Paramount Skydance Criticizes Warner Bros. Discovery Sale, Supports Netflix Offer
In a recent move, Paramount Skydance has taken a strong stance against the sales process of Warner Bros. Discovery (WBD). The company’s attorneys sent a letter to WBD’s CEO, David Zaslav, expressing significant concerns regarding the fairness of the ongoing bidding process.
Concerns Over Bidding Process
The lawyers asserted that WBD appears to favor a singular bidder—Netflix—over other potential acquirers. They criticized the WBD board for what they described as a “myopic process” aimed at a predetermined outcome. Paramount Skydance is looking to acquire the entirety of WBD in an all-cash deal.
Details of the Bids
- Bid submissions for the second round were due on December 1.
- Paramount Skydance is backed by three Middle Eastern sovereign wealth funds.
- Paramount has made three previous bids, including a rejected offer of $23.50 per share.
- Other bidders include Netflix and Comcast, who are interested in portions of WBD’s assets.
In their December 3 letter, Paramount’s legal team claimed WBD’s management has displayed a clear preference for a deal with Netflix. They cited various media reports indicating management enthusiasm towards a Netflix merger, suggesting bias against Paramount’s offer.
Management Conflicts and Employment Agreements
Concerns were further amplified by recent amendments to the employment contracts of WBD executives. These changes guarantee that key executives will retain their stock options in the event of a sale. Paramount’s letter highlighted that such adjustments could represent conflicts of interest.
Following the initial letter, a response was sent by WBD’s attorneys on December 4, assuring that the board is committed to its fiduciary responsibilities and has welcomed the concerns raised by Paramount.
European Regulatory Concerns
Paramount referenced a report from the German newspaper Handelsblatt about a meeting in Brussels between WBD’s president of international, Gerhard Zeiler, and members of the European Commission. The discussion focused on potential merger prospects, raising alarm over media concentration concerns.
Paramount’s legal team expressed that these discussions might indicate a resistance to their bid, questioning whether WBD’s management is adequately considering the implications of a fair sales process.
Call for Independent Oversight
Paramount’s lawyers urged WBD to establish an independent special committee to evaluate transaction opportunities. They requested confirmation that the bidding process will be conducted with impartiality after raising issues over perceived biases.
Concluding their letter, Paramount reiterated their belief that their bid would deliver maximum value to WBD’s shareholders. They emphasized the importance of transparency and fairness in the ongoing acquisition discussions.
