Paramount Slams Warner Bros Over Alleged Unfair Studio Bid

Paramount Skydance is questioning how Warner Bros. Discovery is handling the sale of its assets. According to a letter reviewed by CNBC, Paramount’s lawyers told WBD CEO David Zaslav that they believe the process is unfair and favors a single bidder.

“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,” the letter from Quinn Emanuel attorneys reads.

“We specifically request and expect this letter will be shared and discussed with the full board of directors of WBD.”

Paramount’s letter points to reports suggesting that WBD management seems to favor Netflix’s offer. Sources familiar with the matter told CNBC that Netflix submitted a mostly cash offer and was leading among the second-round bids, which also included Paramount and Comcast.

Comcast, for its part, has been careful with its bid, avoiding extra debt to protect its balance sheet. The company has said in the past that it sets a high bar for mergers and acquisitions. Warner Bros. Discovery confirmed to CNBC that it received Paramount’s letter and would share it with the board.

The company said in a statement, “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.”

WBD is expected to announce a winner as soon as next week, according to sources. Paramount has been trying to acquire the entire company, including HBO Max, Warner Bros. studio, and cable networks like TNT and TBS, since September. The company previously made three offers, with the last at $23.50 per share, all of which WBD rejected before opening the formal sale process in October.

Netflix and Comcast, however, are only interested in WBD’s streaming and film studio businesses. Before the sale, WBD planned to split into two parts: Warner Bros., which includes streaming and studios and would be led by Zaslav, and Discovery Global, which includes cable networks and would be run by CFO Gunnar Wiedenfels.

Paramount’s lawyers also raised concerns that Zaslav may have been biased against a merger with Paramount from the start and preferred a split instead. The letter asks whether WBD has appointed an independent special committee of disinterested board members to oversee the sale.

“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.”

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