As the bidding war over Warner Bros. Discovery is heating up, Paramount Skydance is accusing the company of orchestrating an unfair process that favors Netflix — which has the highest bid to acquire the media giant so far. Paramount lawyers have sent WBD two letters about the bidding process.
The first previously unreported letter was sent on Monday alongside the company’s second round bid. According to the Wall Street Journal, that letter claimed Paramount was the only bidder with a proposal that wouldn’t raise antitrust concerns. Paramount’s lawyers also said that a deal with Netflix would likely “never close,” citing both domestic and international regulatory challenges and that Netflix acquiring Warner Bros. streaming and studio assets “will entrench and extend Netflix’s global dominance in a matter not allowed by domestic or foreign competition laws.”
Representatives for Paramount did not immediately respond to TheWrap’s request for comment on this first letter.
The second letter to CEO David Zaslav was sent Wednesday. In that one, Paramount accused the sales process of being “tainted by management conflicts.” CNBC published the letter in full. Specifically, it claims that certain members of WBD’s management have “personal interests” in roles and compensation that would happen after the transaction and that there is “director bias” by people whose interests might not align with WBD’s stockholders.
“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,” the letter reads, accusing the bidding process of having a “predetermined outcome that favors a single bidder.”
To back its claims, the letter pointed to media reports in the U.S. that seemed to favor Netflix as Warner Bros. Discovery’s preferred bidder as well as a report from a German newspaper about a meeting with WBD President of International Gerhard Zeiler, a direct report to Zaslav and E.U. Commission Vice President Henna Virkkunen it dubbed as “active sabotage.” During that meeting, concerns were raised that if the Ellison family acquired WBD, it could lead to “excessive media concentration.” Because of that, the E.U. commission would consider intervening if there was a merger between Paramount and WBD. Though it’s commonly thought that Paramount will have an easier time buying WBD under the Trump administration, concerns from international parties have been cited as a major potential roadblock for the company.
The letter then states its purpose is to inquire whether the media’s Netflix-leaning reports are “accurate” but then goes on to say these reports “echo similar indications” Paramount has been hearing throughout the bidding process.
Warner Bros. Discovery has since responded to Wednesday’s letter, stating that it was shared with WBD’s board of directors. “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 company said in its response, which was obtained by TheWrap.
