Paramount responds to Warner Bros.' offer by initiating a proxy battle for board positions at the yearly shareholders meeting

Paramount Skydance Challenges Warner Bros. Discovery’s Netflix Deal

In a bold move to disrupt a major Hollywood acquisition, Paramount Skydance announced plans to initiate a proxy battle at Warner Bros. Discovery and file a lawsuit in Delaware. The company aims to obtain more information about Warner Bros. Discovery’s ongoing negotiations with Netflix, hoping to block that agreement and promote its own all-cash takeover bid.

Paramount Skydance intends to propose its own candidates for Warner Bros. Discovery’s board at the 2026 annual meeting. The company is also urging shareholders to vote against the Netflix deal if a special or early meeting is called for approval. This approach seeks to reshape a board that has already twice dismissed Paramount’s offers, and to persuade investors that its proposal offers greater value and less risk.

Paramount CEO David Ellison addressed Warner shareholders, stating, “WBD has come up with increasingly creative excuses to avoid a deal with Paramount, but it cannot claim that the Netflix transaction is financially superior to what we have put forward.”

Simultaneously, Paramount has taken legal action in Delaware Chancery Court, demanding that Warner Bros. Discovery provide more transparency about how it evaluated the Netflix offer and its plans to spin off global cable networks into a separate public company. Paramount argues that without detailed information—especially regarding debt handling and the board’s “risk adjustment” to its $30-per-share cash bid—investors cannot make an informed decision between the competing proposals.

Rival Strategies for Warner Bros. Discovery

Paramount Skydance, led by Ellison, has put forward a $30-per-share cash offer for all of Warner Bros. Discovery, including assets like CNN and TNT. This bid values the company at around $108 billion, factoring in approximately $87 billion in assumed or addressed debt. However, Warner Bros. Discovery’s board has dismissed this proposal as insufficient and too heavily leveraged, insisting it does not compare favorably to the Netflix arrangement.

Netflix, on the other hand, has agreed to purchase Warner Bros. Discovery’s film and television studios, including HBO and HBO Max, through a cash-and-stock deal valued at $27.75 per share. This transaction suggests an equity value of about $72 billion and an enterprise value of $82.7 billion, while leaving the legacy cable networks as a separate public entity. The board has endorsed the Netflix deal, presenting it as a simpler, less risky path to transform the company for the streaming age.

Implications of the Proxy Battle for Shareholders

If Paramount’s proxy contest proceeds, it would allow the company to ask shareholders to replace some or all current directors at the 2026 annual meeting with nominees more receptive to its offer. Paramount has stated that, if elected, these directors would use their fiduciary responsibilities to reconsider the Netflix agreement and potentially guide the company toward a deal with Paramount instead.

Should Warner Bros. Discovery organize a shareholder vote on the Netflix deal before the annual meeting, Paramount has committed to campaigning against the agreement, effectively making the vote a direct choice between the two competing bids. Experts in corporate governance note that this scenario could shift influence from the board to the shareholders, especially if investors see the decision as a balance between headline price and execution risk.

Legal Push for Greater Transparency

In both its Delaware lawsuit and Ellison’s communication to investors, Paramount asserts that Warner Bros. Discovery has not provided the standard financial disclosures typically expected when a board recommends a transaction or responds to a competing tender offer. The complaint highlights that WBD has not clarified how it valued the Netflix deal compared to the remaining equity in the spun-off networks, nor how adjustments for debt and other liabilities impact shareholder value.

Ellison maintains that Delaware law obligates boards to supply shareholders with sufficient information to make well-informed decisions when voting on or tendering shares in a deal. Paramount is asking the court to require Warner Bros. Discovery to release these details before the Netflix offer period ends, enabling investors to make a clearer comparison between the two proposals.

Looking Ahead

Warner Bros. Discovery continues to support the Netflix agreement and has repeatedly turned down Paramount’s advances, setting the stage for a potentially lengthy battle that could play out both in court and at the annual meeting. Paramount and the Ellison family remain committed to their pursuit, betting that increased transparency and growing shareholder scrutiny will eventually tip the scales in favor of their all-cash offer.