Hollywood is currently eating itself. If you thought the original merger that created Warner Bros. Discovery (WBD) was a mess, hold onto your seat because the sequel is much more expensive and significantly more aggressive. Right now, Paramount Skydance prepares Ellison-backed bid for Warner Bros. Discovery in what has basically become a high-stakes game of corporate poker where the "pot" is nearly $110 billion.
It's wild. David Ellison, the CEO of the newly merged Paramount Skydance, isn't just asking for a seat at the table; he’s trying to flip the whole thing over. While WBD leadership has been cozying up to a deal with Netflix, Ellison—backed by the massive wealth of his father, Oracle co-founder Larry Ellison—is making a play for the entire kingdom.
The $108 Billion Hostile Takeover Explained
Let's look at the numbers because they are staggering. We are talking about an all-cash offer of $30 per share, which values the entirety of Warner Bros. Discovery at approximately $108.4 billion. Honestly, it’s a massive premium compared to where the stock has been lingering.
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Why is this "hostile"? Simple. The WBD board doesn't want it.
On January 7, 2026, the board unanimously rejected the offer for the eighth time. They’re worried about debt. Specifically, they’ve characterized the Paramount Skydance bid as a "risky leveraged buyout" that could saddle the combined company with nearly $90 billion in debt. That’s a lot of zeros.
The Netflix Complication
To understand why Ellison is pushing so hard, you’ve got to look at what Netflix is doing. Netflix reached a definitive agreement on December 5, 2025, to buy the "Streaming and Studios" part of WBD for $82.7 billion. This would give Netflix the keys to:
- Warner Bros. Pictures (The studio behind Batman and Harry Potter).
- HBO and the Max platform.
- DC Studios.
In this scenario, the "old" parts of the company—CNN, TNT Sports, and the Discovery networks—would be spun off into a new thing called "Discovery Global." Ellison thinks this is a terrible idea. He’s argued that breaking the company apart is "value-destroying." He wants the whole thing: the prestige of HBO and the cash flow of the cable networks.
Why the Ellison Backing Actually Matters
David Ellison has a secret weapon, and his name is Larry.
For a long time, the WBD board’s biggest complaint was that the Paramount bid lacked a "full backstop." They basically told David, "Your dad's money is in a revocable trust, and he could change his mind tomorrow." That changed on December 22, 2025. Larry Ellison personally stepped up to backstop $40.4 billion in equity financing.
It’s hard to say "no" to that kind of liquidity, yet the board is still doing it.
The Legal Fireworks in Delaware
Because the board keeps saying no, Paramount Skydance is taking them to court. On January 12, 2026, they filed a lawsuit in the Delaware Chancery Court. They want the judge to force WBD to open their books and show exactly how they calculated the value of the Netflix deal versus the Ellison bid.
"WBD has provided increasingly novel reasons for avoiding a transaction with Paramount, but what it has never said, because it cannot, is that the Netflix transaction is financially superior to our actual offer." — David Ellison, January 2026.
Basically, Paramount is accusing the WBD board of failing their fiduciary duty to shareholders. They believe the board is protecting their own jobs—specifically CEO David Zaslav’s role—instead of taking the biggest pile of cash on the table.
A Proxy War is Now Officially Underway
Since the courts haven't immediately handed Ellison a win (Judge Morgan Zurn recently refused to fast-track the lawsuit), Paramount is moving to Plan B: A Proxy Fight.
In mid-January 2026, Paramount Skydance announced it would nominate its own slate of directors to the Warner Bros. Discovery board. This is the corporate equivalent of a coup. If shareholders vote for Ellison’s directors, those new board members would have the power to scrap the Netflix deal and sign the Paramount merger.
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It’s a gutsy move. It forces every institutional investor—the Vanguards and BlackRocks of the world—to choose between a sure-thing cash offer today or a complicated split-and-merge deal with Netflix tomorrow.
The Regulatory Elephant in the Room
You can't talk about a merger of this size without mentioning the "Antitrust" word. If Paramount Skydance successfully buys WBD, it would consolidate two of the "Big Five" Hollywood studios.
- The Pro-Deal Argument: Paramount argues that this is the only way to survive against tech giants like Apple and Amazon who have infinite money.
- The Anti-Deal Argument: Senators like Elizabeth Warren and Bernie Sanders have already expressed concerns that this could lead to higher prices for consumers and fewer voices in journalism (especially with CNN being part of the mix).
Curiously, Donald Trump has also weighed in, calling the Netflix-WBD deal "problematic." This adds a layer of political unpredictability that most M&A experts weren't expecting for 2026.
What Most People Get Wrong About This Deal
People keep thinking this is just about streaming. It's not.
This is about survival through scale. David Ellison isn't just a movie fan; he's a tech-adjacent billionaire who sees that the current media landscape is "grow or die." By combining Paramount and Warner Bros., he’d control a library that rivals Disney's. We're talking about Star Trek, Mission: Impossible, Game of Thrones, SpongeBob, and The Last of Us all under one roof.
Also, don't ignore the "break-up fees." If WBD walks away from Netflix to join Ellison, they owe Netflix a $2.8 billion penalty. That’s a massive "fine" just for changing your mind, and it’s one of the reasons the board is so hesitant to pivot.
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Actionable Insights for Shareholders and Observers
If you’re watching this play out, here is what you need to keep an eye on over the next few weeks:
- The "Advance Notice" Window: Paramount will officially name its board nominees in late January or early February. Watch who those names are. If they are industry heavyweights, it adds huge credibility to the hostile bid.
- Netflix’s Counter-Move: Reports are already circulating that Netflix might switch its offer to "all-cash" to make it more attractive and speed up the timeline. If Netflix ups the ante, Ellison might have to go higher than $30.
- The Discovery Global Valuation: Pay attention to how the market values the "Discovery Global" networks. Paramount claims these assets have "zero equity value," while WBD analysts say they’re worth $4 a share. This discrepancy is the heart of the legal battle.
- The Delaware Court Ruling: While the motion to "expedite" was denied, the actual lawsuit is still moving. Any discovery of internal WBD emails regarding the Netflix negotiations could be explosive.
This isn't just another boring business deal. It's a fight for the soul of Hollywood. Whether the Ellison family manages to strong-arm their way into the Warner lot or Netflix cements its dominance over the studio system, the entertainment industry as we know it is about to change forever.
To keep track of this, you should monitor the SEC filings for "Schedule 14A" (Proxy Statements) from WBD, as that’s where the real war of words will happen between now and the annual shareholder meeting. This is a developing story that will likely define the entire 2026 fiscal year for the media sector.