Paramount Skydance launches legal action against Warner Bros Discovery

Paramount Skydance is suing Warner Bros Discovery (WBD) in a Delaware, US, court, in an effort to gain greater clarity on the terms of Netflix’s offer for the Warner Bros business.

Paramount also plans to nominate a slate of directors for election of the WBD’s board at the WBD annual meeting who it believes would vote against the deal with Netflix, according to a letter signed by Paramount CEO and chairman David Ellison to the WBD shareholders and published in full below. An ‘advance notice’ window for WBD’s 2026 annual meeting opens in three weeks.

Ellison’s letter stated that Paramount will also propose an amendment to WBD’s bylaws to require WBD shareholder approval for any separation of Global Networks.

Earlier this month, WBD’s board of directors once again rejected Paramount’s offer for the company and reiterated its preference for Netflix’s offer, owing to a lack of certainty around Paramount’s ability to close its transaction and Paramount’s dependence on borrowed money.

In today’s letter, Ellison reiterated a lack of understanding as to why WBD’s board has gone with the Netflix offer.

“Along with the WBD shareholders, we have asked for the customary financial disclosure a board is supposed to provide shareholders when making an investment recommendation,” stated Ellison.

“But in each of its 14D-9 filings, WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its ‘risk adjustment’ of our $30 per share all-cash offer.”

The letter also stated: “WBD has provided increasingly novel reasons for avoiding a transaction with Paramount, but what it has never said, because it cannot, is that the Netflix transaction is financially superior to our actual offer.”

On 5 December, Netflix confirmed it would acquire Warner Bros in a deal worth $82.7bn, under which Netflix will acquire its film and television studios, HBO Max and HBO, but not Discovery Global. The cash and stock transaction was valued at $27.75 per WBD share with a total enterprise value of approximately $82.7bn (equity value of $72bn).

On 8 December, Paramount went directly to the WBD shareholders with its hostile all-cash bid to acquire all of the company for $30 a share that gave the target an enterprise value of $108bn. The WBD board then reiterated its support for the Netflix offer on 17 December.

On 22 December, Paramount issued an amended offer with a personal guarantee from David Ellion’s billionaire father Larry Ellison. On 7 January, this offer was rejected.

This article originally appeared in our sister title ScreenDaily