Delaware Judge Dismisses Motion to Expedite Paramount Lawsuit Against Warner Bros. Discovery

A Delaware judge has dismissed Paramount’s motion to expedite a lawsuit against Warner Bros. Discovery seeking more information about its $83 billion Netflix deal.

Paramount CEO David Ellison has accused WBD’s board of withholding key information about how it valued the Netflix deal and the proposed cable network spinoff Discovery Global, which it says “deprive stockholders of the ability to evaluate the real risk of a decrease in financial consideration or meaningfully compare Netflix’s offer to Paramount’s all-cash offer.”

Ellison is seeking to thwart the Netflix deal with a $108.4 billion tender offer, which is set to expire on Jan. 21 at 5 p.m. ET barring no further extension. As of Dec. 19, less than 400,000 WBD shares had been validly tendered.

On Thursday, Delaware Chancery Court judge Morgan T. Zurn ruled that Paramount failed to demonstrate it would suffer irreparable harm, noting that the media giant can’t be harmed as a shareholder because it’s not making a decision on its own tender offer and was not misled itself.

“Paramount as a stockholder must suffer cognizable, irreparable harm. It has not identified any,” Zurn said.

Zurn added that Paramount has other ways of obtaining the information it seeks without an expedited proceeding and “must decide whether and how to improve its odds of success.”

The ruling comes after WBD slammed Paramount’s move in a court filing on Wednesday, arguing it was an “exercise in urgency theatre — ringing a fire alarm in the absence of any flames or even smoke.” It also asked that the lawsuit be deferred until after it provides additional disclosures in the Netflix merger’s proxy statement.

“Today’s lawsuit by Paramount Skydance 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,” a Warner Bros. Discovery spokesperson said in a statement. “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 said that Thursday’s ruling was based on the company’s standing and does not pertain to the merits of its claim.

“WBD shareholders need the information on the WBD Board’s evaluation of the Global Networks stub equity and the “risk adjustments” performed on Paramount’s offer to make an informed decision,” Paramount’s statement continued. “WBD shareholders should ask why their Board is working so hard to hide this information. Paramount continues to urge WBD to make these disclosures so that WBD shareholders can make an informed decision.”

More to come…

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