Paramount sues Warner Bros in escalation of aggressive acquisition battle against Netflix

When all else fails, sue.

Paramount Skydance’s latest move in its dogged pursuit to own storied Hollywood studio Warner Bros Discovery is to file a lawsuit as its $US108.7 billion proposed acquisition continues to be rebuffed in favour of Netflix.

Paramount is locked in a hostile takeover battle as it seeks to unravel an existing deal signed between Warner Bros and Netflix. As recently as last week, Warner Bros again formally rejected Paramount’s offer.

One of the most dramatic corporate power plays to hit Hollywood in years, industry observers expect the outcome to have an outsized impact on the future of the entertainment business.

Warner Bros is one of the few remaining major Hollywood studios, and controls a century-old library of classic films as well as the rights to lucrative franchises including Harry Potter, Game of Thrones, Lord of the Rings and DC Comics.

It also owns cable and streaming brand HBO, responsible for many of the most prestigious and critically acclaimed TV shows of the past three decades, such as The Sopranos, Veep, Succession, Chernobyl and The Wire.

The industry is going through a consolidation era as it comes under immense pressure from a cashed-up Silicon Valley whose businesses have siphoned and diverted away audiences.

The irony is that Warner Bros’ two potential buyers are both funded by tech money. Many in the entertainment industry view Paramount and Netflix as problematic buyers.

Paramount has already committed to cost-cutting, as Ellison did when his Skydance company bought Paramount in mid-2025, resulting in the lost of thousands of jobs.

Netflix has historically been hostile to cinema releases and while it has said it will continue to put Warner Bros movies into theatres, it hasn’t said how long it would continue to do this, and media reporting has suggested the streamer could shrink the exclusivity “window” down to as few as 17 days.

A longer window – which keeps cinema releases off digital and streaming platforms for a set amount of time – is seen as essential to the continued survival of the cinema business, which has been challenged since pandemic shutdowns and an audience pivot to at-home viewing.

Led by David Ellison, the oldest child of tech billionaire and Oracle owner Larry Ellison, Paramount has been in aggressive pursuit of Warner Bros for several months.

Two unsolicited offers from Paramount is what dragged Warner Bros onto the open market where it held a competitive bidding process which in addition to Paramount and Netflix also included American media business Comcast.

After three rounds of offers, the Warner Bros board selected Netflix as the victor and entered into a transaction process, but that hasn’t stopped Paramount from persisting.

In his latest letter addressed to Warner Bros’s shareholders, Ellison said Paramount has filed a suit in the courts of the corporate-friendly US state of Delaware, where Warner Bros is registered, for information it claims the Warner Bros board has refused to disclose.

The main point of difference between the Netflix and Paramount offers is Netflix wants to acquire Warner Bros’s streaming and studios businesses for $US27.75 per share while Paramount’s $US30 per share is for the whole of the company, which also includes cable channel assets.

Paramount has insisted its proposal is “superior”, but that would hinge on what the cable channels are separately valued at, and whether the gap between the Netflix and Paramount per-share offers reflects that assessment.

This is the information Paramount claimed it is seeking through its lawsuit.

Ellison said Paramount will also nominate directors to Warner Bros’ board as proxies and propose to amend the Warner Bros bylaws so that it couldn’t spin-off its cable channels without shareholder approval.

Ellison insisted that Paramount’s offer is better value for shareholders and has asked them to directly vote against the Netflix deal.

Since the start of the sale process, Warner Bros share price has skyrocketed while Paramount and Netflix’s are both down.

Given Paramount’s aggressive approach, it has been suggested by industry commentators and analysts that buying Warner Bros could be a do-or-die moment for Ellison’s empire-building ambitions.

With Hollywood in a consolidation era, there is an eat-or-be-eaten mentality, especially as YouTube becomes the dominant player in all-viewing in mature markets such as the US.

The thinking on Paramount is that it needs Warner Bros to significantly upscale and survive, and that was also the reason Ellison’s Skydance bought Paramount.

Netflix, generally seen as the robust, profitable and unassailable winner of the streaming wars, is also vulnerable to YouTube’s onward march. It has never before made a big acquisition play.

Warner Bros said in a statement to Reuters that Paramount’s suit was “meritless” and pointed out that Paramount has yet to raise or improve its initial $US30 per share offer.

Any transaction will need regulatory approval from the US government, which could investigate any anti-competitive impacts from the merger of two major businesses.