Paramount complains about ‘unfair’ WBD sale process in letter
Paramount complains about ‘unfair’ WBD sale process in letter
The communique to WBD CEO David Zaslav argues that WBD has “abandoned” any notion of a fair process.
Cold winds are blowing in many parts of the United States, and they certainly seem to be cooling the momentum for a merger between Paramount Skydance and Warner Bros. Discovery. Paramount has shown public interest in acquiring WBD for months, but the process clearly hasn’t gone according to plan. This week, Paramount sent a letter to WBD CEO David Zaslav expressing how unhappy it is with WBD’s actions in the sale process, which it thinks may be unfairly tilted toward Netflix.
Key Details:
- Crying foul: Paramount says WBD has “abandoned the semblance” of a fair process.
- Slant for Netflix?: Recent reporting has indicated Netflix’s offer for WBD could be gaining steam.
- Early start: Paramount submitted several bids for WBD before the auction process for the company began.
The strongly worded letter from Paramount makes it clear that the company is supremely unhappy with the reporting that seems to indicate a groundswell in favor of Netflix’s offer among WBD executives. Its communique cites those reports, and explains, “We have come to you first to inquire whether this reporting is accurate, and to engage in a productive discussion with you around any actual or perceived issues that it may reflect.”
The letter also states that Paramount has a “credible basis” to believe that the auction process for WBD has been “tainted by management conflicts, including certain members of management’s potential personal interests in post-transaction roles and compensation.”
The letter is filled with phrases like “abandoned the semblance and reality of a fair transaction process,” and complains that Paramount agreed to standstill arrangements in exchange for a fair opportunity that it says it is not getting. In a reply, WBD’s attorneys were cordial but firm about the line they were taking.
“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,” their response said.
While there are certainly behind-the-scenes machinations going on in any business transaction that the public knows nothing about, it is difficult to see the validity of Paramount’s claims that the WBD sale process has been unfairly tilted against it. Paramount has had more opportunities to acquire WBD than Netflix or Comcast, which has also shown interest in WBD assets; Paramount submitted several bids for WBD before other companies were even able to put one forth, though WBD did not accept any of those early offers.
Warner CEO David Zaslav made plain his intention to stimulate a bidding war for WBD when Paramount’s interest first became clear, and Netflix and Comcast have the same right to make attempts to purchase the assets they want from WBD as Paramount does. And if Paramount thinks Netflix or Comcast has unfairly offered Zaslav a golden parachute of some kind in order to sway him, it must be noted that Paramount offered Zaslav the role of co-CEO of the merged company should he pick their offer.
Paramount seems to be employing a carrot-and-stick approach to its WBD takeover attempts, since its bids alone have not been enough to win the company. This week, Paramount raised its offered breakup fee to WBD to $5 billion if the two sides agree to a deal that is eventually quashed by regulators. Any deal between the two that reaches the regulatory review stage is expected to move through without much trouble, however, given the close relationship between President Trump and Paramount CEO David Ellison’s father, Larry.
WBD is still sorting through the second round of official bids received for its assets, and while a winner might be announced this week, the merger process is likely to drag on for quite some time, given the drama now building around the sale.
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