As two major streaming platforms, Warner Bros. and Netflix, prepare for a merger, concerns continue to be voiced about the implications of the deal. This represents further consolidation in the media business.
On Monday, Paramount CEO David Ellison announced that the company has filed a lawsuit against Warner Bros. Discovery in Delaware. The lawsuit demands greater financial disclosure regarding Netflix’s $82.7 billion acquisition. In a letter to shareholders, Ellison disclosed that the lawsuit requests Warner Bros. Discovery provide essential information it has 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 Netflix’s deal. Ellison wrote that Warner Bros. Discovery has provided increasingly novel reasons for avoiding a transaction with Paramount, but cannot claim the Netflix transaction is financially superior to Paramount’s actual offer.
He added that shareholders have asked for the customary financial disclosure a board is supposed to provide when making an investment recommendation. Ellison stated that Warner Bros. Discovery has failed to include any disclosure about how it valued the overall Netflix transaction, how the purchase price reduction for debt works, or the basis for its risk adjustment of Paramount’s cash offer. He believes shareholders need this information to make an informed decision.
Last week, the Warner Bros. Discovery board rejected Paramount’s latest bid once again, saying there is too much risk of the deal falling through.
Former President Trump also expressed dissatisfaction with the merger. Over the weekend, he shared an opinion piece titled “Stop the Netflix Cultural Takeover.” The piece, published last month, argues that if Netflix acquires Warner Bros.’ assets, it would establish itself as the most dominant cultural gatekeeper the United States and much of the world has ever seen.
After meeting with Netflix co-CEO Ted Sarandos in December, Trump indicated that the merger could be a problem due to Netflix’s already significant market share, which would expand greatly with the acquisition.
The industry has generally reacted negatively to the acquisition, raising concerns about job implications, the future of theatrical releases, and the representation of diverse voices in film and television. Netflix co-CEOs Greg Peters and Sarandos attempted to address these fears in a letter last month.
However, the Writers Guild of America continues to oppose the acquisition, citing antitrust law violations. Lawmakers, including Senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal, warn that the merger could lead to increased consumer costs. They believe it would exacerbate financial pressures on middle-class families, especially following Netflix’s recent price hike.