A Delaware judge has denied a request from Paramount to expedite its lawsuit against Warner Bros. Discovery. The ruling came during a hearing on Thursday, where Vice Chancellor Morgan T. Zurn stated that Paramount had not demonstrated it would suffer “cognizable irreparable harm” without the financial information it seeks from Warner. This decision puts Paramount under pressure to win over Warner shareholders ahead of a critical tender offer deadline next week.
Investors have until Wednesday to accept Paramount’s offer of $30 per share to sell their stock. Paramount, which filed the lawsuit on Monday, argues that shareholders need access to details regarding Warner’s internal deliberations and financial analyses to compare its bid with that of Netflix. The lawsuit claims that Warner’s board members assessed various assets in determining that Netflix’s recent cash-and-stock deal was more favorable.
The legal dispute centers around Paramount’s assertion that its proposed acquisition, valued at $108 billion and including the assumption of Warner’s debt, presents a higher value for shareholders than Netflix’s agreement, finalized on December 4, 2023. On that date, Warner’s board concluded the auction, awarding Netflix the coveted assets.
Netflix’s stock has declined approximately 17% since early December, leading the company to consider enhancing its bid by offering an all-cash proposal for Warner’s movie and television studio, along with HBO and HBO Max. As of now, Netflix has declined to comment on these developments.
Paramount’s interest lies in acquiring all of Warner Bros. Discovery, which includes popular networks such as CNN and various basic cable channels. Following the court ruling, Warner Bros. Discovery issued a statement asserting that Paramount’s legal challenge was “yet another unserious attempt to distract,” adding that the court recognized the lack of need for expedited treatment of the case.
The company expressed satisfaction with the outcome, stating, “Despite its multiple opportunities, Paramount Skydance continues to propose a transaction that our board unanimously concluded is not superior to the merger agreement with Netflix.”
In response to the ruling, Paramount downplayed the setback, emphasizing that Zurn’s decision did not address the merits of its claims. The company maintained that Warner shareholders should have access to the valuation process used by the board regarding Warner’s cable channels to make an informed decision between the two competing offers.
Paramount has continued to urge Warner Bros. Discovery to disclose the financial details, raising concerns about the transparency of the evaluation process. It remarked, “WBD shareholders should ask why their Board is working so hard to hide this information,” highlighting the importance of clarity in the ongoing negotiations.
As the deadline approaches, the outcome of this legal battle may significantly impact the future of both Paramount and Warner Bros. Discovery, shaping the landscape of the entertainment industry.
