Paramount sues Warner Bros Discovery over Netflix deal disclosures

Paramount has filed a lawsuit against Warner Bros Discovery (WBD) in the Delaware Chancery Court, seeking greater disclosure around WBD’s proposed $82.7 billion deal with Netflix. The move marks an escalation in Paramount’s effort to challenge the Netflix-backed transaction and push its own all-cash offer.

The David Ellison-led company said it plans to nominate directors to the WBD board and prepare for a proxy contest, signalling a more confrontational phase in the takeover battle. Paramount is offering $30 per share in cash, compared with Netflix’s $27.75-per-share cash-and-stock proposal.

In a letter to shareholders, Paramount said it would also propose changes to WBD’s bylaws to require shareholder approval for any separation of the company’s cable television business, a key element of the Netflix transaction. 

“WBD has provided increasingly novel reasons for avoiding a transaction with Paramount, but what it has never said, because it cannot, is that the Netflix transaction is financially superior to our actual offer,” Paramount wrote in a letter to Warner Bros Discovery shareholders.

“Unless the WBD board of directors decides to exercise its right to engage with us under the Netflix merger agreement, this will likely come down to your vote at a shareholder meeting,” it added.

Paramount has argued that the planned cable spin-off proposed under the Netflix deal holds little value and has reiterated its revised $108.4 billion bid, which includes $40 billion in equity personally guaranteed by Oracle co-founder Larry Ellison and $54 billion in debt.

In a separate statement, the company said it would nominate a slate of directors at WBD’s 2026 annual meeting and, if required, seek votes against approval of the Netflix transaction.

“Paramount will propose an amendment to WBD's bylaws to require WBD shareholder approval for any separation of Global Networks... to ensure that you get the final decision on which offer is better for you,” the release said.

Paramount maintains that its all-cash bid offers greater certainty and fewer regulatory risks than the Netflix deal, which involves equity consideration and a planned cable asset spin-off. It has also pointed to the performance of Comcast’s cable spin-off, Versant, as a cautionary example.

Shares of Warner Bros Discovery fell 1.5 percent in early trading, while Netflix shares rose 0.8 percent and Paramount gained 0.3 percent. Warner Bros Discovery and Netflix did not immediately respond to requests for comment.

Warner Bros Discovery owns assets including HBO, CNN and Warner Bros Studios, with a content library spanning franchises such as Harry Potter and DC Comics. Paramount’s tender offer is set to expire on January 21, though it may be extended.