Paramount Skydance has sued Warner Bros Discovery in the Delaware Court of Chancery, seeking access to detailed financial information related to Warner Bros’ proposed $82.7 billion deal with Netflix, as it has escalated its bid to acquire the media company. The lawsuit has aimed to force disclosure of the analysis underpinning Warner Bros’ board’s support for the Netflix transaction, ahead of the January 21 expiry of Paramount’s tender offer. Paramount has also said it has planned to nominate directors to Warner Bros’ board, marking one of its most aggressive moves yet in the takeover battle.
The development has come as Paramount and Netflix have remained locked in a competitive race for control of Warner Bros, including its film and television studios and extensive content library, as per media reports. Warner Bros’ board has rejected multiple offers from Paramount and has advised shareholders to vote in favour of the Netflix deal, which includes a separation of the company’s cable television business.
Paramount has also stated that it has planned to propose an amendment to Warner Bros’ bylaws that would require shareholder approval for any spin-off of its cable TV assets, a transaction that is central to the Netflix agreement. The company has argued that its all-cash offer of $30 per share for the entirety of Warner Bros is financially superior to Netflix’s cash-and-stock offer of $27.75 per share, and that it would face fewer regulatory hurdles.
The lawsuit has named Warner Bros, its CEO David Zaslav and key investor John Malone, among others, and has emphasised that timely disclosure is critical for shareholders deciding whether to tender their shares before the offer deadline. Paramount has said any decision to extend the tender offer has depended partly on the number of shares tendered by investors.
Warner Bros has responded by stating that the lawsuit has been “meritless” and has reiterated that Paramount has neither raised its bid nor addressed what it has described as deficiencies in the offer. The company has also said it would owe Netflix a $2.8 billion termination fee if it were to exit the agreement, contributing to an estimated $4.7 billion in additional costs to unwind the deal.
Paramount has maintained that Warner Bros has failed to demonstrate that the Netflix transaction is financially superior to its proposal. While the amended offer has included $40 billion in equity personally guaranteed by Oracle co-founder Larry Ellison and $54 billion in debt, Paramount has not increased the overall price it is willing to pay. Analysts have noted that the legal action could take significant time to play out, with some suggesting that a higher bid would ultimately be more decisive.
