Why Paramount is suing Warner Bros. Discovery
What's the story
Paramount has filed a lawsuit against Warner Bros. Discovery (WBD) after the latter's agreement with Netflix. The legal action is aimed at forcing WBD to disclose more information about its agreement with Netflix, particularly how it valued the transaction. Paramount's CEO David Ellison said, "WBD has provided increasingly novel reasons for avoiding a transaction with Paramount, but what it has never said...is that the Netflix transaction is financially superior to our actual offer."
Strategic moves
Paramount's hostile takeover bid and board nominations
In December, after considering offers from several companies including Paramount, WBD chose to enter into a deal with Netflix. The deal will see Netflix acquire WBD's studio, HBO, and HBO Max for $82.7 billion. Not one to back down easily, Paramount launched a $108.4 billion hostile takeover bid for the entire company. However, WBD rejected both this offer and an amended version from Paramount.
Board nominations
Paramount's plans to challenge WBD's Netflix deal
Along with the lawsuit, Ellison also announced that Paramount intends to nominate directors to WBD's board. These nominees would vote against the Netflix deal and could potentially trigger a shareholder vote on the merger. "We will exercise WBD's right under the Netflix Agreement to engage on Paramount's offer and enter into a transaction with Paramount," Ellison said, hinting at their aggressive strategy going forward.