In a dramatic escalation of the most significant media takeover battle in a decade, Paramount Skydance (led by David Ellison) filed a lawsuit against Warner Bros. Discovery (WBD) in the Delaware Chancery Court on January 12, 2026.
The lawsuit seeks to force WBD to disclose the “hidden math” behind its decision to accept a $82.7 billion merger with Netflix while repeatedly rejecting Paramount’s higher $108.4 billion all-cash offer.
The Conflict: “Show Us the Math”
Paramount argues that the WBD board, led by CEO David Zaslav, breached its fiduciary duty by choosing a “financially inferior” offer from Netflix.
The Competing Offers
| Feature | Netflix Offer (Accepted) | Paramount Offer (Hostile) |
| Total Value | ~$82.7 Billion | $108.4 Billion |
| Per Share | $27.75 (Cash + Stock) | $30.00 (All-Cash) |
| Structure | Buys Studios/HBO; Spins off Cable. | Buys the Entire Company. |
| Financing | Standard Corporate | Backed by Larry Ellison ($40B guarantee). |
The Core Dispute: WBD plans to spin off its declining cable networks (CNN, TNT, Discovery) into a new entity called Discovery Global. Paramount’s lawsuit alleges WBD is misleading shareholders by overvaluing these “stub” shares, which Paramount analysts claim have zero equity value.
Paramount’s Three-Pronged Attack
David Ellison is not just relying on the courtroom; he has launched a full-scale hostile takeover strategy:
- The Disclosure Lawsuit: Demanding WBD reveal how it “risk-adjusted” Paramount’s bid and how it calculated the valuation of the Netflix deal.
- The Proxy Fight: Paramount has announced it will nominate a rival slate of directors for the 2026 WBD annual meeting. If elected, these directors would exercise WBD’s right to terminate the Netflix agreement.
- Bylaw Amendments: Paramount is proposing a change to WBD’s bylaws that would require shareholder approval for any separation of the cable television business—a move designed to block the Netflix deal’s structure.
Why WBD Preferred Netflix
Despite the lower price tag, the WBD board has cited several “novel reasons” for sticking with Netflix:
- Debt Concerns: A merger with Paramount would create a combined entity with nearly $87 billion in debt, potentially triggering a credit rating downgrade to “speculative-grade.”
- Breakup Fees: Walking away from Netflix would cost WBD roughly $4.7 billion, including a $2.8 billion termination fee.
- Antitrust Risk: A Paramount-WBD merger would consolidate two of the largest TV operators in the US, likely facing heavy scrutiny from the Trump administration’s DOJ.
What Happens Next?
The clock is ticking for both Hollywood giants. Paramount’s tender offer is currently set to expire on January 21, 2026, though it may be extended depending on the court’s ruling.
“WBD has provided increasingly novel reasons for avoiding a transaction… but what it has never said, because it cannot, is that the Netflix transaction is financially superior to our actual offer.” — David Ellison, CEO of Paramount Skydance
If the Delaware court grants an expedited hearing, we could see a ruling before the end of January that determines whether WBD shareholders get a direct vote on the competing bids.
