A judge on the Delaware Court of Chancery has denied a motion filed by Paramount Skydance to expedite its lawsuit against Warner Bros. Discovery as the latter Hollywood studio remains up for sale.
In a ruling issued Thursday morning, Vice Chancellor Morgan Zurn determined Paramount has not suffered any “cognizable, irreparable harm” from what the entertainment company alleges is a lack of information provided by Warner Bros. As a result, the judge declined to speed up the trial process.
“Paramount itself is not making any decision based” on Warner Bros.’s allegedly deficient disclosures, Zurn said. “Paramount itself was not misled.”
She added that Paramount can obtain the wanted information outside of an expedited legal proceeding and that it “must decide whether and how to improve its odds of success” in the bidding war.
The judge’s decision comes three days after Paramount CEO David Ellison announced his company filed a lawsuit seeking information about the Warner Bros. sale process and its pending deal with Netflix. Ellison said Paramount took legal action, “so that WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer.”
Warner Bros. formally told shareholders to reject Paramount’s hostile takeover last week.
The deadline for Warner Bros. shareholders to tender their shares for Paramount’s all-cash $30 per-share offer is Jan. 21, which explains Paramount’s urgent request. The deadline for the hostile takeover offer was set by Paramount itself. The date is expected to be extended, according to Deadline.
Paramount argues its deal is superior to the one made by Netflix, but Warner Bros. doesn’t think so.
“Today’s lawsuit by Paramount Skydance was yet another unserious attempt to distract and the Judge saw right through it,” Warner Bros. said, as reported by Variety. “We are pleased a Delaware Court agreed with our belief and rejected the notion that this lawsuit needed special treatment and may have other serious flaws. Despite its multiple opportunities, Paramount Skydance continues to propose a transaction that our board unanimously concluded is not superior to the merger agreement with Netflix.”
In a statement of its own, Paramount disagreed with the ruling.
“Today’s ruling [by the Honorable Morgan T. Zurn] was based on Paramount’s standing and does not pertain to the merits of Paramount’s claim,” the media company said. “WBD shareholders need the information on the WBD Board’s evaluation of the Global Networks stub equity and the ‘risk adjustments’ performed on Paramount’s offer to make an informed decision. WBD shareholders should ask why their Board is working so hard to hide this information. Paramount continues to urge WBD to make these disclosures so that WBD shareholders can make an informed decision.”
Paramount is seeking to buy the entirety of Warner Bros., including its cable networks such as CNN, while Netflix only wants to purchase the company’s studio and streaming businesses. Paramount’s revised bid is valued at $108.4 billion, and Netflix’s current offer is valued at $82.7 billion.
PARAMOUNT ESCALATES HOSTILE TAKEOVER OF WARNER BROS. WITH LAWSUIT AND PROXY WAR
Netflix is reportedly considering amending its bid to an all-cash offer in order to outcompete Paramount, which isn’t letting the world’s largest streaming service take the win yet.
In conjunction with the lawsuit, Paramount announced an effort to nominate its own directors to the Warner Bros. board in a proxy fight. The nomination process starts in about three weeks. Warner Bros.’s annual meeting hasn’t been scheduled yet.