Paramount Skydance Corp. accused Warner Bros. Discovery Inc. of failing to conduct a fair auction, saying the film and TV company isn’t acting in its shareholders’ best interests.
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.
Warner Bros. “appears to have abandoned the semblance and reality of a fair transaction process, thereby abdicating its duties to stockholders,” the letter reads. The company has “embarked on a myopic process with a predetermined outcome that favors a single bidder.”
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 a second formal round of bids. Warner Bros.’ board has continued to weigh the offers and has had discussions with bidders. CNBC reported on the letter earlier Thursday.
Paramount asked in the letter if Warner Bros. has appointed an independent special committee of disinterested board members to steer the sale process and consider offers, calling it “an important step.”
The sales process has been “tainted,” Paramount’s lawyers said, by “certain members of management’s potential personal interests in post-transaction roles,” along with “recent amendments to employment arrangements.”
Paramount also cited a reported meeting between a senior Warner Bros. executive and European Union officials that raised concerns of media concentration if the two companies merged.
“The implications of such a meeting, if it occurred, are clear and evince a tacit resistance to, if not active sabotage of, a Paramount offer,” the letter said.
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.
Warner Bros. officially put itself up for sale in October after receiving offers from Paramount, the parent of CBS. It has also attracted bids from Netflix and NBC Universal owner 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 bidding for the Warner Bros. film and TV studios and its HBO Max streaming service.