Paramount Sues Warner Bros., Targets Board in Netflix Deal Clash

MEDIA-AND-ENTERTAINMENT

Overview

Paramount Global has sued Warner Bros. Discovery (WBD), aiming to block a potential merger with Netflix and seeking to nominate its own directors to the WBD board. Paramount challenges WBD's valuation of cable assets and pushes its own superior $30 per share offer. WBD shares dipped 1.5% following the legal filing and takeover battle.

Paramount Global has initiated legal proceedings against Warner Bros. Discovery (WBD), revealing plans to challenge a proposed merger with Netflix. The media giant filed a lawsuit in Delaware, aiming to halt the Netflix deal and install its own directors on WBD's board.

Legal Challenge Launched

Paramount's CEO David Ellison stated in a public letter that Paramount would contest the Netflix agreement at WBD's annual shareholder meeting or a special session if convened. The company accuses WBD of withholding crucial information regarding the valuation of its cable-TV assets, which are slated for a spin-off before a potential sale of studios and streaming operations to Netflix.

Paramount's Superior Offer

Paramount's own offer for WBD stands at $30 per share, which it deems superior to Netflix's $27.75 per share proposal for the studios and streaming segment. The lawsuit seeks to ensure shareholders have full disclosure and can vote on significant corporate changes, specifically concerning the spin-off of cable assets. WBD shares dipped 1.5% following the news.

Shareholder Vote Crucial

Ellison reiterated Paramount's commitment to its tender offer, suggesting the outcome may depend on shareholder votes if the WBD board does not engage with Paramount. The legal maneuver escalates the takeover battle for Warner Bros. Discovery, with Paramount pushing its acquisition strategy and questioning WBD's asset valuation disclosures.

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