Paramount Skydance has escalated its months-long attempt to take over Warner Bros. Discovery (WBD) by filing a lawsuit challenging WBD’s decision to pursue a merger with Netflix. The legal action, filed in Delaware’s Chancery Court, represents a dramatic step in a high-stakes corporate battle involving some of Hollywood’s biggest players. Paramount maintains that WBD’s handling of the Netflix transaction undervalues shareholders and lacks transparency, while WBD has rejected this claim, calling Paramount’s offer and lawsuit “meritless” and its bid still inadequate.
Paramount’s lawsuit centers on the contention that Warner Bros. Discovery has failed to provide crucial financial disclosures that shareholders need to fairly evaluate competing acquisition proposals. Paramount argues that, under Delaware law, WBD must disclose how it valued both the Netflix transaction and Paramount’s rival offer, especially the value of spun-off assets like its Global Networks division which Paramount claims has essentially no equity value.
In its filings, Paramount asserts that WBD’s board has given “increasingly novel reasons” for rejecting its proposals without ever explaining why the Netflix deal is truly superior. Paramount claims that the Netflix structure which consists of cash, Netflix stock, and separate equity in a newly created cable asset spinoff is actually inferior when properly valued compared to its own all-cash offer of $30 a share.
The lawsuit also claims that WBD’s board applied a “risk adjustment” to Paramount’s offer without disclosing the methodology behind it, a critical omission, Paramount says, because shareholders need full information before deciding how to tender their shares.
Paramount’s $30 Per Share Cash Bid vs. Netflix’s Deal
The central commercial dispute involves two competing proposals:
- Paramount Skydance: An all-cash offer of $30 per share valuing WBD at around $108.4 billion, backed by a combination of debt and $40 billion in personal equity guarantees from Oracle co-founder Larry Ellison.
- Netflix: A deal valued at approximately $82.7 billion consisting of cash, Netflix shares, and equity in a newly spun-off cable and broadcast network business. This deal was approved by WBD’s board in early December 2025.
Paramount contends that Netflix’s structure improperly undervalues parts of WBD’s business especially Global Networks and that the use of stock and spin-off equity makes the offer less certain in actual value than a straightforward cash bid. Paramount’s lawsuit argues this failure to properly quantify and disclose these valuations has deprived shareholders of the information they need to make an “informed decision.”
Why Warner Bros. Discovery Has Rejected Paramount’s Offer
Warner Bros. Discovery’s board has twice rejected Paramount’s hostile takeover bid, arguing that it does not provide better value or a clearer path to closing compared with the Netflix deal. In a unanimous board statement, WBD described Paramount’s proposal as riskier, citing a heavy reliance on debt financing, execution uncertainty, and potential operational consequences if the deal fails to close.
The board has emphasized that Netflix’s offer, backed by a company with a much stronger credit profile and free cash flow, provides greater certainty and stability. According to WBD’s public disclosures, Paramount’s leveraged buyout proposal would put burdensome financial risk on the company and potentially impede future strategic initiatives, including planned asset spinoffs and business growth.
WBD has also highlighted termination and breakup fees including a roughly $2.8 billion charge if it walks away from Netflix as reasons Paramount’s bid is impractical, even if the nominal offer price is higher.
The Lawsuit’s Broader Strategy
Paramount isn’t merely filing a complaint; it is combining legal action with broader corporate maneuvers:
- Proxy Fight: Paramount plans to nominate its own slate of directors for WBD’s board at the 2026 annual shareholder meeting, hoping to change the board’s stance on the deal and push through its offer.
- Bylaws Amendments: The suit seeks a court order to amend WBD’s bylaws so that key decisions including spin-offs like Global Networks would require shareholder approval rather than board control alone.
This combined legal and governance strategy is aimed at forcing a shareholder vote that could potentially derail the Netflix deal, even if the board resists. Paramount argues that unless shareholders have full valuation information, they cannot exercise their rights fully, which is central to its legal standing.
Warner Bros. Discovery Calls the Lawsuit “Meritless”
Warner Bros. Discovery has strongly rejected Paramount’s legal claims and its take-over tactics. In public statements, WBD described the lawsuit as a distraction and a tactic to deflect from the core issue: Paramount has not improved its offer price since initial discussions began. WBD executives argue that true value lies in certainty and execution, not just a higher headline number.
WBD has said Paramount’s legal action is an attempt to derail a deal that it believes will deliver more consistent long-term value to shareholders. The company maintains that its board acted responsibly and in good faith in evaluating offers both Paramount’s and Netflix’s before recommending the Netflix merger.
The outcomes of this dramatic legal escalation remain uncertain. The lawsuit is likely to play out over weeks or months, with potential implications for shareholder rights, merger litigation, and corporate governance norms in large public companies. Paramount could seek expedited handling given the approaching January 21 deadline for its tender offer, but judges typically weigh carefully such complex fiduciary disputes.
Shareholders are now in the crosshairs: they must decide whether to accept the Netflix deal, which WBD’s board argues offers greater certainty, or instead back Paramount’s all-cash bid, a choice that will be influenced by the disclosures and valuation arguments at the heart of this lawsuit.
This contest isn’t just financial; it intersects with regulatory pressure on media consolidation. Both deals would attract intense antitrust and competition scrutiny in the U.S., Europe, and other jurisdictions potentially complicating closing timelines and deal terms. Experts note that the legal fight itself could influence regulators’ perceptions of corporate governance and transparency in high-profile mergers.
Paramount’s lawsuit against Warner Bros. Discovery marks a new phase in one of the most public and aggressive bid battles in recent entertainment industry history. At stake are not just billions of dollars in deals, but shareholder rights, corporate strategy, and the future shape of global media giants. As the legal and proxy fight continues, all eyes will be on how Delaware courts interpret fiduciary duties and disclosure requirements and on how shareholders cast their votes in what could be a defining moment in modern merger battles.
