Just when Hollywood thought the Warner Bros Discovery saga was settling down, Netflix has gone back to the drawing board and Paramount has reached for its lawyers.
What began as a blockbuster bidding war is now a full-blown corporate street fight, complete with proxy battles, lawsuits and a looming shareholder showdown.
Netflix is weighing a major tweak to its agreed deal for Warner Bros Discovery, exploring whether to convert its offer into an all-cash bid for the studio and streaming crown jewels, according to people familiar with the talks.
The move is aimed at speeding up a transaction that is already politically sensitive, operationally complex and fiercely contested.
Under the agreement struck in December, Netflix agreed to pay US$82.7 billion for Warner Bros’ film and television studios, HBO and the company’s vast content library — but not its global networks arm, which includes CNN, Discovery and other legacy cable assets.
The consideration is a mix of cash, Netflix stock and equity in a planned spin-off of those networks.
However, Paramount, backed by Skydance and Oracle co-founder Larry Ellison, has spent months trying to blow that deal up.
Its rival offer values Warner Bros at US$108.4 billion, or roughly US$30 a share, and would swallow the entire company — networks and all — in what Warner’s board has repeatedly described as the largest leveraged buyout in history.
Warner’s directors have consistently argued that Paramount’s bid relies too heavily on debt financing, raising the risk that it simply doesn’t close.
They have dismissed the proposal as “inadequate” despite its higher headline price, pointing to financing risk, execution complexity and the costs Warner would incur by walking away from Netflix — including a $2.8 billion breakup fee and billions more in interest and penalties.
Netflix has kept its public comments to a minimum but an all-cash offer would strip away one of Paramount’s key talking points: complexity.
It could also make it harder for sceptical investors and regulators to argue the deal undervalues Warner’s best assets.
But that has not stopped Paramount from escalating.
This week, CEO David Ellison fired off a letter to Warner Bros shareholders announcing a two-pronged attack: a lawsuit demanding more financial disclosure around the Netflix deal, and a proxy fight to install Paramount-friendly directors on Warner’s board.
The lawsuit, filed in Delaware, seeks what Paramount calls “basic information” — including how Warner has valued its global networks business, which Netflix isn’t buying.
Ellison argues shareholders can’t make an informed decision without seeing how those assets stack up inside the competing bids.
The proxy fight is even more aggressive with Paramount planning to nominate directors at Warner’s next annual meeting and campaign against approval of the Netflix transaction.
If Warner calls a special meeting to vote sooner, Paramount says it will actively solicit votes to block the deal.
In his letter, Ellison made it clear he’s not backing down.
“Unless the WBD board decides to engage with us,” he wrote.
“This will likely come down to your vote.”
Warner’s response has been unambiguous.
The board has warned shareholders that Paramount is a “litigious counterparty” and said the lawsuit only underlines why it has refused to engage.
In earlier statements, the company called the legal action meritless and said Paramount had failed to address the “numerous and obvious deficiencies” in its proposal.
Behind the legal sparring sits a deeper strategic clash about Hollywood’s future.
Netflix wants the engines of modern entertainment: studios, intellectual property (IP) and streaming scale.
Meanwhile, Paramount wants the whole machine, including the slower-growing cable networks and is betting it can make the maths work with enough leverage and Ellison’s US$40 billion personal backing.
The spoils for whichever entity wins this stoush are enormous.
Warner Bros controls some of the most valuable franchises in entertainment, from Harry Potter and DC Comics to Game of Thrones, Friends and a film library that stretches back to Casablanca and Citizen Kane.
The ultimate victor will shape how and where those stories are told in an industry increasingly dominated by streaming and still reeling from volatile box-office revenues.
For now, the deal many assumed was done is anything but over.
Netflix may be sharpening its offer and Paramount is digging in for a shareholder war.
Warner Bros Discovery is caught in the middle, facing a choice that will redefine the company and possibly the industry for decades.