In a dramatic escalation of the battle for control of Warner Bros Discovery (WBD), media rival Paramount Skydance has launched a multi-pronged offensive to derail WBD's planned $82.7bn (£61.4bn) deal with streaming giant Netflix.
Boardroom Battle and Legal Action
Paramount announced on Monday that it intends to nominate its own slate of directors for election to the WBD board at the company's upcoming annual meeting, typically held in June. The explicit goal of these nominees would be to vote against approving the pre-arranged merger with Netflix. This move represents a direct challenge to the current WBD leadership's strategy.
Simultaneously, Paramount has filed a lawsuit seeking the disclosure of key financial details related to the Netflix agreement. The company argues that WBD shareholders need "basic information" – including how WBD has valued its global networks business encompassing CNN, Cartoon Network, and the Discovery Channel – to make an informed decision. Notably, this networks division is not part of the proposed sale to Netflix.
A Superior Offer on the Table?
This aggressive manoeuvring is part of Paramount's broader effort to secure its own $108.4bn hostile takeover of WBD, a bid personally backed by a substantial $40bn guarantee from Oracle co-founder Larry Ellison. Paramount's Chief Executive, David Ellison, stated in a letter to WBD investors that the company is committed to seeing its tender offer through.
Paramount contends that its all-cash offer of $30 per share, which includes acquiring the global networks, is fundamentally superior for shareholders. In contrast, it criticises the Netflix deal, which offers $23.25 per share in cash plus stock in Netflix and equity in the spun-off networks business – an element Paramount values at zero.
High Stakes and Hefty Penalties
The corporate showdown carries enormous financial consequences. Under its existing agreement with Netflix, WBD would face a $2.8bn breakup fee if it walked away. Paramount has sought to match the financial stakes by increasing its own proposed termination fee to $5.8bn.
However, WBD's board has repeatedly urged shareholders to reject Paramount's "inadequate" bid, labelling it the "largest leveraged buyout (LBO) in history" and warning of associated risks. The board estimates that accepting Paramount's offer would incur approximately $4.7bn in costs, including the Netflix breakup fee, additional debt interest, and other penalties.
David Ellison emphasised that Paramount does not take these steps lightly, but its goal remains to engage constructively with WBD's board. "Paramount is committed, my family is committed, and hopefully this helps answer the question of what comes next," he stated. The outcome now appears likely to hinge on a decisive shareholder vote, placing the future of iconic assets like Warner Bros studios, HBO, and DC Comics franchises in the balance.
