Paramount Sues Warner Bros., Aims To Nominate Directors To Board

Paramount Skydance Corp. plans to nominate a new slate of directors to Warner Bros. Discovery Inc.’s board to thwart a planned merger with Netflix Inc., and filed suit to get more information about that deal.

Paramount Chief Executive Officer David Ellison said in a letter to the Warner Bros. board made public on Monday that he would challenge the Netflix deal either at the regular Warner Bros. annual meeting or a special meeting convened to approve the deal if Warner Bros. calls one.

Ellison said he had sued Warner Bros. in Delaware court to force the company to disclose information to help shareholders make an informed decision. Paramount accused Warner Bros of failing to disclose how it values the cable-TV assets that the company plans to spin off before selling the studios and streaming business to Netflix. Paramount said it would seek changes in the Warner Bros. bylaws so that shareholders can vote specifically on the spinoff.

Warner Bros. shares fell 1.5% at the start of trading in New York. Netflix rose slightly, while Paramount was unchanged.

Paramount said it’s sticking to its bid of $30 a share for Warner Bros. and encouraged shareholders to tender their shares under a previously announced offer. The company considers its proposal for all of Warner Bros. superior to Netflix’s $27.75 a share offer for the studios and streaming business. The Netflix deal includes a spinoff of cable channels link CNN and TNT to Warner Bros. shareholders before the transaction closes.

“We are committed to seeing our tender offer through,” Ellison said in the letter. “We understand, however, that unless the WBD board of directors decides to exercise its right to engage with us under the Netflix merger agreement this will likely come down to your vote at a shareholder meeting.”