Judge denies Paramount's motion to fast-track lawsuit against Warner Bros.

Paramount Faces Legal Setback in Warner Bros. Discovery Bid

Paramount is under mounting pressure to persuade Warner Bros. Discovery shareholders ahead of next week's deadline for its tender offer.

(Brian van der Brug / Los Angeles Times)

On Thursday, Paramount encountered a hurdle in Delaware when a judge declined to fast-track its lawsuit against Warner Bros. Discovery. The suit sought access to internal discussions and financial assessments related to the deal.

According to Reuters, Vice Chancellor Morgan T. Zurn of the Delaware Chancery Court ruled that Paramount did not demonstrate it would experience significant and irreparable harm without the financial information it requested.

With the deadline approaching, Paramount must convince Warner shareholders to accept its offer of $30 per share by Wednesday, though the company may choose to extend this period.

Earlier in the week, Paramount filed a lawsuit, arguing that investors need more details from Warner about how its board valued assets when deciding that a sale to Netflix was more advantageous.

Paramount had hoped an expedited court process would strengthen its appeal to Warner shareholders.

Further Reading

David Ellison's company maintains that its $108 billion proposal, which includes taking on Warner's debt, offers greater value to Warner shareholders than Netflix's cash-and-stock deal from December 4. Despite this, Warner's board concluded the auction that evening, awarding the deal to Netflix.

Netflix, whose share price has dropped roughly 17% since early December, is reportedly considering a revised offer consisting entirely of cash for Warner Bros.' film and TV studios, as well as HBO and HBO Max. Netflix has not commented on these reports.

Paramount is aiming to acquire all of Warner Bros. Discovery, including CNN and other major cable networks.

In a statement on Thursday, Warner Bros. Discovery dismissed Paramount Skydance's legal action as a "frivolous distraction," noting that the judge recognized its lack of merit.

Warner Bros. Discovery added, "We are satisfied that the Delaware Court agreed with our position and declined to give this lawsuit special consideration, which may also have other significant issues. Despite repeated opportunities, Paramount Skydance continues to propose a deal that our board unanimously determined is not superior to the merger agreement with Netflix."

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Paramount downplayed the recent court decision, stating that the ruling does not address the substance of its claims.

The company reiterated that Warner shareholders deserve transparency regarding how the board assessed the value of Warner's cable networks, enabling them to fairly compare competing offers.

Additional Developments

Netflix is reportedly uninterested in acquiring Warner's cable channels, which would allow Warner to proceed with plans to spin off those assets into a new entity, Discovery Global, later this year. Warner shareholders would receive shares in this new company.

Paramount questioned, "WBD shareholders should consider why their Board is working so diligently to withhold this information," and continued to urge Warner Bros. Discovery to disclose these details so shareholders can make informed choices.

Reporting contributed by Samantha Masunaga.