Proxy Fights and Power Plays: The Battle for Warner Bros. Discovery

One of the most closely watched battles in the entertainment industry began on December 5, 2025, when Netflix announced a $72 billion deal to acquire Warner Bros. Discovery’s (“WBD”) film and television studios, including HBO, HBO Max, and the Warner Bros. content libraries. (Michelle Chapman, AP News). The announcement immediately drew regulatory scrutiny, with the chairman of the Senate Antitrust Subcommittee raising concerns about possible market dominance and the integrity of the merger review process. (Joe Flint, Wall Street Journal). The swift and widespread pushback highlights the increasingly restrictive regulatory environment surrounding major media mergers, setting the stage for aggressive strategic countermoves by competitors. Just three days later, on December 8th, Paramount responded by launching an all-cash competing bid for WBD and vowing to initiate a proxy fight, threatening to elect its own slate of directors and leverage shareholder influence to derail Netflix’s proposed acquisition. (Fintool; Una Hajdari, Euro News). This post examines the corporate governance and fiduciary implications of the proposed deal, as well as its broader consequences for shareholder value and media industry consolidation.

WBD seeks to sell its film and television studio assets as part of Netflix’s proposed $72 billion acquisition. (Michelle Chapman, AP News). WBD is pursuing the sale largely due to the significant debt WBD accumulated through prior mergers and aggressive streaming investments. (Financial Content). Through the transaction, WBD aims to reduce debt, refocus on core operations, and increase shareholder value. Id. The deal requires both shareholder and regulatory approval, a process analysts do not expect to conclude until later in 2026 because WBD has yet to schedule a shareholder meeting, and regulators continue to actively review antitrust concerns. (Ty Roush, Forbes; Lillian Rizzo, CNBC). Federal antitrust officials and lawmakers are currently reviewing the transaction amid concerns over market concentration and the fairness of the merger. (Michelle Chapman, AP News; Joe Flint, Wall Street Journal). Meanwhile, competing firms have begun challenging both the structure of the deal and the integrity of its approval process. (Alex Weprin, Hollywood Reporter).

Beyond regulatory review, the proposed acquisition faces direct competitive opposition, with Paramount positioning itself at the center of the dispute. (Alex Weprin, Hollywood Reporter). Rather than merely criticizing the deal, Paramount has acted as both a rival bidder and a strategic disruptor, actively working to influence the transaction’s outcome. (Ty Roush, Forbes). Prominent investor Mario Gabelli is leading Paramount’s charge, announcing plans to tender nearly 90 percent of his WBD shares to Paramount. Id. Paramount has also made it clear that it wants all WBD’s assets, including CNN and Discovery, not merely the studio properties Netflix is targeting. (Michelle Chapman, AP News). WBD’s board, however, has indicated it favors Netflix’s offer, citing the additional financial burdens Paramount’s bid would impose. (Ty Roush, Forbes). Paramount’s all-cash offer of $30 per share would require WBD to assume “nearly $55 billion in new debt” and force a consolidation of CBS and CNN, raising further antitrust concerns. (Ty Roush, Forbes; Jeffrey Sonnenfeld, Yale Insights; Wyatte Grantham-Philips, The Business Journal).

Undeterred, Paramount has escalated its opposition on multiple fronts. It has argued that a Netflix acquisition would hand the streaming giant excessive control over both television and film production and distribution markets. (Una Hajdari, Euro News; Alex Weprin, Hollywood Reporter). On January 12, 2026, Paramount sued WBD, alleging that the WBD board breached its fiduciary duties by failing to disclose adequate information about WBD’s valuation, debt assumptions, and decision-making process underlying the Netflix deal. (Todd Spangler, Variety). Through the lawsuit, Paramount seeks an order compelling additional disclosure regarding the WBD board’s rationale for favoring Netflix’s offer. Id. Paramount CEO David Ellison has further announced plans to launch a proxy fight, seeking to install Paramount-backed directors at WBD’s annual shareholder meeting. (Ty Roush, Forbes). Collectively, these efforts aim to pressure WBD’s board and shareholders to reconsider or restructure the transaction. (Una Hajdari, Euro News; Alex Weprin, Hollywood Reporter). In response, Netflix reportedly plans to alter its bid by either raising the price or moving towards an all-cash deal. (Alex Weprin, Hollywood Reporter).

Industry observers largely expect Netflix to overcome Paramount’s challenge and ultimately secure the deal. (Jeffrey Sonnenfeld, Yale Insights; Natalie Sherman, AOL). While regulatory intervention could delay the process, Netflix’s financial strength gives it a clear advantage over Paramount. (Jeffrey Sonnenfeld, Yale Insights). Yale School of Management Professor Jeffrey Sonnenfeld noted that siding with Paramount would saddle WBD with roughly $55 billion in additional debt. A Raymond James analyst further reported that “more than 70% of HBO Max” subscribers in the United States also subscribe to Netflix, underscoring the significant market overlap and competitive reach Netflix already commands. Id.; (Natalie Sherman, AOL). Netflix’s financial profile reinforces the advantage. The company leads the streaming industry in both pure subscriber count and profitability and holds an A/A3 investment-grade credit rating, signaling strong financial stability and access to favorable borrowing terms. (Fintool). Paramount, by contrast, holds a Ba1/BB credit rating—widely considered as “near-junk,”—reflecting higher financial risk and more limited borrowing capacity. Id.; (Financial Content). That distinction puts Paramount at a meaningful disadvantage in pursuing a larger acquisition. (Financial Content).

Taken together, these financial and market indicators suggest Netflix is better positioned to complete the acquisition. Ultimately, the dispute reflects mounting tension between legacy media companies and dominant streaming platforms over content control and distribution. (Lillian Rizzo, CNBC).  Trade groups have warned that further consolidation could lead to adverse consequences for the broader entertainment workforce, leading to a decline in diverse storytelling and job losses. (Michelle Chapman, AP News).

The battle for WBD has evolved into one of the most consequential corporate contests in recent history. The dispute has drawn together competing acquisition bids, shareholder pressure, and litigation over the board’s decision-making process. While analysts generally favor Netflix as the stronger bidder, the outcome remains contested, and the stakes extend well beyond the deal itself. Whichever party prevails, the deal signals an accelerating consolidation of content and distribution power into the hands of a shrinking number of platforms. Trade groups and industry observers have raised serious concerns that greater concentration would cost jobs, undermine creative independence, and diminish the diversity of stories told across the industry.