Netflix Reportedly Prepares All-Cash Bid For Warner Bros. As Paramount Turns Up Heat On Takeover Battle

The Strategic Pivot: From Mixed Consideration to All-Cash

Netflix’s revised offer eliminates the stock component of its original proposal, which included $4 per share in Netflix equity alongside cash consideration of $27.75 per share.[1] This restructuring addresses a critical vulnerability: Netflix shares have declined approximately 25% since the takeover competition began, making stock-based consideration increasingly unattractive to shareholders evaluating competing bids.[1]

The all-cash approach serves multiple strategic objectives. First, it accelerates deal certainty by removing valuation volatility tied to Netflix’s equity performance—a material concern given the extended timeline for regulatory review and shareholder approval.[2] Second, it directly counters Paramount’s positioning, which emphasizes the superiority of its $108.4 billion all-cash offer for the entire company, including cable television operations.[2] By converting to pure cash, Netflix eliminates a structural disadvantage in head-to-head shareholder comparisons.

Paramount’s Escalating Pressure: Litigation and Proxy Warfare

Paramount Skydance, led by CEO David Ellison, has shifted from passive rejection to active confrontation. On January 13, 2026, Paramount filed a Delaware lawsuit challenging Warner Bros. Discovery’s disclosure practices, arguing that shareholders lack sufficient information to evaluate the Netflix transaction against Paramount’s competing bid.[3][4] The lawsuit specifically contests the board’s valuation methodology for the planned Global Networks spin-off, debt transfer mechanics, and the “risk adjustment” calculations that favor the Netflix deal.[3]

Beyond litigation, Paramount has announced a multi-pronged proxy strategy. The company will nominate a slate of directors for Warner Bros. Discovery’s 2026 annual meeting, with the explicit mandate to exercise contractual rights under the Netflix agreement to engage with Paramount’s offer.[3] Additionally, Paramount plans to propose a bylaw amendment requiring shareholder approval for any Global Networks separation—a direct challenge to deal architecture.[3] If Warner Bros. calls a special shareholder meeting before the annual meeting, Paramount will solicit proxies against Netflix deal approval.[3]

Financial Comparison: Cash Certainty vs. Valuation Spread

The competing bids present a classic M&A tension between price and certainty. Paramount’s $30 per share all-cash offer for studios and streaming assets values that business segment at $108.4 billion total enterprise value.[2] Netflix’s revised all-cash offer maintains its $27.75 per share valuation for the same assets, representing a $2.25 per share (8.1%) discount to Paramount’s bid.[2]

However, Warner Bros. Discovery’s board has consistently rejected Paramount’s offer, citing financing risk. The board argues that Paramount’s bid relies heavily on debt financing, despite $40 billion in equity backing from Oracle co-founder Larry Ellison (father of David Ellison).[2] In contrast, Netflix has agreed to a $5.8 billion termination fee if regulators block the deal, signaling confidence in deal completion.[2] Warner Bros. would owe Netflix $2.8 billion if it abandons the agreement, creating asymmetric risk allocation favoring deal closure.[2]

Asset Profile and Strategic Rationale

The contested prize encompasses some of entertainment’s most valuable intellectual property. Warner Bros. Discovery controls the Harry Potter and Fantastic Beasts franchises, Game of Thrones, Friends, the DC Comics cinematic universe, and a catalog of classic films including Casablanca and Citizen Kane.[2] For Netflix, acquisition of these studios and streaming assets represents a transformational vertical integration play—securing content production capacity and library depth to compete against Disney+, Amazon Prime Video, and traditional broadcast networks in the streaming wars.

The deal structure reflects this strategic logic. Netflix acquires WBD’s film studios and HBO/Max streaming platform while Warner Bros. Discovery separates its Global Networks division (cable television operations including CNN, HGTV, and Discovery Channel), which Paramount seeks to acquire separately or in combination.[2]

Regulatory and Political Headwinds

Both bids face significant regulatory scrutiny. Lawmakers from across the political spectrum have expressed concern that further media consolidation could increase consumer costs and reduce programming choice.[2] Former President Trump has signaled potential intervention in the Netflix-Warner Bros. transaction, adding unpredictability to the approval timeline.[2]

The regulatory environment creates an asymmetric advantage for Netflix’s revised offer. All-cash structures typically navigate regulatory review faster than leveraged transactions, as they reduce debt-servicing risks and financial stability concerns that regulators evaluate. Paramount’s debt-heavy financing, despite Ellison’s equity commitment, may face extended scrutiny from the Federal Trade Commission and Department of Justice.

Timeline and Shareholder Vote

Warner Bros. Discovery has committed to a shareholder vote on the Netflix deal in late spring or early summer 2026.[1] This timeline creates a compressed window for Paramount’s proxy campaign. The “advance notice” period for director nominations at the 2026 annual meeting opens in approximately three weeks from mid-January, giving Paramount a narrow window to mount its slate challenge.[3]

The litigation strategy may prove consequential. If Delaware courts compel enhanced disclosure of valuation assumptions and debt mechanics, shareholders will have clearer information to evaluate both bids. Conversely, if courts dismiss Paramount’s claims as meritless (as Warner Bros. has characterized them), the legal challenge becomes a symbolic rather than substantive obstacle.[3][4]

Market Implications and Deal Probability Assessment

Netflix’s willingness to convert to all-cash demonstrates confidence in deal completion and suggests internal conviction that regulatory approval is achievable. The move also signals that Netflix views the Warner Bros. asset base as strategically essential—a rare major acquisition for a company historically built through organic content development.

For private equity and M&A professionals evaluating media consolidation trends, this battle illustrates several 2026 dynamics: the acceleration of streaming platform vertical integration, the persistent valuation gap between traditional media and digital platforms, and the increasing use of proxy warfare and litigation as deal-blocking mechanisms when traditional board negotiations fail.

The outcome will establish precedent for cross-platform media consolidation in an era of regulatory skepticism toward market concentration. A Netflix victory would validate the streaming-first consolidation thesis; a Paramount victory would signal that traditional media financing and strategic positioning retain competitive viability against digital-native competitors.