The battle for Hollywood’s future has officially entered the courthouse. On January 13, 2026, Paramount Global, aided by Skydance, filed a massive lawsuit against the board of Warner Bros. Discovery (WBD), alleging that its leadership has been deceiving investors regarding the actual value of a competing bid for acquisition by Netflix.
What began as a behind-the-scenes bidding war has now erupted into a full-blown corporate showdown. Not only is the future of one of the world’s great entertainment properties at issue, but the future of the entire industry itself is at stake—legacy studios versus the tech giants.
Behind the lawsuit: Paramount’s drive for transparency
Paramount’s lawsuit revolves, in essence, around the issue of disclosure. The company claims that WBD’s board of directors did not disclose in a fair manner how it weighed the merger offer from Paramount against the offer from Netflix.
The suit filed by Paramount has three fundamental purposes. First, it demands that WBD be compelled to make internal assessments of the company, juxtaposing the two offers and assessing whether the Netflix offer actually provides better value for the company’s shareholders. Second, the company alleges that the board is doing little to ensure the interests of the shareholders, while instead preferring a quick and easy acquisition by Netflix of the WBD ecosystem for less than its value. Lastly, in a somewhat surprising move, Paramount has announced its intention to nominate its own board members at the next annual general meeting of WBD.
Industry experts say that this lawsuit has less to do with opportunism and more to do with the simple fact that Paramount finds itself on the fringes of the elite ranks of the world’s biggest media conglomerates, typically ranked fifth or sixth after Disney, Amazon, Netflix, and Apple. The company feels as if it could become irrelevant on such a scale-driven market.
One area of debate is the value of the linear TV assets owned by WBD. Paramount believes that the CNN, TBS, and Discovery brands represent underleveraged, although potent, assets when paired with their own broadcast and streaming platform. Netflix, on the other hand, is thought to be interested only in the high-value IP owned by WBD, such as the HBO, DC, Harry Potter, and Lord of the Rings brands, and considers the legacy cable assets to be disposable.
This involvement by Netflix has heightened worries in Hollywood. With a market capitalization in excess of $400 billion, Netflix does not need WBD. However, it would be a significant acquisition for the streaming platform if it were to buy WBD because it would grant it an unprecedented level of power over some of the most valuable franchises in the history of the entertainment industry.
Many Hollywood personalities have highlighted the possibility that a merger between Netflix and WBD could accelerate the decline of theatrical exhibition as a viable means of content distribution. This is because Netflix has always ignored theatrical exhibition as a distribution channel in favor of direct-to-digital releases.
Core Strategy
- Paramount + WBD: Legacy studios combined with a streaming balance
- Netflix + WBD: Direct-to-digital dominance
Theatrical Commitment
- Paramount + WBD: Strongly pro-cinema
- Netflix + WBD: Highly uncertain
Key Assets
- Paramount+ + WBD: CNN, TBS, Max, Paramount+
- Netflix + WBD: HBO, DC, Harry Potter
Industry Impact
- Paramount + WBD: Competitive studio ecosystem
- Netflix + WBD: Potential market monopoly
Paramount is now waging a two-front war, not only taking on WBD’s board in the courtroom but also reaching out to the shareholders on Wall Street. This battle will determine whether the movie industry will have a level playing field with various movie studios or be dominated by one giant, technology-driven studio. This lawsuit is not merely about who buys whom. This lawsuit is about whether the future of entertainment will be determined by movie makers and movie theaters or by algorithms and apps.
