WILMINGTON, Del., January 13 — Paramount Global has filed a lawsuit against Warner Bros. Discovery, escalating a fierce corporate battle over the future of one of Hollywood’s largest studios. The suit seeks to force Warner Bros. to disclose key financial details about its proposed $82.7 billion merger with Netflix, aiming to sway shareholders before Paramount’s competing $108.7 billion all-cash tender offer expires.
What is the Paramount lawsuit about?
Paramount filed the complaint in the Delaware Court of Chancery. The core demand is for Warner Bros. to disclose the financial analysis its board used to justify the Netflix merger agreement. Paramount argues shareholders need this information to properly evaluate its competing, higher-value all-cash offer before the January 21 tender deadline.
What are the competing offers for Warner Bros.?
Two starkly different proposals are now on the table.
Netflix’s Offer: A mix of cash and stock valued at $82.7 billion, or $27.75 per share. This deal includes a strategic component: a potential spinoff of Warner Bros.’ cable TV business (Discovery).
Paramount’s Offer: An all-cash bid of $108.7 billion, or $30 per share. This offer is backed by $40 billion in equity from Larry Ellison and $54 billion in debt. Paramount contends its bid is financially superior, easier to value, and faces fewer regulatory hurdles.
How is Paramount challenging the Netflix merger?
In addition to the lawsuit, Paramount is using a variety of tactics to sabotage the Netflix deal.
Board Challenge: It plans to nominate directors to Warner Bros.’ board to directly challenge the merger.
Bylaw Amendment: It has proposed a bylaw change requiring shareholder approval for any spinoff of the cable TV business, a key part of the Netflix deal’s structure that Paramount claims has little value.
What is the Warner Bros. board’s reaction?
The Warner Bros. Discovery board has firmly rejected Paramount’s overtures. It dismissed Paramount’s arguments as “meritless,” noting that Paramount has not increased its bid or addressed what Warner Bros. sees as deficiencies. The board also warned that terminating the Netflix deal would trigger a $2.8 billion breakup fee, part of $4.7 billion in total additional costs.
What are the implications for shareholders and the industry?
The outcome will fundamentally reshape Hollywood’s balance of power.
- Warner Bros. shareholders face a critical decision with Paramount’s tender offer expiring on January 21.
- The battle is for control of Warner Bros.’ iconic assets, including the Harry Potter franchise, DC Comics, and HBO.
- The decision pits the strategic fit of a Netflix merger against the immediate, premium value of Paramount’s cash bid. Paramount claims Warner Bros. has never argued the Netflix deal is financially superior, suggesting the final choice may come down to a shareholder vote.
FAQ: Paramount vs. Warner Bros. Legal Battle
Q: What does Paramount hope to achieve with the lawsuit?
A: Paramount aims to obtain and publicize Warner Bros.’ internal financial justification for the Netflix deal, hoping to convince shareholders that its own $108.7B cash offer is objectively better before the January 21 deadline.
Q: Why does Paramount oppose the cable TV spinoff?
A: Paramount believes the Discovery cable TV assets, which Netflix plans to spin off, have minimal value. Giving shareholders a direct vote on any such spinoff is the goal of its proposed bylaw modification, which might complicate the Netflix deal.
