Paramount Skydance Corp. said Warner Bros. Discovery Inc. isn’t being fair in its process to sell itself and isn’t acting in shareholders’ best interests, as a competitive bidding process is underway.
In a letter to Warner Bros. Chief Executive Officer David Zaslav, attorneys for Paramount said the entertainment giant is favoring a rival bid from Netflix Inc., even after Paramount has submitted five offers.
“It has become increasingly clear, through media reporting and otherwise, that WBD appears to have abandoned the semblance and reality of a fair transaction process, thereby abdicating its duties to stockholders, and embarked on a myopic process with a predetermined outcome that favors a single bidder,” according to the letter, which was published earlier by CNBC.
Paramount wants to know if Warner Bros. appointed an independent special committee of disinterested members of its board to steer the sale process and consider offers. Play Video
“If not, we strongly urge you to empower such a special committee comprised of directors with no potential appearance of bias or beholdenness to others whose interests may differ from those of the stockholders,” the letter reads. “This would seem to be an important step at this stage, to ensure the fairness and unimpeachability of the transaction process and to maximize the value of whatever outcome WBD determines to pursue.”
Paramount said it believes that the sales process has been “tainted” by management conflicts, including “certain members of management’s potential personal interests in post-transaction roles and compensation as a result of the economic incentives embedded in recent amendments to employment arrangements.”
In response, Warner Bros. said it had shared the Paramount letter with its board.
“Please be assured that the WBD Board attends to its fiduciary obligations with the utmost care, and that they have fully and robustly complied with them and will continue to do so,” Warner Bros. said.
A spokesperson for Paramount declined to comment.
Bloomberg has reported that Netflix’s bid consists mostly of cash and that the price is higher than what Paramount has offered. Three media companies submitted offers on Dec. 1 in what was a second formal round of bids. Warner Bros.’ board has continued to weigh the offers and has had discussions with bidders. The company is expected to make a final decision in coming days.
Warner Bros. officially put itself up for sale in October after receiving offers from Paramount. It has attracted bids from Paramount, Netflix and Comcast Corp. Paramount is the only company bidding for all of Warner Bros., including cable-TV networks like CNN and TNT. Netflix and Comcast are only bidding for the Warner Bros. film and TV studios and its HBO Max streaming service.
