Paramount Skydance Corp (PSKY) is done playing nice. After watching Warner Bros. Discovery (WBD) repeatedly reject its takeover advances, the company filed a lawsuit Monday demanding financial transparency around Warner Bros.' nearly $83 billion deal with Netflix Inc (NFLX).
But CEO David Ellison isn't stopping at litigation. He's also launching a proxy fight to replace Warner Bros.' board with directors who would actually be willing to negotiate. In an open letter dripping with frustration, Ellison wrote: "We remain perplexed that WBD never attempted to clarify or negotiate any of the terms."
"We filed suit this morning in Delaware Chancery Court to ask the court to simply direct WBD to provide this information so that WBD shareholders have what they need to be able to make an informed decision," Ellison said.
Warner Bros. Calls It "Meritless"
The lawsuit comes on the heels of Warner Bros.' board once again recommending that shareholders reject Paramount's amended offer from late December. At the heart of Paramount's complaint is a claim that Warner Bros. hasn't disclosed how it valued key pieces of the Netflix transaction, including its Global Networks business and debt reduction mechanisms.
"WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its 'risk adjustment' of our $30 per share all-cash offer," Ellison said in his letter.
Without this transparency, Paramount argues, shareholders can't properly evaluate whether its $30-per-share cash offer is actually inferior to the Netflix deal.
Warner Bros. isn't having it. The company dismissed the lawsuit as "meritless" and suggested that if Paramount really wanted to win, maybe it should consider offering more money instead of filing legal complaints.
"Despite six weeks and just as many press releases from Paramount Skydance, it has yet to raise the price or address the numerous and obvious deficiencies of its offer," the company said in a statement.
How Much Is Discovery Global Really Worth?
Here's where things get interesting. The Netflix deal would pay $27.75 per share for Warner Bros.' film and TV studios, HBO properties, and games division, but only after the company spins off its Global Networks business this year. Paramount claims that according to Warner Bros.' own calculations, shares of that spun-off entity, Discovery Global, could end up worthless.
Paramount plans to nominate its own slate of board candidates ahead of Warner Bros.' 2026 shareholder meeting and "solicit against the approval of the Netflix transaction." It's a full-court press: lawsuit, proxy fight, and public pressure campaign all at once.
Despite the aggressive tactics, Ellison maintains that Paramount remains open to "constructive discussions" with Warner Bros.' board. But he insists that Warner Bros. has never demonstrated that the Netflix deal is financially superior to Paramount's cash offer.
Price Action: Paramount Skydance Corp shares were up 0.16% at $12.17 while the market was closed on Monday. WBD closed Monday down 1.68% at $28.40, having risen by over 136% in the last six months.
