Paramount Criticizes Warner Bros. Sales Process as “Unfair” in Blistering Letter

Paramount Pictures has formally raised concerns regarding the sale process of Warner Bros. Discovery, labeling it as “tilted and unfair.” This message was communicated through a letter directed to the company’s board, expressing apprehension about the favorable treatment allegedly accorded to Netflix.

Warner Bros. Discovery Sale Process

David Ellison’s Paramount believes that the ongoing bidding process is favoring Netflix, particularly considering the email sent through its lawyers at Quinn Emanuel. In contrast, Warner Bros. Discovery (WBD) has responded by assuring stakeholders of its commitment to fiduciary responsibilities.

Bidding Landscape

• Second round bids for acquiring Warner Bros. Discovery were due on December 1.
• Paramount, Comcast, and Netflix are key players in this acquisition battle.
• Paramount seeks an outright acquisition, including the cable channels division.

Netflix is eyeing both the Warner Bros. studio and HBO’s streaming services, while Comcast aims to integrate NBCUniversal into WBD through a stock-heavy deal.

Concerns of Partiality

Paramount’s letter highlighted reports suggesting WBD management favors a transaction with Netflix, referring to it as a “slam dunk.” The communication indicates that the board appears to have a favorable bias towards Netflix due to established relationships.

Regulatory Challenges

Regulatory scrutiny is a significant concern in this potential acquisition. Paramount has increased its breakup fee to $5 billion, reflecting its confidence in navigating regulatory challenges. However, there are apprehensions that the EU may adopt a more stringent stance on the merger.

Financial Implications

• Bank of America analysts note that the megadeal would carry substantial risks for Paramount.
• Paramount Skydance is already heavily leveraged at nearly 3.5 times its financial capacity.
• The proposed purchase price for Warner Bros. Discovery ranges between $70 billion and $75 billion.

The bid assumes support from Oracle’s founder, Larry Ellison, bolstering the financial backing of David Ellison’s endeavors.

Potential Legal Actions

Reports indicate that the Trump administration may investigate a potential Netflix deal, including a possible lawsuit to block the merger due to the implications of combining Netflix and HBO Max.

In the ongoing competition, Paramount has made it clear that it will not relinquish its ambitions easily, determined to contend against streaming giant Netflix in this significant acquisition pursuit.