Paramount Sues Warner Bros. Over Netflix Deal
Kyiv • UNN
Paramount Skydance has sued Warner Bros Discovery, seeking information about an $82.7 billion Netflix deal. Paramount is offering $108.7 billion in cash for Warner Bros.
Paramount Skydance on Monday sued Warner Bros Discovery to obtain more information about a competing $82.7 billion deal with Netflix, escalating the battle for control of one of "Hollywood's most iconic studios," UNN reports, citing Reuters.
Details
The company, led by David Ellison, also said it plans to nominate directors to the Warner Bros. board, one of its most aggressive moves aimed at convincing investors that its $108.7 billion all-cash offer is superior to Netflix's cash-and-stock deal.
Paramount and Netflix are locked in a fierce battle for Warner Bros, its valuable film and television studios, and its vast content library, which includes "Harry Potter" and the DC Comics universe.
Last week, Warner Bros rejected Paramount's latest offer, advising shareholders to vote for the Netflix deal.
Warner Bros. rejects revised Paramount takeover bid - CNN07.01.26, 16:22 • 82774 views
In a letter to shareholders, Paramount also said it would propose an amendment to Warner Bros' bylaws that would require shareholder approval for any spin-off of the media giant's cable television business, which is key to the Netflix deal.
Paramount's argument is that its all-cash offer of $30 per share for the entire Warner Bros company is superior to Netflix's $27.75 per share offer for the studios and streaming assets, which involves cash and stock, and would more easily overcome regulatory hurdles.
Paramount filed a lawsuit in Delaware Chancery Court, seeking to compel the disclosure of the financial analysis underlying the Warner Bros board's support for the Netflix merger.
CBS's parent company said last week that Warner Bros' cable division was worth virtually nothing and reiterated its amendment after another rejection from the Warner Bros board. On Monday, Paramount intensified its efforts but has not yet increased the price it is willing to pay.
"I don't think the lawsuit is a big deal. It will take a long time to go through the court system if they go that route entirely," said Craig Huber, an analyst at Huber Research Partners. "If they want Warner Bros badly enough, let them raise the bid. Money talks."
Warner Bros also said it would owe Netflix $2.8 billion in termination fees if it backed out of the deal, part of an additional $4.7 billion in termination costs.
The revised offer included $40 billion in equity personally guaranteed by Oracle co-founder Larry Ellison, father of Paramount CEO David Ellison, and $54 billion in debt.
"WBD has offered increasingly new reasons to avoid a deal with Paramount, but what it has never said, because it cannot, is that the Netflix deal is financially superior to our actual offer," Paramount wrote in a letter to investors.
"If the WBD board does not choose to exercise its right to engage with us under the Netflix merger agreement, it will likely impact your vote at the shareholder meeting," the company added.
Paramount argued that the disclosure of Warner Bros' financial analysis is crucial for investors weighing whether to tender their shares to Paramount before the January 21 expiration of the offer, which can be extended.
"Time is of the essence," Paramount said in its lawsuit against Warner Bros, CEO David Zaslav, and key investor John Malone, among others. "Any decision to proceed will depend, in part, on the number of shares tendered."
In its statement, Warner Bros. said the lawsuit was "without merit," adding that Paramount had not yet "increased its price or addressed the numerous and obvious deficiencies of its offer."
Warner Bros. shares fell 1.6% on Monday, while Netflix shares remained unchanged and Paramount rose 0.4%.