Paramount, led by David Ellison, has formally raised concerns about the Warner Bros. Discovery (WBD) sale process, suggesting that the David Zaslav-led studio may be favoring Netflix over other potential buyers.
In a letter sent through its attorneys at Quinn Emanuel, Paramount questioned whether WBD was overseeing “a tilted and unfair process,” according to reporting by The Hollywood Reporter. The correspondence comes amid a heated second round of bids, due December 1, for the studio giant, which WBD hopes to sell or restructure by the end of the year.
Lawyers for WBD responded in a note emphasizing the board’s commitment to its fiduciary duties. “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,” the letter said.
Paramount’s letter reportedly asserts that Netflix has received preferential treatment during the sale process.
“Several U.S. media outlets have reported on the enthusiasm by WBD management for a transaction with Netflix, and on statements by management that a transaction between WBD and Netflix would be a ‘slam dunk,’ while also referring to Paramount’s bid in a negative light,” the letter reads, citing coverage by CNBC.
The bids reflect different strategies for the storied media empire.
Netflix is reportedly focused on acquiring WBD’s studio and streaming assets, including HBO and HBO Max. Paramount seeks a full acquisition encompassing WBD’s cable channels, such as TNT, TBS, CNN, HGTV, and Food Network. Comcast’s bid, meanwhile, proposes a merger of NBCUniversal into WBD, likely relying heavily on stock.
Regulatory scrutiny is a significant factor in negotiations. Paramount recently increased its potential breakup fee to $5 billion, signaling confidence that its bid could navigate regulatory hurdles. Analysts have noted the risks in this deal. Bank of America highlighted that Paramount Skydance would take on substantial leverage. This includes a $70–75 billion equity purchase and $25.6 billion in WBD debt.
Paramount’s letter raises concerns that WBD management may be influenced by personal career considerations. It cites possible post-sale roles for executives. Discussions reportedly included an offer to Zaslav for a co-CEO and co-chairman position. However, the board’s primary focus remains maximizing shareholder returns.
As the process unfolds, Netflix appears to have emerged as the frontrunner, according to several reports. Meanwhile, regulators, including the Department of Justice, may scrutinize a potential Netflix-WBD combination, raising the possibility of legal challenges.
Paramount has signaled it will actively compete, ensuring the bidding war remains a high-stakes contest for one of Hollywood’s most valuable properties.
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