Stay informed with free updates
Simply sign up to the Media myFT Digest — delivered directly to your inbox.
Paramount has increased the pressure on Warner Bros Discovery to restart negotiations, threatening a proxy fight to overhaul the Hollywood studio’s board and filing a lawsuit to obtain internal financial information.
The move is the latest escalation in Paramount’s efforts to gatecrash Netflix’s $82.7bn deal to buy WBD’s studio and streaming business, after the media group rejected Paramount’s $108bn for the whole business including its cable channels. After losing to Netflix, Paramount almost immediately went directly to shareholders with a hostile bid.
Paramount said on Monday that it “intends to nominate directors for election” at WBD’s annual meeting later this year as well as encouraging shareholders to vote “against the approval of the Netflix transaction”.
The media group also filed a lawsuit in Delaware to push WBD to disclose its financial analysis concluding that Paramount’s all-cash $30 a share bid for the entirety of WBD’s studio, streaming and cable businesses was inferior to Netflix’s $27.75 a share cash-and-stock deal for the studio and streaming assets.
Paramount argues in the lawsuit that WBD withheld material information necessary to compare the two deals, including the valuation of its global networks business behind CNN, the amount of debt that would be allocated to it and the impact that debt could have on the cash and stock consideration payable by Netflix.
In a letter to WBD’s board, Paramount said it “will nominate a slate of directors who, in accordance with their fiduciary duties, will exercise WBD’s right under the Netflix Agreement to engage on Paramount’s offer and enter into a transaction with Paramount”, when the nomination window opens in three weeks.
WBD said Paramount was “seeking to distract with a meritless lawsuit and attacks on a board that has delivered an unprecedented amount of shareholder value”. Netflix did not immediately respond to requests for comment.
Paramount, run by David Ellison, the son of Oracle billionaire Larry Ellison, said it was still “committed” to the tender offer on its hostile approach, which expires at the end of this month, but acknowledged the fate of the deal “will likely come down to [WBD’s] vote at a shareholder meeting”.
Paramount also said it would propose an amendment to WBD’s bylaws to require a shareholder vote on the separation of WBD’s Global Networks division, as well as soliciting votes against the Netflix offer if WBD calls a special meeting on the deal.
“These actions, coupled with our tender offer, ensure that you get the final decision on which offer is better for you,” Paramount added in a direct appeal to WBD shareholders.
