A bus passes close to Warner Bros. Studio on Sept. 12, 2025 in Burbank, California.
Mario Tama | Getty Pictures
Paramount Skydance is looking foul on how Warner Bros. Discovery has carried out its sale course of.
In a letter reviewed by CNBC, Paramount attorneys instructed Warner Bros. Discovery CEO David Zaslav that Paramount was questioning the “equity and adequacy” of the method, which formally launched in October. This week, Paramount, Netflix and Comcast submitted second-round bids to amass some or all of Warner Bros. Discovery’s belongings, CNBC beforehand reported.
“It has turn into more and more clear, via media reporting and in any other case, that WBD seems to have deserted the illusion and actuality of a good transaction course of, thereby abdicating its duties to stockholders, and launched into a myopic course of with a predetermined end result that favors a single bidder,” reads the letter from attorneys at Quinn Emanuel. “We particularly request and count on this letter will likely be shared and mentioned with the complete board of administrators of WBD.”
Specifically, Paramount’s letter calls out reviews that WBD’s administration seems to favor Netflix’s provide.
Netflix has made a proposal of principally money, and all three firms submitted greater bids than their preliminary provides, in line with folks near the matter who declined to be named talking about confidential dealings.
As of Thursday morning, Netflix was the main bidder primarily based on how WBD is valuing the provides, folks acquainted instructed CNBC. Comcast executives, for his or her half, proceed to be disciplined within the firm’s provide as to not anger shareholders by taking up further debt and risking its stability sheet, in line with folks accustomed to that firm’s pondering. Comcast management has beforehand mentioned that its bar for M&A is usually excessive.
Warner Bros. Discovery instructed CNBC it confirmed to Paramount that it had acquired the letter and would share it with members of the WBD board.
“Please be assured that the WBD Board attends to its fiduciary obligations with the utmost care, and that they’ve absolutely and robustly complied with them and can proceed to take action,” the corporate mentioned in its response to Paramount.
WBD expects to announce a winner as early as subsequent week, sources instructed CNBC.
Whereas first-round bids arrived in mid-November, Paramount has been vying to amass the whole lot of Warner Bros. Discovery — which incorporates its streaming service HBO Max, movie studio Warner Bros. and portfolio of cable TV networks like TNT and TBS — since September, CNBC beforehand reported.
Warner Bros. Discovery rebuffed three provides made by Paramount, the final of the these for $23.50 a share, earlier than launching a proper sale course of to beckon different consumers, CNBC beforehand reported.
Netflix and Comcast have an interest solely in WBD’s streaming and movie studio enterprise, CNBC has reported. Previous to the sale course of Warner Bros. Discovery had begun the means of splitting its firm into two — Warner Bros., the streaming and studio companies which might be led by Zaslav, and Discovery International, the cable TV networks division that will be run by present WBD CFO Gunnar Wiedenfels.
Paramount attorneys despatched the letter as the corporate suspects that Zaslav has been biased in opposition to a merger with Paramount for the reason that outset, and as a substitute, would reasonably full its path towards a separation, a number of the folks acquainted instructed CNBC. Paramount and its advisors have considered WBD’s contact with them as extra obstructionist reasonably than constructive, two of the folks mentioned.
Previous to the sale course of, Zaslav had been recognized to inform colleagues that Amazon’s Prime Video or Netflix would possible have an interest suitors in Warner Bros. Discovery, or particularly HBO Max and the movie studio, the folks mentioned. Within the letter, Paramount asks the WBD board if reporting that WBD administration has “chemistry” with Netflix administration is correct.
Paramount is looking for affirmation, in line with the letter, of whether or not Warner Bros. Discovery appointed an impartial particular committee of disinterested members of its board to steer the sale course of and take into account provides.
“If not, we strongly urge you to empower such a particular committee comprised of administrators with no potential look of bias or beholdenness to others whose pursuits might differ from these of the stockholders,” the letter reads. “This could appear to be an necessary step at this stage, to make sure the equity and unimpeachability of the transaction course of and to maximise the worth of no matter end result WBD determines to pursue.”
Learn the complete letter from Paramount to WBD:
Expensive Mr. Zaslav: We write on behalf of Paramount Skydance Company (“Paramount”, “we” or “us”) to specific our critical issues concerning the equity and adequacy of the bidding course of for a possible mixture with Warner Bros. Discovery (“WBD” or “you”). It has turn into more and more clear, via media reporting and in any other case, that WBD seems to have deserted the illusion and actuality of a good transaction course of, thereby abdicating its duties to stockholders, and launched into a myopic course of with a predetermined end result that favors a single bidder. We particularly request and count on this letter will likely be shared and mentioned with the complete board of administrators of WBD.
Now we have not too long ago seen reporting within the U.S. and overseas media that offers critical trigger for concern. The German newspaper Handelsblatt not too long ago reported on a gathering that reportedly came about in Brussels between Gerhard Zieler, President of WBD’s Worldwide Enterprise and a direct report back to WBD’s Chief Government Officer, who “arrived with a three-person group,” with the E.U. Fee Vice President Hena Virkkunen, to debate the potential merger prospects for WBD. In that dialog, the article reviews that “issues had been raised that the Ellison household’s deliberate acquisition of Warner Bros. Discovery may result in extreme media focus,” and that the E.U. Fee would take into account intervening in a possible merger with Paramount for that reason. The article quotes “sources shut” to Zeiler as saying “that the talks with the Fee had been necessary as a result of each Warner and the EU wished to protect media variety.” The implications of such a gathering, if it occurred, are clear and evince a tacit resistance to, if not lively sabotage of, a Paramount provide.
Whereas this report is regarding in itself, this isn’t an remoted report relating to purported WBD resistance to a mix with Paramount. A number of U.S. media retailers have reported on the passion by WBD administration for a transaction with Netflix, and on statements by administration {that a} transaction between WBD and Netflix could be a “slam dunk,” whereas additionally referring to Paramount’s bid in a unfavorable mild. Extra reporting for the reason that submission of revised bids on December 1 has indicated that WBD’s “board has actually warmed to” a transaction with Netflix as a result of “chemistry between” WBD administration and Netflix administration. Now we have come to you first to inquire whether or not this reporting is correct, and to interact in a productive dialogue with you round any precise or perceived points that it could replicate.
Furthermore, these media reviews echo related indications that we’ve been listening to all through this course of, regardless of what we considered as in any other case productive conversations that we’ve had with WBD management. Paramount has a reputable foundation to imagine that the gross sales course of has been tainted by administration conflicts, together with sure members of administration’s potential private pursuits in post-transaction roles and compensation because of the financial incentives embedded in latest amendments to employment preparations. These issues are amplified by indications of director bias and beholdenness to others whose pursuits might not align with the stockholders’, and the truth that alternate options involving solely sure WBD belongings are being prioritized however their heightened regulatory threat and potential to deprive stockholders of consideration for the whole lot of WBD’s enterprise worth.
Additional, as you already know, Paramount agreed to sure standstill preparations in alternate for the chance to take part in a very aggressive and unbiased bidding course of. Paramount didn’t cut price for WBD to foster, whether or not deliberately or unintentionally, a tilted and unfair course of. We imagine that each one events to this course of ought to have a shared need for, and can mutually profit from, an unimpeachable transaction course of. As we assume you agree, even discounting the accuracy of any media reviews, simply the looks of a flawed course of imperils any potential transaction that may consequence and will undermine the potential worth maximization to WBD stockholders from any potential transaction.
In mild of our grave issues relating to the integrity of WBD’s course of, we search affirmation as as to if WBD has appointed an impartial particular committee of disinterested members of its board to contemplate the potential transaction alternatives and to make a closing dedication relating to a sale or break-up of all or a part of the corporate. If not, we strongly urge you to empower such a particular committee comprised of administrators with no potential look of bias or beholdenness to others whose pursuits might differ from these of the stockholders. This could appear to be an necessary step at this stage, to make sure the equity and unimpeachability of the transaction course of and to maximise the worth of no matter end result WBD determines to pursue. Partaking with WBD all through this course of, we’ve been inspired by the large potential from a mix of our entities. We stay assured that the Paramount provide would supply the utmost worth to WBD stockholders and look ahead to the chance to proceed to interact with you productively on this course of. However at this level we should insist on assurances and steps taken to make sure that a very truthful and impartial course of is being carried out, each for Paramount’s profit and within the curiosity of WBD’s stockholders.
Disclosure: Comcast is the mother or father firm of NBCUniversal, which owns CNBC. Versant would turn into the brand new mother or father firm of CNBC upon Comcast’s deliberate spinoff of Versant.