A major Hollywood business battle just entered a new chapter in court. Paramount Skydance is taking legal action against Warner Bros. Discovery to get more details about its multi-billion dollar deal with Netflix. The lawsuit, filed on Monday, January 12, 2026, asks the court to force Warner Bros. to share financial information about its agreement with Netflix.
This fight started when Warner Bros. agreed to sell its main studio and streaming businesses to Netflix for $82.7 billion. This deal includes famous parts of Warner Bros. like its movie and TV studios, the HBO brand, and its games division. However, Paramount made its own offer to buy the entire Warner Bros. Discovery company for a higher price of $108 billion, or $30 per share in cash. The Warner Bros. board of directors has consistently told its shareholders to reject Paramount’s bid in favor of the Netflix deal.
The new lawsuit shows that Paramount is not backing down. They believe Warner Bros. shareholders have a right to see the financial math behind the board’s decision.
The Core of Paramount’s Legal Argument
Paramount is asking a simple question in court: show us the math. The company’s main argument is that Warner Bros. Discovery has not explained how it determined the Netflix offer is better for its shareholders. In legal papers filed in Delaware, Paramount says Warner Bros. failed to share important details.
Paramount’s CEO, David Ellison, explained the company’s position in a letter to Warner Bros. shareholders. He pointed out that the Netflix deal involves cash, stock, and shares in a new company that would hold Warner Bros.’ cable TV channels. Paramount claims Warner Bros. has not clearly shown how it values these different parts of the Netflix offer.
“WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its ‘risk adjustment’ of our $30 per share all-cash offer,” Ellison wrote.
Paramount wants the court to order Warner Bros. to provide this information. They argue that shareholders need it to make a fully informed choice between Paramount’s cash offer and the more complicated deal with Netflix.
Warner Bros. Discovery’s Stance on the Two Deals
Warner Bros. Discovery has been very clear about its choice. The company’s board of directors unanimously supports the Netflix merger and has urged shareholders to reject Paramount’s hostile takeover attempt. In a detailed letter to shareholders dated January 7, 2026, the board explained its reasons for choosing Netflix.
The board argues that while Paramount’s offer seems higher, it actually comes with greater financial risk and cost. They say accepting Paramount’s bid would force Warner Bros. to pay Netflix a $2.8 billion termination fee for breaking their agreement. The board also states that Warner Bros. would face other costs, like a $1.5 billion fee for failing to complete a planned debt exchange. All together, Warner Bros. claims walking away from Netflix to accept Paramount’s offer would cost about $4.7 billion.
Another major concern for the Warner Bros. board is the structure of Paramount’s bid. They call it a highly leveraged buyout, meaning it relies on a huge amount of debt. The board is worried that such a large and complex deal might not actually close, leaving Warner Bros. in a worse position. Samuel A. Di Piazza, Jr., Chair of the Warner Bros. Discovery Board, summarized the board’s view:
“Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount’s offer would impose on our shareholders”.
The company has dismissed Paramount’s lawsuit as a “meritless” distraction from what it sees as the weaknesses in Paramount’s own proposal.
Paramount’s Two-Pronged Strategy: Lawsuit and Proxy Fight
Filing the lawsuit is just one part of Paramount’s aggressive strategy. The company also announced plans to start a proxy fight for control of the Warner Bros. Discovery board. This means Paramount will nominate its own slate of directors at Warner Bros.’ next annual shareholder meeting, which is usually held in June.
The goal of this proxy fight is to elect directors who would then have the power to engage with Paramount and potentially accept its takeover offer. Paramount CEO David Ellison told shareholders that unless the current board decides to talk, “this will likely come down to your vote at a shareholder meeting”.
In addition, Paramount said it will propose a change to Warner Bros.’ company bylaws. This change would require shareholder approval for any separation of the Global Networks business, which is a key part of the Netflix deal. Paramount also warned that if Warner Bros. calls a special meeting to vote on the Netflix agreement before the annual meeting, it will actively campaign for shareholders to vote against it.
This dual strategy shows Paramount is trying to pressure the Warner Bros. board from multiple angles: legally through the courts, and directly with shareholders through the proxy contest.
Financial Figures and Deal Structures Compared
To understand the fight, it helps to look at what each company is actually offering. The numbers are huge, but the differences are important for shareholders.
The Netflix deal is valued at $82.7 billion. It is structured as a purchase of Warner Bros.’ premium assets. Netflix would pay $27.75 per share to acquire the Warner Bros. film and TV studios, HBO, and the games division. This transaction is planned to happen in the third quarter of 2026, after Warner Bros. spins off its cable TV channels (like CNN, Discovery Channel, and TBS) into a separate company called Discovery Global. Warner Bros. shareholders would get cash and Netflix stock, plus shares in the new Discovery Global company.
The Paramount offer is an all-cash bid of $30 per share for the entire Warner Bros. Discovery company, including the cable networks. This totals approximately $108 billion. The bid is backed by a $40 billion personal guarantee from Larry Ellison, the billionaire co-founder of Oracle and father of Paramount CEO David Ellison. The rest would be financed through debt.
A key point of contention is the value of the Discovery Global spin-off in the Netflix plan. Paramount argues that the math behind the Netflix offer suggests the shares in this new cable TV company are valued at close to zero. They say this makes their straightforward $30 cash offer clearly better. Warner Bros., however, insists the Netflix deal provides more certain value and avoids the massive debt load of Paramount’s proposal.
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Market and Regulatory Reactions
The battle between these entertainment giants is being watched closely by investors and regulators. When news of the lawsuit broke on Monday, Warner Bros. Discovery shares fell by about 1.7%, while Paramount’s stock rose slightly. This market movement suggests investors are considering the new pressure Paramount is applying.
Both proposed deals face significant regulatory scrutiny. A merger between Netflix and Warner Bros. would combine two streaming and content powerhouses, which could raise antitrust questions. The new Trump administration has already indicated it plans to scrutinize the transaction. Paramount argues its deal would face fewer regulatory hurdles because it is a smaller company with a different set of assets.
Netflix is already preparing its finances for the potential purchase. In December, the company secured $25 billion in new bank facilities to help fund the cash portion of the deal. This shows Netflix is moving forward with its plans, despite the competing offer from Paramount.
The outcome of this corporate drama will reshape the entertainment landscape. If Netflix succeeds, it will become the owner of legendary franchises like Harry Potter, Superman, Batman, and hit HBO series like Game of Thrones and Succession. If Paramount wins, it would merge two of Hollywood’s oldest studios, creating a new giant with a vast library of films and TV shows.
Paramount’s tender offer for Warner Bros. Discovery shares is currently set to expire on January 21, 2026, though the company can extend this deadline. The legal and proxy fights are likely to continue for months as both sides try to win over shareholders.
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