Faber Report: Paramount files lawsuit against Warner Bros. Discovery

Summary

Paramount has filed a lawsuit in Delaware against Warner Bros. Discovery and plans to nominate directors and seek a bylaw vote on the company's split, escalating its effort to challenge WBD's board. David Faber says the move is designed to apply pressure but likely won't matter much because WBD's shareholder vote on the Netflix deal will probably occur before the annual meeting. Faber also notes Paramount has not raised its bid and faces financing constraints, while WBD's board has so far favored Netflix's lower-valued offer. The segment frames WBD as a contested M&A situation with the Netflix deal still favored but not finalized.

• Paramount filed a lawsuit in Delaware against Warner Bros. Discovery and is nominating directors.
• Paramount is seeking a bylaw requiring a shareholder vote on WBD's split.
• Faber says the pressure tactics may be ineffective because the Netflix shareholder vote likely comes before the annual meeting.
• Paramount has not raised its bid and would need additional equity from Larry Ellison; banks are unlikely to increase debt.
• WBD's board has not viewed Paramount's $30 all-cash offer as superior.
• Netflix's deal is worth about $27.40 plus the value of Global Networks, according to Faber.
• The outcome may depend on a shareholder vote many months away.
• The segment highlights a contested M&A battle involving WBD, Paramount, and Netflix.