Streaming Wars 2.0: Paramount Sues to Block Warner Bros. Discovery’s $82.7B Netflix Marriage
Streaming Wars 2.0: Paramount Sues to Block Warner Bros. Discovery’s $82.7B Netflix Marriage
The battle for Hollywood’s crown jewels has moved from the boardroom to the courtroom. In a stunning escalation of the most expensive takeover fight in entertainment history, Paramount Skydance (PSKY) officially filed a lawsuit against Warner Bros. Discovery (WBD) in the Delaware Chancery Court yesterday.
The goal? To halt the massive $82.7 billion deal that would see Netflix acquire the storied Warner Bros. film studios and HBO, effectively merging the world’s largest streamer with the creators of Harry Potter and the DC Universe.
The "Show Us the Math" Lawsuit
Led by CEO David Ellison, Paramount is accusing the Warner Bros. board of "deception" and failing in its duty to shareholders. Paramount’s core argument is simple: they offered $30 per share in cold, hard cash for the entire company. Netflix, by contrast, offered $27.75 per share in a complex mix of cash and stock that only covers the "Streaming & Studios" division.
“WBD has provided increasingly novel reasons for avoiding a transaction with Paramount,” Ellison wrote in a scathing letter to shareholders. “What it has never said, because it cannot, is that the Netflix transaction is financially superior to our actual offer.”
The lawsuit demands that WBD disclose the secret financial analysis used to justify choosing Netflix’s lower bid. Paramount’s legal team argues that the board is hiding the true value of the "Global Networks" (the cable TV leftovers like CNN and Discovery) to make the Netflix deal look better than it actually is.
The Hostile Takeover: Proxy Wars and Director Slates
Paramount isn't just suing; it’s attempting a coup. Alongside the legal filing, Paramount announced it will nominate a rival slate of directors at WBD’s 2026 annual meeting. These "rebel" directors would be tasked with tearing up the Netflix agreement and accepting Paramount’s $108.4 billion total valuation.
Paramount also plans to introduce a bylaw amendment that would require a shareholder vote for any "spin-off" of WBD’s cable assets—a move designed to gum up the gears of the Netflix transaction.
WBD’s Defense: "Noise and Distraction"
Warner Bros. Discovery isn't backing down. In a statement released this morning, the WBD board dismissed the lawsuit as a "meritless distraction" intended to mask the "obvious deficiencies" in Paramount’s hostile bid.
WBD argues that the Netflix partnership offers more long-term "strategic value" and avoids the massive regulatory headaches of a Paramount-Warner merger, which would consolidate two of the largest television operators in the U.S. and likely trigger an antitrust nightmare in Washington.
What’s at Stake?
If the Netflix deal survives this legal assault, the streaming landscape will be permanently reshaped. A merged Netflix-Warner entity could control over 35% of the U.S. streaming market, leaving Disney+ and Amazon Prime Video in a distant second and third place.
However, if Paramount’s lawsuit succeeds in forcing more transparency, it could embolden institutional investors to revolt against the Netflix deal before the 21st January tender deadline.
