A Delaware Chancery Court judge has ruled against Paramount Skydance's plea to accelerate legal proceedings in its dispute with Warner Bros. Discovery (WBD) concerning the latter's agreement with Netflix. Paramount Skydance, which had previously argued the urgency of its case, aimed to compel WBD to release additional financial data related to the Netflix transaction and the planned spin-off of Discovery Global networks. This information was deemed crucial by Paramount Skydance for substantiating its all-cash offer of $30 per share for WBD, which it positions as superior to Netflix's $27.75 per share bid for WBD's studios and streaming divisions.
The court's decision, articulated by Judge Morgan T. Zurn, highlighted that Paramount Skydance had not demonstrated it would suffer significant and irreversible damage from the alleged lack of disclosures by WBD. The judge clarified that Paramount, as a non-shareholder of WBD, would not directly incur harm from any deficiencies in WBD's financial transparency since Paramount itself is not in a position to make decisions regarding its own tender offer. Warner Bros. Discovery expressed satisfaction with the ruling, characterizing Paramount's lawsuit as a diversionary tactic, and affirmed its board's unanimous conclusion that Paramount's offer does not surpass the existing merger agreement with Netflix.
Despite the setback, Paramount Skydance remains steadfast in its position, emphasizing that the court's rejection was based on its standing rather than the merits of its claims. Paramount Skydance insists that WBD shareholders require comprehensive information on the valuation of Discovery Global's stub equity and any risk adjustments made to Paramount's offer to make an informed decision. The company plans to escalate its efforts by initiating a proxy battle, proposing a slate of directors for WBD's 2026 shareholder meeting who would be open to engaging with Paramount's offer, and advocating for changes to WBD's bylaws to mandate shareholder approval for the Discovery Global spin-off. Paramount's earlier analysis had valued the Netflix transaction at $27.42 per share for WBD shareholders, factoring in a decline in Netflix's share price, and suggested a near-zero value for Discovery Global under the Netflix deal, contrasting sharply with its own assessment of a potential M&A value. Meanwhile, reports indicate that Netflix is preparing a revised all-cash offer for WBD's assets, which would take place after the Discovery Global spin-off, scheduled for the third quarter of 2026.
The ongoing legal and corporate maneuverings underscore the intricate nature of major business transactions and the importance of transparency and fair evaluation for all stakeholders. It highlights the dynamic competitive landscape within the media industry, where companies constantly strive to maximize shareholder value and secure strategic advantages. This case serves as a reminder that robust corporate governance and clear communication are essential, fostering trust and enabling informed decision-making in high-stakes corporate contests.