Warner Bros. Discovery Rejects $108 Billion Paramount Skydance Bid, Setting Up Delaware Fight and Proxy Battle

A $100 billion prize — and a boardroom showdown

On Jan. 7, the board of Warner Bros. Discovery (WBD) urged shareholders to reject what may be the richest all-cash offer ever made for a Hollywood company: a $30-per-share hostile bid from Paramount Skydance valuing WBD at about $108.4 billion.

Instead, directors reaffirmed support for an earlier deal to sell most of the company to Netflix at a lower headline value—an approach that would split WBD, placing its studios and streaming assets under Netflix while spinning off its cable networks into a separate public company.

Paramount Skydance responded by filing suit in Delaware and preparing to nominate its own directors, setting up a proxy fight that could determine control of one of the last major independent U.S. studios—and shape Hollywood’s competitive map in the streaming era.

A three-way struggle for control

WBD, created in 2022 through the merger of AT&T’s WarnerMedia and Discovery Inc., has spent the past two years grappling with heavy debt, streaming losses, and the decline of cable TV. Under Chief Executive David Zaslav, the company has cut costs and reorganized around two main segments:

• Streaming & Studios, including Warner Bros., HBO, Max and video games.
• Global Linear Networks, including CNN, TNT, TBS, Discovery Channel and HGTV.

On Dec. 5, 2025, WBD announced a transaction that would effectively dismantle that structure. Netflix agreed to acquire the Streaming & Studios arm for an enterprise value of about $82.7 billion, following a tax-free spin-off of the cable networks into a new publicly traded company called Discovery Global.

Under the terms outlined, WBD shareholders would receive $23.25 in cash and $4.50 in Netflix stock per share (subject to a collar), targeting a total of $27.75, while retaining shares in Discovery Global.

Netflix co-CEOs Ted Sarandos and Greg Peters have framed the proposal as offering greater certainty, pointing to Netflix’s investment-grade profile, roughly $400 billion market capitalization, and projected more than $12 billion in free cash flow in 2026.

The companies expect the Discovery Global spin to close in Q3 2026, with the studios sale closing 12 to 18 months after the announcement, subject to U.S. and international approvals. Netflix also agreed to pay a $5.8 billion reverse termination fee if the deal fails due to antitrust or regulatory barriers.

Three days after WBD unveiled the Netflix package, a rival bidder moved publicly.

On Dec. 8, Paramount Skydance launched an unsolicited all-cash tender offer for 100% of WBD at $30 per share, pitching it as a simpler, higher-value alternative that avoids a spin-off and avoids Netflix stock consideration.

Why Warner’s board says no

WBD rejected Paramount Skydance’s proposal on Dec. 17, calling it inadequate and not a “Superior Proposal” under the Netflix agreement. Paramount Skydance later amended the offer—keeping the $30 price while revising financing terms and adding an equity backstop from the Ellison family trust, followed by a personal guarantee from Oracle co-founder Larry Ellison.

In its Jan. 7 letter, WBD’s board again unanimously recommended shareholders back the Netflix deal, arguing that comparing headline prices alone ignores costs, financing risk and execution certainty.

WBD said abandoning Netflix would trigger costs including:

• a $2.8 billion termination fee to Netflix,
• a $1.5 billion fee tied to a debt exchange offer that could not proceed under the Paramount structure,
• about $350 million in incremental interest expense.

Together, WBD estimated those items total about $4.7 billion, or $1.79 per share, narrowing the effective gap between the bids.

The board also contrasted Netflix’s $5.8 billion regulatory reverse break-up fee with Paramount Skydance’s proposed structure. WBD argued that after accounting for what WBD would pay to exit the Netflix deal, the net amount Paramount Skydance would effectively bear would fall sharply.

A central point of WBD’s critique is leverage. The company said Paramount Skydance—described as having a market capitalization around $14 billion—was proposing an acquisition funded by roughly $40 billion of equity and about $54 billion of new debt. WBD estimated the combined company would carry about $87 billion in gross debt and run at roughly seven times projected 2026 EBITDA.

WBD also flagged what it called “onerous operating covenants,” including restrictions affecting affiliate agreements, refinancing activity, and aspects of the planned Discovery Global spin.

By contrast, WBD emphasized that Netflix could finance its transaction through cash, operating cash flow and stock without relying on a leveraged buyout structure.

Paramount goes to court — and to shareholders

Paramount Skydance has accused WBD’s board of favoring Netflix and argues its all-cash bid is “clearly superior,” especially if shareholders assign limited value to the future Discovery Global spinoff.

On Jan. 12, Paramount Skydance escalated its challenge by filing suit in Delaware Chancery Court against WBD, Zaslav, and several directors and major shareholders. The suit seeks board-level financial models and banker presentations underlying WBD’s decision to stick with Netflix.

Paramount Skydance cited the Jan. 21 expiration of its tender offer (which it can extend), arguing investors need fuller disclosure to decide whether to tender.

WBD has called the lawsuit “meritless,” saying it has already provided required disclosures through its filings, including its Schedule 14D-9.

Paramount Skydance also said it intends to nominate its own slate of directors at WBD’s next annual meeting, expected in mid-2026, and propose a bylaw amendment requiring shareholder approval for any separation or spin-off of WBD’s networks business—an initiative that could directly undermine the Netflix transaction.

Some investors have publicly questioned WBD’s position. Hedge fund Pentwater Capital, a significant shareholder, has warned that turning down a fully financed all-cash premium bid could expose the board to claims it failed to maximize shareholder value.

Antitrust scrutiny and labor backlash

The contest is unfolding amid rising political attention to consolidation in technology and media.

A Netflix–WBD tie-up would combine the world’s largest subscription streaming service—more than 300 million paid subscribers—with Warner Bros. and HBO. Netflix would gain franchises such as DC Comics, Harry Potter, and the broader HBO library.

The Writers Guild of America has said it “forcefully” opposes the Netflix deal, arguing it is the kind of consolidation antitrust laws were designed to prevent. Other entertainment unions, including Hollywood Teamsters, have raised concerns that either consolidation route could drive layoffs, depress wages, and reduce the number and variety of projects.

Sen. Elizabeth Warren has also criticized the prospect of Netflix acquiring WBD, calling it an “anti-monopoly nightmare.”

Paramount Skydance has attempted to position its bid as less anticompetitive, arguing that combining Paramount+ with Max could create a stronger competitor to Netflix and Disney. But a Paramount Skydance–WBD merger would also create a sprawling group across broadcast, cable news, cable sports and multiple streaming services—raising its own regulatory questions.

What it means for viewers and workers

For audiences, the outcome could determine where many of entertainment’s most recognizable brands live.

• Under Netflix, HBO series and Warner Bros. films could increasingly be developed and distributed under a Netflix umbrella. Netflix has pledged to preserve theatrical releases and “traditional windows,” but critics argue a single dominant platform could gradually raise prices or narrow licensing options.
• Under Paramount Skydance, CBS, Paramount Pictures, Showtime, Nickelodeon, MTV, Paramount+, Pluto TV and other assets would combine with Warner Bros., HBO, CNN, TNT and Discovery’s networks. Supporters argue the scale could sustain a second diversified rival to Netflix and Disney. Skeptics warn that the projected debt load could pressure the company toward cost cuts and a heavier reliance on proven franchises.

For employees and creators—writers, actors, crew and staff—the stakes are immediate: job security, budgets, greenlights and leverage in future labor negotiations.

The decisions still to come

Several fronts will determine the outcome:

• Delaware Chancery Court will weigh Paramount Skydance’s disclosure demands.
• Antitrust regulators in the U.S. and abroad will scrutinize the Netflix deal.
• Paramount Skydance must decide whether to extend its tender offer beyond Jan. 21.
• A proxy contest may take shape ahead of WBD’s mid-2026 annual meeting.

Ultimately, regulators, judges and shareholders will decide whether WBD sells its studios and streaming arm to Netflix, accepts a leveraged takeover by Paramount Skydance, or remains independent under continued financial pressure.

Whatever the outcome, the battle underscores how the center of gravity in entertainment has shifted: the future of a century-old studio is now being determined as much through proxy cards, covenants and court filings as on soundstages—and the result may define Hollywood’s next decade.