As two major streaming platforms — Warner Bros. and Netflix — are gearing up for a merger, concerns continue to be raised about the implications of the deal, which represents greater consolidation in the media industry.
On Monday, Paramount CEO David Ellison announced that the company has filed a lawsuit against Warner Bros. Discovery ( WBD ) in Delaware, demanding more financial disclosures about its $82.7 billion acquisition of Netflix.
In letter to shareholdersEllison revealed that the lawsuit has been filed in Delaware District Court, asking WBD to provide key information it allegedly failed to share. Ellison argues that shareholders need accurate information to assess whether to accept Paramount’s competing offer of $30 per share in cash, which he claims is superior to the Netflix deal.
Ellison wrote: “WBD has been providing increasingly novel reasons for avoiding a deal with Paramount, but what it has never said, because it can’t, is that the Netflix deal is financially superior to our actual offer.”
“Together with WBD’s shareholders, we requested the usual financial disclosure that a board of directors is supposed to provide to shareholders when making an investment recommendation… WBD failed to include any disclosure about how it valued the overall Netflix transaction, how the purchase price reduction for the debt in the Netflix transaction works, or even what the basis for our ‘share-by-share’ equity risk adjustment is.” we need this information to make an informed investment decision about our offering,” Ellison added.
Last week, WBD’s board once again rejected Paramount’s latest offer, saying there was too much risk the deal would fall apart.
President Trump also expressed his displeasure with the merger. Over the weekend, Trump shared Truly Social an opinion piece by John Pierce titled “Stop the Netflix Cultural Takeover,” published at One America News last month. Pierce believes that if Netflix acquires Warner Bros. via streaming and studios, it will establish itself as “the most dominant cultural watchdog the United States — and much of the world — has ever seen.”
After meeting with Netflix co-CEO Ted Sarandos in December, Trump is indicated that the merger “could be a problem,” because of Netflix’s already significant market share, which would be greatly expanded by the acquisition.
The industry has also generally reacted negatively to the acquisition, raising concerns about labor implications, the future of theatrical releases, and the representation of diverse voices in film and television.
Netflix co-CEOs Greg Peters and Sarandos sought to address those fears in a letter last month. However, the Writers Guild of America (WGA) continues to oppose the acquisition, citing antitrust violations. Lawmakers, including senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal, warn that the merger could lead to higher costs for consumers, exacerbating financial pressures on middle-class families, especially after Netflix’s recent price hike.
