Hollywood’s biggest boardroom battle just got louder — and more litigious. Paramount Skydance has taken its fight for control of Warner Bros Discovery to court, turning up the heat in a high-stakes takeover
contest that has Netflix firmly in the middle.
On Monday, the David Ellison-led company filed a lawsuit against Warner Bros Discovery, seeking greater transparency around the media giant’s $82.7 billion agreement with Netflix. The move marks a sharp escalation in Paramount’s hostile bid to acquire Warner Bros, one of the most storied studios in Hollywood.
Paramount said it filed the case in the Delaware Court of Chancery to force Warner Bros to disclose the financial analysis behind its board’s decision to back the Netflix deal. The company argued that investors need this information before deciding whether to tender their shares to Paramount, whose offer is set to expire on January 21.
“Time is of the essence,” Paramount said in the lawsuit against Warner Bros, CEO David Zaslav and key investor John Malone, among others. “Any decision concerning an extension will depend, in part, on the number of shares tendered.”
Alongside the legal action, Paramount said it plans to nominate its own slate of directors to Warner Bros’ board, one of its most aggressive steps yet in its bid to convince shareholders that its offer is superior. In a letter to investors, the company also said it would seek changes to Warner Bros’ bylaws that would require shareholder approval for any separation of its cable television business — a central pillar of the Netflix transaction.
Paramount is pitching its $108.7 billion all-cash offer at $30 per share for all of Warner Bros as a cleaner and more valuable alternative to Netflix’s proposal, which offers $27.75 per share in a mix of cash and stock for the company’s studios and streaming assets. Paramount has also argued that its bid would face fewer regulatory hurdles.
Warner Bros, however, rejected Paramount’s latest proposal last week and urged shareholders to vote in favour of the Netflix deal. The company has said that exiting the Netflix agreement would trigger a $2.8 billion termination fee, part of a broader $4.7 billion cost tied to ending the transaction.
The revised Paramount proposal includes $40 billion in equity personally guaranteed by Oracle co-founder Larry Ellison — the father of Paramount CEO David Ellison — along with $54 billion in debt. Still, Paramount has not raised the price of its offer, a point not lost on market watchers.
“I don’t think the lawsuit matters much. It would take ages to get through the court system if they full-on go that route,” said Craig Huber, analyst at Huber Research Partners. “If they want Warner Bros bad enough, raise the bid. Money talks.”
In its investor communication, Paramount pushed back strongly against Warner Bros’ rationale for rejecting its offer. “WBD has provided increasingly novel reasons for avoiding a transaction with Paramount, but what it has never said, because it cannot, is that the Netflix transaction is financially superior to our actual offer,” the company wrote. “Unless the WBD board of directors decides to exercise its right to engage with us under the Netflix merger agreement, this will likely come down to your vote at a shareholder meeting,” it added.
Warner Bros responded by calling the lawsuit “meritless,” saying Paramount had yet to “raise the price or address the numerous and obvious deficiencies of its offer.” Netflix declined to comment.
The market reaction was muted. Warner Bros shares fell 1.6% on Monday, Netflix stock was flat, and Paramount edged up 0.4%.
(With inputs from Reuter)
