Paramount Skydance Corp (NYSE:PSKY) escalated its battle with Warner Bros. Discovery (NASDAQ:WBD) by filing a lawsuit on Monday, demanding that the HBO owner disclose financial details of its nearly $83 billion deal with Netflix Inc (NASDAQ:NFLX).
Paramount CEO David Ellison is also launching a proxy fight to replace Warner Bros.’ board with directors who would negotiate with Paramount. Ellison expressed frustration in an open letter, questioning why Warner Bros. has not engaged in discussions: "We remain perplexed," he wrote, "that WBD never attempted to clarify or negotiate any of the terms.”
“We filed suit this morning in Delaware Chancery Court to ask the court to simply direct WBD to provide this information so that WBD shareholders have what they need to be able to make an informed decision,” Ellison said.
WBD Slams Lawsuit As ‘Meritless’
The latest escalation comes days after WBD’s board once again recommended that shareholders reject Paramount’s amended offer, which was made in late December.
The lawsuit accuses Warner Bros. of failing to disclose how it valued various aspects of the Netflix deal, including its Global Networks business and debt reductions. Paramount argues that without this transparency, shareholders cannot properly assess its $30-per-share cash offer.
“WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its ‘risk adjustment' of our $30 per share all-cash offer,” Ellison said in the letter.
Warner Bros. has dismissed the lawsuit as “meritless,” suggesting that Paramount should offer more money instead of legal challenges. The company highlighted that Paramount has not increased its offer beyond $30 per share.
“Despite six weeks and just as many press releases from Paramount Skydance, it has yet to raise the price or address the numerous and obvious deficiencies of its offer,” the company said in a statement.
Is WBD Underestimating Paramount’s Resolve?
The Netflix deal involves a $27.75-per-share purchase for Warner Bros.’ film and TV studios, HBO properties, and games division, following the spinoff of its Global Networks business this year. Paramount claims that, per Warner Bros.’ own calculations, shares of the spun-off entity, Discovery Global, could end up being worthless.
Paramount plans to nominate its own board candidates ahead of Warner Bros.’ 2026 shareholder meeting and “solicit against the approval of the Netflix transaction.”
However, despite the aggressive legal and proxy maneuvers, Ellison maintains that Paramount is open to “constructive discussions” with Warner Bros.’ board. However, he insists that Warner Bros. has never demonstrated that the Netflix deal is financially superior to Paramount’s cash offer.
Price Action: Paramount Skydance Corp shares were up 0.16% at $12.17 while the market was closed on Monday, according to Benzinga Pro. WBD closed Monday down 1.68% at $28.40, having risen by over 136% in the last six months.
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