A Lawsuit, a Streaming Deal, and a Big Question for Warner Bros. Discovery Investors
- - A Lawsuit, a Streaming Deal, and a Big Question for Warner Bros. Discovery Investors
Danny Vena, CPA, The Motley FoolJanuary 14, 2026 at 4:57 AM
0
Key Points -
Paramount filed a lawsuit to compel Warner Bros. Discovery to provide details behind its decision to be acquired by Netflix.
The boards of directors of Netflix and Warner Bros. have already unanimously approved the deal, but Paramount didn't like the outcome.
Shareholders will ultimately decide how this battle plays out.
10 stocks we like better than Warner Bros. Discovery ›
Another day, another development in the ongoing conflict between Warner Bros. Discovery (NASDAQ: WBD) and Paramount Skydance (NASDAQ: PSKY).
Since streaming titan Netflix (NASDAQ: NFLX) announced its intention to acquire certain assets of Warner Bros. last month, an increasingly hostile takeover bid by Paramount has been playing out in boardrooms and in the press. This, despite the fact that the deal was already unanimously approved by the boards of directors for both Netflix and Warner Bros.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Professionally-dressed executives having a meeting around a table in a glass-walled conference room.
Image source: Getty Images.
Late yesterday, Paramount fired its latest salvo, filing a lawsuit in the Delaware Chancery Court. It asked the court to compel Warner Bros. to provide details on how it valued its global networks, how it valued the Netflix offer, and how it accounted for debt in the proposed acquisition. Paramount also announced a proxy fight, with plans to nominate its own slate of directors to the Warner Bros. board to oppose the Netflix acquisition.
Paramount CEO David Ellison said he's "perplexed" that Warner Bros. turned down Paramount's $30-per-share all-cash offer, calling Netflix's $27.72 cash and stock offer "inferior."
Unfortunately, the truth is more complicated, and this isn't an apples-to-apples comparison.
The devil's in the details
The existing deal with Netflix includes certain Warner Bros. assets, including its film and television studios, its library of content, and HBO Max and HBO. It doesn't include the company's legacy television and cable channel business.
Warner Bros. had previously announced its intention to split its streaming and studios business and its global networks division into two separate entities. It would then spin off the global networks in the third quarter, forming a new company dubbed Discovery Global.
The newly minted company could contain its "premier entertainment, sports and news television brands ... including CNN, TNT Sports in the U.S., and Discovery, free-to-air channels across Europe, and digital products such as Discovery+ and Bleacher Report." Warner Bros. believes it can get a good price for the cable business.
Paramount wants to buy Warner Bros. lock, stock, and barrel. It even issued a hostile takeover bid, offering to buy the stock directly from shareholders for $30 per share. Warner Bros. board rejected the latest bid, which it portrayed as a stunt, noting that Paramount hadn't increased its offer or addressed what it called "numerous and obvious deficiencies." Warner Bros. also characterized the lawsuit as "meritless."
Decisions, decisions
This leaves Warner Bros. Discovery investors with a decision to make. Under the Warner Bros. plan, shareholders would receive $23.25 in cash per share, Netflix shares worth roughly $4.47 (or $27.72 in all), and a stake in the Discovery Global spin-off.
Under Paramount's plan, Warner Bros. shareholders can accept the $30 all-cash offer, as the deadline has been extended until Jan. 21.
Both companies argue that their deal is superior, but it will be the shareholders who ultimately decide.
Should you buy stock in Warner Bros. Discovery right now?
Before you buy stock in Warner Bros. Discovery, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Warner Bros. Discovery wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $482,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,133,548!*
Now, it’s worth noting Stock Advisor’s total average return is 968% — a market-crushing outperformance compared to 197% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of January 13, 2026.
Danny Vena, CPA has positions in Netflix. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
Source: “AOL Money”
