Bid war: Takeover battle intensifies as Paramount challenges Warner Bros-Netflix $82.7 billion pact

Paramount Skydance has dramatically increased its efforts to gain control of Warner Bros. Discovery by launching a lawsuit on January 12. This legal challenge seeks more transparency regarding Warner Bros. Discovery's competing $82.7 billion agreement with Netflix, indicating a potential proxy battle on the horizon. Led by David Ellison, Paramount plans to nominate new directors to the board of Warner Bros. Discovery during the 2026 annual meeting. This move is part of its strategy to convince shareholders that its aggressive $30-per-share all-cash offer is more appealing than Netflix's $27.75-per-share cash-and-stock deal. The ongoing legal proceedings highlight the fierce competition between Paramount and Netflix for Warner Bros. Discovery’s valuable film and television assets, including its extensive content library that features popular franchises like Harry Potter and the DC Comics universe. In a recent communication to shareholders, Paramount announced its intention to propose changes to Warner Bros. Discovery’s bylaws. These amendments would necessitate shareholder consent for any potential separation of the company’s cable television operations, a crucial aspect of the Netflix deal. This lawsuit follows Warner Bros. Discovery's board advising shareholders to dismiss Paramount’s revised bid. Ellison expressed concerns in his letter, stating that Warner Bros. Discovery has not provided sufficient information on how it assessed the value of its Global Networks stub equity or the overall Netflix transaction, including details on the debt reduction and the rationale behind the risk adjustment of Paramount's offer. Additionally, Ellison confirmed Paramount's plans to nominate directors, adding a proxy contest to what has emerged as one of the most significant takeover battles in Hollywood history. Last month, Warner Bros. Discovery agreed to sell its streaming and studio operations to Netflix for $72 billion, despite Paramount's pursuit of the full portfolio, which includes its cable TV assets. As part of the Netflix agreement, Warner Bros. Discovery intends to create a separate publicly traded company from Discovery Global, a move that Paramount has criticized as “virtually worthless.” After receiving another rejection from Warner Bros., Paramount reiterated its enhanced $108.4 billion offer, which includes $40 billion in equity guaranteed by Oracle co-founder Larry Ellison and $54 billion in debt financing. The deadline for Paramount’s tender offer is set for January 21, although they have the option to extend it. Market reactions remained relatively stable, with Warner Bros. Discovery shares declining by 1.5 percent, while Netflix saw a rise of 0.8 percent and Paramount increased by 0.3 percent.