Paramount suffered a blow in a Delaware courtroom Thursday as a judge refused to expedite its lawsuit against Warner Bros. Discovery seeking information about internal deliberations and a financial analysis.
Reuters reported that Vice Chancellor Morgan T. Zurn of the Delaware Chancery Court said during a hearing that Paramount had failed to show it would suffer “cognizable irreparable harm” without the financial details it sought.
Now the pressure is on Paramount to win over Warner shareholders before next week’s tender offer deadline. Investors have until Wednesday to sell their stock to Paramount for $30 a share. Paramount could extend that deadline.
Paramount sued on Monday, claiming investors needed information that Warner has yet to provide about how board members valued various assets in determining that its sale to Netflix was more lucrative.
Paramount wanted the judge to fast-track the proceedings to help boost its outreach to Warner shareholders.
The David Ellison-led company has insisted its $108-billion deal, including absorption of Warner debt, represents a higher value for Warner shareholders than Netflix’s Dec. 4 cash-and-stock deal. Warner board members closed the auction that night, awarding Netflix the prize.
Netflix, which has seen its stock slide about 17% since early December, is reportedly weighing whether to bolster its bid by offering all cash for Warner Bros. movie and television studio, HBO and HBO Max. Netflix declined to comment.
Paramount wants to buy all of Warner Bros. Discovery, including CNN and the other basic cable channels.
In a statement Thursday, Warner Bros. Discovery said Paramount Skydance’s legal challenge “was yet another unserious attempt to distract and the Judge saw right through it.”
“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,” Warner Bros. Discovery said. “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.”
Paramount downplayed its latest setback, saying Zurn’s ruling “does not pertain to the merits of Paramount’s claim.”
Paramount, in its statement, said that Warner shareholders deserved information about how Warner board’s evaluated the value for Warner’s cable channels to better compare the two proposals.
Netflix doesn’t want the cable channels allowing Warner to move forward with plans to spin off those channels this summer. Warner shareholders would get stock in that new company, called Discovery Global.
“WBD shareholders should ask why their Board is working so hard to hide this information,” Paramount said, adding it “continues to urge WBD to make these disclosures so that WBD shareholders can make an informed decision.”
Times staff writer Samantha Masunaga contributed to this report.
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