Warner Bros. Discovery’s board rejected a $30-per-share all-cash offer from Paramount Skydance, backed by billionaire Larry Ellison’s personal guarantee, in favor of Netflix’s $82.7 billion cash-and-stock deal. Now, Paramount has sued in the Delaware Chancery Court, claiming shareholders lack key details to evaluate the choices.
How Netflix’s Deal Reshapes Warner Bros. Discovery
The Netflix agreement, announced December 5, 2025, hands the streamer Warner Bros. film studio, HBO, Max, and DC Entertainment. Warner Bros. Discovery’s cable networks—Discovery Channel, TLC, Animal Planet—would spin off into a separate public company. Netflix gains high-growth streaming and studio assets, while existing investors hold shares in a cable business hit by cord-cutting.
Paramount views the spinoff as a vulnerability. In a January 12, 2026, letter to shareholders, the company questioned how Warner Bros. Discovery valued this “stub equity” and allocated debt, warning the board could adjust terms post-deal, saddling shareholders with a debt-heavy remnant while Netflix takes prime assets.
A Cleaner, Higher Cash Offer
Paramount’s bid stands at $30 per share, all cash and fully financed—8 percent above Netflix’s $27.75 mix of $23.25 cash and $4.50 stock. That $2.25 premium equals about $6 billion more for shareholders. Paramount emphasizes simplicity: pure cash, no stock volatility, no spinoff risks.
Initially doubting financing, Warner Bros. Discovery prompted Paramount to amend its December 22 filing. Filings show Ellison provided an irrevocable personal guarantee for $40.4 billion in equity financing. Despite this, the board unanimously rejected it on January 8, deeming it inferior.
The Personal Guarantee That Didn’t Move the Board
Warner Bros. Discovery’s process draws sharp criticism. Paramount’s suit alleges that no contract drafts were exchanged, no financing queries were made after the December 4 approach, and minimal engagement despite improvements. From Paramount’s view, the swift dismissal signals a predetermined path to Netflix, bypassing rigorous comparison.
To sidestep the board, Paramount launched a tender offer in December 2025. Investors can submit shares directly at $30 until January 21, 2026, potentially granting control without approval. Separately, Paramount plans a proxy fight, nominating directors for the 2026 annual meeting to revisit the Netflix deal.
A Rejection Without Real Negotiation
The lawsuit hinges on disclosure under Delaware law. Paramount argues Warner Bros. Discovery omitted spinoff valuations, debt splits, Netflix’s per-share fluctuations, and risk adjustments to its bid. Without this, shareholders cannot compare offers fairly before voting.
Warner Bros. Discovery calls the suit meritless, defending Netflix for its streaming dominance, integration expertise, and regulatory edge. Executives highlight execution risks in Paramount’s plan, despite the higher price. Netflix, lacking studios, may face less antitrust heat than Paramount, a fellow media giant.
Why Netflix’s Structure Appeals to the Board
Both deals invite scrutiny. Netflix’s merger with Max would pair 280 million subscribers, raising concentration concerns, though it would add new studios. Paramount’s acquisition overlaps existing operations. For CEO David Zaslav, the stakes run high. Netflix’s valuation puts its holdings at nearly $667 million; Paramount’s valuation pushes past $1 billion. Either likely ends his run.
Viewers could see HBO content and DC films on Netflix, altering habits, or a Paramount merger bolstering its platform. Shareholders face choices on transparency, strategy versus cash, and risks from court rulings, tender offers, and proxy fights—deciding the fate of Hollywood’s storied assets.
Sources:
Paramount Skydance Corporation Letter to Shareholders, January 12, 2026
Warnier Bros. Discovery Board Statement, January 8, 2026
Netflix Acquisition Agreement Announcement, December 5, 2025
Delaware Chancery Court Paramount Skydance v. Warner Bros. Discovery Lawsuit Filing, January 12, 2026
Reuters, Bloomberg, CNBC, Variety Deal Coverage, December 2025–January 2026