the lawsuit and proxy fight, Paramount recently sent a letter to the House Judiciary antitrust subcommittee to make its case that the pending Netflix-Warner Bros. merger is “presumptively unlawful” because Netflix already dominates the streaming market. Sen. Mike Lee (R-UT), who chairs the Senate Judiciary antitrust subcommittee, is among several lawmakers who have expressed antitrust concerns about Netflix’s market dominance.
Meanwhile, President Donald Trump remains a wildcard in the merger. He’s expected to be involved in the regulatory process for the deal.
WARNER BROS. TELLS SHAREHOLDERS TO REJECT PARAMOUNT TAKEOVER BID AGAIN
While he has not explicitly supported one bidder over the other, Trump has close ties to the Ellisons and seemingly opposes Netflix’s bid, despite Ted Sarandos’s efforts to court the White House.
In a Truth Social post on Sunday, Trump shared a One America News commentary piece decrying the Netflix-Warner Bros. deal. The article, titled “Stop the Netflix Cultural Takeover,” called on federal regulators to “treat this merger as a top-tier antitrust priority — not only for its market implications, but for what it means for free expression and America’s cultural pluralism.”
