Paramount’s hostile bid to take over Warner Bros Discovery continues via proxy fight, lawsuit

What is up for sale

Faced with ratings and revenue decline in recent years, WBD is set to split into two businesses, virtually reversing its 2022 merger. The resulting companies include Warner Bros, comprising its TV business, the HBO film studio and HBO Max streaming service; and a global networks operation including the Discovery channel, CNN and Cartoon Network.

In October 2025, WBD announced that the company was open to a partial or complete sale, triggering weeks of deliberations with several interested entities, including Netflix and Paramount.

Two competing offers

While Netflix’s deliberations focused on its merger with only the Warner Bros. business, not WBD’s global networks business, Paramount presented an offer to acquire the entire WBD business.

On December 5, Netflix announced it had entered an $82.7 bn agreement with WBD to acquire the Warner Bros. business. The acquisition would take place after the split, likely in Q3 2026. WBD’s deal with Netflix also prohibits it from soliciting any other offers, and

While WBD’s deal with Netflix prohibits it from soliciting other offers, Paramount could raise its bid to WBD, forcing Netflix to counter. In such a case, WBD would have to pay Netflix $2.8 bn if it were to accept an improved Paramount bid.

The Netflix merger is a “binding agreement with enforceable commitments” made by a public company with a market cap exceeding $400 bn, WBD wrote in its letter to shareholders. This agreement necessitated no equity financing or robust debt commitments.

Paramount’s hostile takeover bid

Days after Netflix announced its merger with WBD, Paramount announced it was mounting a hostile takeover bid to acquire the entire WBD business.

In a hostile takeover, the would-be acquirer may do one of three things:

• Directly approach the acquiree company’s shareholders with a tender offer to convince them of the merits.
• Initiate a proxy fight to replace board members with persons amenable to a takeover bid, as it now plans to.
• Buying up the company’s stock in the open market.

On December 8, Paramount opted for the first route, sending in an unsolicited all-cash $30 per share offer to WBD’s shareholders. Paramount CEO David Ellison said this offer is worth about $18 bn more in cash than the competing cash-and-stock bid from Netflix, priced at $27.75 per share.

WBD rebuffed this move, noting in its letter to its shareholders on December 17 that Paramount’s original offer omitted details about its weak financial position and was based on a convoluted debt-equity financing structure.

Crucially for WBD, Paramount’s offer lacked a “full backstop” or a complete guarantee by Larry Ellison, the billionaire co-founder of Oracle, Donald Trump’s close ally, and David Ellison’s father.

The senior Ellison backed Paramount’s financing agreement through a revocable trust, whose assets and liabilities were not publicly disclosed and could potentially be modified by him at any time. WBD characterised this as a risk to its shareholders.

On December 22, Paramount announced that Larry Ellison had agreed to personally backstop $40.4bn in equity financing for the proposed deal. However, the WBD board unanimously voted against the amended agreement last week (January 7), saying its revised bid amounted to a risky leveraged buyout that investors should reject.

As part of its proxy fight, Paramount now plans to nominate candidates to WBD’s board ahead of the crucial shareholder meeting that will decide the fate of WBD. This, it hopes, would at least tilt the odds in its favour and force WBD to at least engage with its offer.