David Ellison’s Paramount Skydance just suffered another setback, this time in its legal fight with Warner Bros. Discovery.
A Delaware judge ruled against Paramount, which had sued WBD in hopes of getting a court order forcing its acquisition target to quickly release information about how the company valued its cable networks.
The value of WBD’s cable TV networks is a key difference between Paramount’s and Netflix’s rival bids. Paramount wants to buy them while Netflix does not.
Paramount’s effort was unsuccessful, as the Delaware Court of Chancery’s Morgan Zurn ruled against Paramount’s motion for a summary judgment seeking expedited discovery on Thursday morning.
“Paramount has not shown it will suffer cognizable irreparable harm if expedition is not granted,” Zurn said in her ruling.
A Paramount spokesperson said in a statement that the company “continues to urge WBD to make these disclosures so that WBD shareholders can make an informed decision.”
WBD said in a statement that the company was pleased the court “rejected the notion that this lawsuit needed special treatment and may have other serious flaws.”
Paramount has made eight offers to buy WBD, which have been rejected by WBD’s board of directors in favor of its Netflix deal. However, Paramount still thinks its all-cash, $30-per-share offer for all of WBD, including its cable networks like CNN, is superior to Netflix’s cash-and-stock bid of $27.75 per share for WBD’s studio and HBO assets.
Since Netflix does not want to buy WBD’s cable TV networks, their value could determine whether WBD shareholders choose Paramount’s rival, hostile bid. Paramount hoped the court would require WBD to disclose how it valued its cable channels.
“For stockholders to understand the difference between those two transactions, they need certain basic information that they don’t have today,” Quinn Emanuel lawyer Mike Barlow said on behalf of Paramount. Barlow argued WBD’s shareholders “are being harmed” every day that they don’t have WBD’s valuation of its TV networks.
WBD’s legal team — led by Ryan McLeod from Wachtell, Lipton, Rosen & Katz — said there was “zero emergency” to disclose WBD’s valuation of its cable assets and “no threat” of clear, irreparable harm to Paramount that required it to immediately release that information.
McLeod, from WBD’s team, argued that there wasn’t a rush for WBD to disclose how it valued its cable networks, saying that Paramount’s January 21 deadline for WBD shareholders to give Paramount control of their shares was an arbitrary date that could easily be moved.
To that point, Paramount’s Barlow said that the company “fully intends to extend this tender offer,” which would give WBD shareholders more time to decide whether to tender their shares.
Judge Zurn ruled in WBD’s favor, reasoning that “Paramount as a stockholder was not misled by any omissions” from WBD, since Ellison’s company wasn’t deciding whether to take its own offer.
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