Paramount Files Lawsuit Against Warner Bros. Discovery Over Netflix Deal

Paramount Skydance filed a lawsuit against Warner Bros. Discovery earlier this month seeking more information about its recent $82.7 billion deal with Netflix.

According to Reuters, the lawsuit escalates the ongoing rivalry between Paramount and Netflix over Warner Bros. Discovery’s film and TV content, including the Harry Potter franchise and DC Comics films.

Paramount addressed the situation in a recent letter to shareholders, stating it would seek to propose an amendment to Warner Bros.’ bylaws to require shareholder approval for other media companies. Such bylaw amendment may impact the deal with Netflix.

“WBD has provided increasingly novel reasons for avoiding a transaction with Paramount,” the shareholders’ letter reads, per Reuters. “But what it has never said, because ⁠it cannot, is that the Netflix ⁠transaction is financially superior to our ​actual offer.”

“Unless the WBD board of directors decides to exercise its right to engage with us under the Netflix merger agreement, this will likely come down to your vote at a shareholder meeting,” the letter added.

The amendment proposal notably includes a $40 billion in equity personally guaranteed by Larry Ellison, Oracle co-founder and the father of Paramount CEO, David Ellison. Approximately $54 billion in debt will also be added.

Paramount further argued that its all-cash bid of $30 per share for Warner Bros. is “superior” to Netflix’s $27.75 per share offer.

Warner Bros. has since responded to the lawsuit, stating it is “meritless.” The famous production company further stated that Paramount has yet to “raise the price or address the numerous and obvious deficiencies of its offer.”

The deal with Netflix has some high stakes, with Warner Bros. previously stating it will owe the streaming giant a whopping $2.8 billion termination fee.

Meanwhile, The Guardian reports that, in response to the lawsuit, Netflix has since changed its deal with Warner Bros. to an all-cash arrangement.

Ted Sarandos, Netflix’s co-chief executive, shared more details about the new offer. “Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty at $27.75 per share in cash, plus the value from the planned separation of Discovery Global.”

“The WBD board continues to support and unanimously recommend our transaction,” Sarandos added. “And we are confident that it will deliver the best outcome for stockholders, consumers, creators, and the broader entertainment community.”