The battle for Warner Bros. Discovery has taken a contentious turn, with Paramount Skydance announcing plans for a proxy fight and a lawsuit in Delaware. This aggressive maneuver aims to disrupt Warner Bros. Discovery’s proposed deal with Netflix, which the WBD board has already endorsed, and to push Paramount Skydance’s own all-cash offer. Paramount’s strategy includes nominating its own slate of directors for the 2026 annual meeting, intending to reshape the board that twice rejected its acquisition bid. Should Warner Bros. Discovery call an early or special meeting to approve the Netflix agreement, Paramount Skydance has pledged to urge shareholders to vote against it, effectively turning the decision into a referendum on the preferred transaction.
David Ellison, CEO of Paramount, articulated his company’s position in a letter to Warner Bros. Discovery shareholders, asserting that WBD has offered “increasingly novel reasons” to avoid engaging with Paramount. Ellison contends that Warner Bros. Discovery has not, and cannot, argue that the Netflix transaction is financially superior to Paramount’s actual offer. This statement underscores Paramount’s belief in the value of its own proposal, which stands at $30 in cash for every Warner Bros. Discovery share. This offer seeks to acquire the entire company, including assets like CNN and TNT, at an approximate valuation of $108 billion, a figure that accounts for assuming or addressing about $87 billion of WBD’s existing debt.
In parallel with its proxy intentions, Paramount has initiated legal proceedings in Delaware Chancery Court. The lawsuit seeks to compel Warner Bros. Discovery to disclose more detailed information regarding its valuation of the Netflix transaction and the planned spin-off of WBD’s global cable networks into a separate public entity. Paramount argues that without clarity on these specifics, particularly concerning the treatment of debt and the board’s “risk adjustment” of Paramount’s $30-per-share all-cash proposal, investors lack the necessary information to make an informed choice between the two competing paths. The complaint highlights what Paramount alleges is a failure by Warner Bros. Discovery to provide the “customary” financial disclosure typically expected when a board recommends a transaction or responds to a competing tender offer.
The Netflix proposal, by contrast, involves the acquisition of WBD’s film and television studios, including HBO and HBO Max, in a cash-and-stock deal. This transaction is valued at $27.75 per WBD share, translating to approximately $72 billion in equity value and an $82.7 billion enterprise value. A key distinction of the Netflix deal is that it would leave the legacy cable networks as a stand-alone public company. Warner Bros. Discovery’s board has publicly endorsed this transaction, presenting it as a cleaner, lower-risk route to reposition the company for the evolving streaming landscape.
Should a proxy contest unfold, Paramount would gain a direct avenue to appeal to Warner Bros. Discovery shareholders, potentially asking them to replace some or all of the current directors with nominees more amenable to considering its offer. Paramount has indicated that such newly elected directors would, in accordance with their fiduciary duties, utilize WBD’s rights under the Netflix agreement to revisit Paramount’s bid and potentially guide the company toward a transaction with Paramount. This maneuver could significantly shift leverage from the boardroom to the shareholder base, particularly if investors perceive the choice as a balance between a headline price and execution risk.
Ellison’s legal challenge further contends that Delaware law mandates boards provide shareholders with sufficient information for fully informed investment decisions when they are asked to tender shares or vote on a deal. Paramount is requesting the court to order Warner Bros. Discovery to provide these missing details before Netflix’s offer period concludes, which would offer investors a clearer basis for comparing the rival transactions. As Warner Bros. Discovery continues to stand by its endorsement of the Netflix deal and reject Paramount’s overtures, the stage appears set for a protracted dispute, potentially spanning both the courtroom and future shareholder meetings. Paramount, along with the Ellison family, seems prepared for this extended engagement, banking on increased disclosure and shareholder scrutiny to ultimately favor its all-cash offer.
