- Paramount Skydance sued Warner Bros. Discovery in Delaware to force disclosure of financial and valuation details tied to WBD’s Netflix deal.
- Paramount is trying to revive a hostile bid with a $30/share all-cash offer valuing WBD at about $108.4B, versus roughly $82.7B for Netflix’s cash-and-stock proposal.
- To counter financing doubts, Paramount added a ~$40.4B irrevocable Larry Ellison guarantee and matched Netflix’s $5.8B breakup fee.
- WBD’s board continues to back the Netflix transaction as safer and higher-value when including a planned Global Networks spinoff, and calls Paramount’s suit meritless.
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The central contention lies in which deal better serves WBD shareholders in terms of price, risk, and certainty. Paramount Skydance’s intent with its lawsuit is to force full transparency over Netflix’s deal terms, particularly those that might show deficiencies or regulatory or valuation risks, thereby persuading shareholders to prefer its all-cash bid.
Paramount’s offer rises to meet key criticisms: it added an irrevocable personal guarantee from Larry Ellison totaling about US$40.4 billion, boosted the reverse termination fee to US$5.8 billion to match Netflix’s, and emphasized taking all of WBD (including cable assets) versus Netflix’s partial scope. Yet WBD asserts that Paramount still hasn’t improved to a level the board deems superior—primarily due to perceptions of financial instability and over-leveraging.
The legal filing in Delaware seeks access to private valuations, due diligence materials, and the board’s internal decision-making process. This is classic tactic in deal contests—leveraging disclosure rules to sway shareholder opinion and potentially expose weaknesses in competitor bids. For Paramount, success could upend the Netflix transaction; for WBD and Netflix, it could solidify the status quo if no fatal flaws are found.
Strategically, both sides face regulatory risk. Paramount argues its offer is more regulator-friendly despite its debt load. WBD’s Netflix deal, conversely, is already agreed, but still awaits full regulatory approval. Both potential deals could be challenged under antitrust or national security rules—especially given Paramount’s foreign backers and Ellison family connections.
Key open questions remain: Is Paramount’s financing truly binding and robust enough? Will shareholders—and perhaps courts—buy Paramount’s regulatory path claims? Can WBD’s board provide enough transparency to invalidate Paramount’s assertions without compromising its fiduciary stance? The timeline is tight: Paramount’s tender-offer deadline is January 21 (unless extended), while Netflix’s deal contemplates closing in 12-18 months, with certain spinoffs (Discovery Global) occurring mid-2026.
Supporting Notes
- Paramount filed its lawsuit against WBD seeking detailed disclosures about the Netflix deal and the valuation of its Global Networks division.
- Paramount’s bid values WBD at $108.4 billion with an all-cash offer of $30/share, while Netflix’s deal is worth about $82.7 billion through a mix of cash and stock.
- Larry Ellison provided an irrevocable personal guarantee of approximately $40.4 billion in equity for Paramount’s offer.
- Paramount matched Netflix’s breakup fee at $5.8 billion to address risk in case of regulatory or other deal‐blocking issues.
- Warner’s board has repeatedly rejected Paramount’s offers, citing concerns over financing commitments, debt burden, and the structure of an equity commitment via a revocable trust rather than a firm guarantee.
- WBD argues Paramount’s lawsuit is “meritless,” stating the offer has “numerous and obvious deficiencies” and has not been raised in price to be deemed superior to the Netflix transaction.
- The Netflix deal includes a spinoff of the Global Networks division (cable channels like CNN, TBS, HGTV, etc.), which WBD believes when combined with its core bid produces a share value over $31, exceeding Paramount’s $30 offer.
- Paramount extends its tender deadline to January 21 to give shareholders more time to consider its offer.