Paramount sues Warner Bros. over Netflix merger

Paramount has filed a lawsuit against Warner Bros. Discovery in Delaware, demanding more financial disclosure as Netflix moves toward an US$82.7 billion acquisition of Warner Bros. assets.

Paramount CEO David Ellison said the company seeks information on how Warner Bros. valued the Netflix deal, how purchase price reductions for debt are calculated, and the basis for the “risk adjustment” of Paramount’s competing US$30 per share cash offer.

Warner Bros. Discovery’s board previously rejected Paramount’s latest bid, citing concerns about deal risks.

The proposed acquisition has drawn criticism from industry figures and lawmakers, who warn of possible impacts on jobs, diversity in media, and consumer costs.

🔗 Source: TechCrunch

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Implications, context, and why it matters.

The valuation dispute centers on Warner’s unusual spin-then-sell structure

Paramount sued WBD over a “risk adjustment” that applies an internal discount for financing and antitrust clearance. That cut the value of Paramount’s $30 per share bid below Netflix’s $27.75 offer and ties to WBD’s plan to spin off Discovery Global before a sale 1.
The two step plan creates accounting headaches. Netflix’s $82.7 billion enterprise value (a company’s total value including debt) excludes Discovery Global, while Paramount’s $108.4 billion hostile bid covers the whole company 1.
WBD can tilt the math by assigning higher risk to Paramount’s financing and antitrust clearance, which makes Netflix look better, according to Paramount 1.
The combined subscription video on demand (SVOD) share would barely exceed 30%, which is the level that triggers the Philadelphia National Bank (PNB) presumption under the Clayton Act, and a broader market that includes YouTube could push shares below that number 2.

Regulators may push asset sales as other buyers surface

The Department of Justice (DOJ) or Federal Trade Commission (FTC) could require structural remedies. That means divestitures of businesses or assets rather than behavioral conditions like promises about future conduct, and Netflix may need to sell specific WBD properties to win approval, which aligns with Assistant Attorney General Gail Slater 3.
Recent DOJ matters use this approach, and staff pushed divestiture first reviews in both cases 3. Keysight and Spirent work in test and network measurement. Safran and RTX operate in aerospace and defense.
Starz, a premium TV network and streaming service, bid $25 billion for WBD’s Global Linear Networks, which signals buyer interest if WBD sells or separates non studio assets 1.