A Delaware judge recently turned down a request from Paramount to speed up proceedings in its case against Warner Bros. Discovery. The judge requested more details about how Warner Bros. evaluated Netflix’s $72 billion acquisition proposal as superior to Paramount’s $78 billion hostile offer.
During the hearing, Associate Chief Judge Morgan Zuhn indicated Paramount did not adequately demonstrate it would face “clear and irreparable harm” without the financial information it was seeking.
Earlier in January, Warner Bros. rejected Paramount’s takeover offer and encouraged its shareholders to support the Netflix acquisition.
This lawsuit is a strategic move by David Ellison’s Paramount to increase pressure on Warner Bros., which has an extensive array of content, including franchises like Harry Potter and DC Comics.
Paramount’s push to expedite the case is intended to ensure that Warner Bros. shareholders receive necessary financial details to make informed decisions regarding a cash tender offer of $30 per share for the studio and streaming business, especially in light of a January 21 deadline.
Warner Bros. deemed Paramount’s request as hasty and stated that it would reveal its financial data when seeking shareholder approval for the Netflix deal. Paramount is likely to extend its tender offer, as there is no vote currently scheduled.
Warner Bros. expressed that halting production for a court decision based on incomplete information “makes no sense,” and Solicitor Ryan McLeod reiterated this position during the hearing.
Neither Paramount, Warner Bros., nor Netflix provided comments when approached for input.
Paramount Seeks Board Representation
Paramount’s actions are part of a broader strategy to increase pressure on Warner Bros. Recently, it revealed plans to appoint directors to Warner Bros., aiming to persuade the board to negotiate with Paramount for the benefit of shareholders.
Additionally, adjustments to Warner Bros. are on the table, including proposed changes to its articles of incorporation that would require shareholder approval for separating its cable TV operations, which include channels like CNN and Food Network.
Paramount itself encompasses not just Paramount Pictures but also CBS, MTV, and Nickelodeon.
In its motion for urgency, Paramount argued that “time is of the essence,” stating that the quantity of shares tendered could influence the potential extension of the offer.
Paramount also asserted that further transparency would help Warner Bros. shareholders understand their rights. However, Warner Bros. countered that the urgency stemmed from Paramount’s own choices, suggesting that claims should wait until a proxy statement related to the Netflix merger is submitted.
