In a major escalation of the battle for Hollywood supremacy, Paramount Skydance has filed a lawsuit against Warner Bros Discovery (WBD) in the Delaware Chancery Court. The legal action, led by Paramount CEO David Ellison, demands full transparency and financial disclosures regarding WBD’s pending $82.7 billion deal with Netflix. This move comes as Paramount attempts to convince investors that its rival $108.4 billion hostile bid offers superior value and certainty.

At the heart of the dispute is the future of the storied Warner Bros. studio, its streaming services, and a massive content library featuring the DC Universe and Harry Potter. While WBD has reached a deal to sell its studio and streaming assets to Netflix for $27.75 per share in a cash-and-stock transaction, Paramount has countered with an all-cash offer of $30 per share for the entire company.

Paramount’s lawsuit alleges that WBD has failed to disclose critical information, including how it valued the “stub equity” of the cable networks business—branded as Discovery Global which is set to be spun off as part of the Netflix merger. Paramount has previously labeled this spinoff “virtually worthless,” citing the poor market performance of other recent cable spinoffs like Comcast’s Versant.

Beyond the courtroom, David Ellison has launched a high-stakes proxy battle. Paramount plans to nominate a new slate of directors to the WBD board and propose an amendment to the company’s bylaws. This amendment would require explicit shareholder approval for any separation of the cable TV business, effectively blocking a key pillar of the Netflix deal unless investors vote in its favor.

“WBD has provided increasingly novel reasons for avoiding a transaction with Paramount,” the company stated in a letter to shareholders. “But what it has never said—because it cannot—is that the Netflix transaction is financially superior to our actual offer.”

Paramount’s amended offer is bolstered by massive financial firepower, including $40 billion in equity personally guaranteed by Oracle co-founder Larry Ellison and $54 billion in debt. Paramount argues that its all-cash proposal for the whole company simplifies the regulatory process and provides immediate liquidity, whereas the Netflix deal forces shareholders to hold equity in a declining cable business.

With Paramount’s tender offer set to expire on January 21, the company is urging WBD shareholders to exercise their right to choose. WBD has yet to engage with Paramount’s revised bid, which it previously rejected as “inadequate” due to perceived execution risks.

Key Highlights:

• Legal Escalation: Paramount Skydance is suing Warner Bros Discovery to force the disclosure of financial details regarding its $82.7 billion deal with Netflix.
• Hostile Bid: Paramount is pushing its $30-per-share all-cash offer ($108.4 billion total), backed by Larry Ellison, as a superior alternative to Netflix’s $27.75-per-share bid.
• Proxy Battle: David Ellison plans to nominate a new board of directors and change company bylaws to give shareholders the final say on the cable business spinoff.
• Key Deadline: Shareholders have until January 21 to decide on Paramount’s tender offer, as the fight for the DC and Harry Potter franchises intensifies.