Inside Paramount Skydance’s Legal Challenge to WBD–Netflix Deal

Paramount Skydance Corporation has escalated its takeover battle with Warner Bros. Discovery (WBD) by filing a lawsuit in the Delaware Chancery Court, challenging WBD’s $82.7 billion deal with Netflix and claiming it significantly undervalues shareholders.

The legal action comes as Paramount presses ahead with its $30-per-share all-cash offer for WBD, which it says is financially superior in value, certainty, and timing compared with the Netflix transaction. In a letter to WBD shareholders on Monday, Paramount outlined its next steps and demanded greater transparency around the Netflix deal to allow investors to make an informed decision.

“WBD has provided increasingly novel reasons for avoiding a transaction with Paramount,” the company said, “but what it has never said—because it cannot—is that the Netflix transaction is financially superior to our actual offer.”

Paramount argues that the Netflix consideration is materially weaker, consisting of $23.25 in cash, Netflix shares worth about $4.11, and equity in a yet-to-be-listed Global Networks business—an entity Paramount claims has zero equity value after its analysis.

The company also alleged that WBD has failed to adequately disclose how debt transferred to Global Networks could reduce the final cash and stock payouts to shareholders. According to Paramount, WBD’s filings omit key details, including how the Global Networks equity was valued, how the Netflix deal was priced overall, how debt-related purchase price adjustments work, and how a “risk adjustment” was applied to Paramount’s competing offer.

Paramount said such disclosures are required under Delaware law when shareholders are asked to vote on major transactions.

As part of its strategy, Paramount said it will continue with its tender offer and may nominate a slate of directors ahead of WBD’s 2026 annual meeting. If elected, these directors would exercise WBD’s right under the Netflix agreement to engage with Paramount. The company also plans to propose a bylaw amendment requiring shareholder approval for any separation of Global Networks and said it would solicit proxies against the Netflix deal if WBD calls a special shareholder meeting.

Paramount further questioned WBD’s board process, expressing surprise that the company did not respond to its December 4 offer or attempt negotiations before accepting the Netflix deal.

The dispute follows WBD’s December 2025 agreement to sell its key assets—including Warner Bros. studios and HBO/Max—to Netflix for roughly $83 billion, while spinning off its cable networks separately. Paramount Skydance, led by David Ellison and backed by Larry Ellison, has since launched a rival $108 billion bid to acquire WBD outright, which WBD’s board has repeatedly rejected, citing execution risk and leverage concerns.

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