Paramount Skydance steps up hostile bid for Warner Bros Discovery with law suit

A hostile takeover bid for media giant Warner Bros Discovery (WBD) has ratcheted up with entertainment conglomerate Paramount taking legal action to force the release of financial data.

Paramount Skydance, which owns film production company Paramount Pictures and TV network CBS, has filed a law suit seeking to compel WBD to disclose to shareholders how it values the bid and a competing offer from Netflix.

It has also threatened to nominate directors at WBD's annual meeting in an effort to get board approval for its takeover.

Paramount's bid was hostile as it involved a direct approach to WBD's shareholders. The board had already agreed a $82.7bn (£61.4bn) deal with Netflix in early December to sell its TV studios and rights to top franchises, including Harry Potter and Game of Thrones.

Warner Bros Discovery's board had unanimously recommended shareholders accept Netflix's proposal to buy the streaming portion of WBD's business and reject Paramount Skydance's offer.

David Ellison, Paramount Skydance's chairman, chief executive and the son of multibillionaire Larry Ellison, said his company was seeking the release of information on how WBD valued multiple elements of streaming behemoth Netflix's rival takeover attempt, Paramount Skydance's own offer and part of WBD's own valuation.

It's customary for such disclosures to be made when a board makes an investment recommendation, an open letter to WBD shareholders read.

The streaming wing of WBD's business was already being spun off into a separate company consisting of entities such as the TV network HBO and its streaming service HBO Max, along with Warner Bros' TV and film production units and comic book filmmakers DC Studios.

But Mr Ellison said Paramount Skydance would propose a change to WBD bylaws, necessitating shareholder approval before spinning off the streaming portion, potentially placing hurdles on the sell-off process.

Other parts of WBD include the news channel CNN and sports network TNT.

What does Paramount Skydance want?

The hostile bidder is seeking engagement with the WBD board on its offer, which it believes would be a "win for both companies". The Paramount Skydance offer, Mr Ellison said in the letter, is "simply more" than Netflix's.

"Our objective from the moment we approached WBD was for a collaborative negotiation and a successful transaction that would be a win for both companies, both shareholder groups and all stakeholders," he said.

"We remain perplexed that WBD never responded to our 4 December offer, never attempted to clarify or negotiate any of the terms in that proposal, nor traded markups of contracts with us."

The offer has been rejected by Paramount as it said it involved an "extraordinary amount of debt financing" that represented a risk to any deal closing.

Why does it matter?

Any merger of WBD and Paramount Skydance or Netflix would be one of the biggest media deals in history, with significant impacts on TV, filmmaking and the possible future of the cinema.

Netflix has expressed scepticism over the future of cinema theatres, with the films it produces having short spells in theatres and some being released directly to streaming. The streaming giant owning film production companies could mean fewer or shorter duration theatre runs for films

If Paramount Skydance is successful in its takeover attempt, it would own CNN, as well as CBS News, sparking concern about concentrating news services within a small number of companies.

WBD's shares have fallen by roughly 2% while Paramount Skydance's rose 0.5%.

What does WBD say?

Responding to the letter, WBD said, "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.

"Instead, Paramount Skydance is seeking to distract with a meritless lawsuit and attacks on a board that has delivered an unprecedented amount of shareholder value," a spokesperson added.

(c) Sky News 2026: Paramount Skydance steps up hostile bid for Warner Bros Discovery with law suit