The battle for Warner Bros. Discovery spilled onto pages full of revelations big and small Wednesday, as the media giant defended the process of selecting Netflix as the winner in its auction.
Company disclosures and a letter to shareholders from the board of directors explained the reasoning behind discarding Paramount as well as Comcast and offers from two unidentified parties. Among the reasons listed for rebuffing David Ellison: an incendiary and, it seems, unfortunately timed letter from Paramount’s lawyers at a critical moment.
“PSKY threatened WBD with unfounded allegations as a pressure tactic,” Warner wrote in a lengthy SEC filing detailing the auction from the WBD perspective. It’s referring to a letter that attorneys at Quinn Emanuel “served” WBD and its advisors on Paramount’s behalf, accusing directors of bias and management of conflict of interest regarding post-transaction roles.
WBD’s board Wednesday urged shareholders to reject Paramount’s hostile $108 billion deal and provided new context for how it opted for Netflix’s $82.7 billion offer for the WBD studio and streaming operation. Paramount stood by its hostile takeover effort, calling its offer “superior” to Netflix’s. Another takeaway from the flurry of filings is that WBD CEO David Zaslav stands to take home hundreds of millions dollars for engineering M&A fireworks at the end of his combined company’s rocky run.
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The legal letter, as reported by Deadline and others, alleged that “Paramount has a credible basis to believe that the sales process has been tainted by management conflicts, including certain members of management’s potential personal interests in post-transaction roles and compensation, as a result of the economic incentives embedded in recent amendments to employment arrangements.”
“In fact,” WBD countered Wednesday, “the only post-transaction roles discussed with WBD management by any bidder were the repeated offers that PSKY made to Mr. Zaslav for several hundred million dollars (to be co-CEO and co-chairman of PSKY). Mr. Zaslav refused to discuss those proposals with PSKY and disclosed them to the WBD Board.
“PSKY’s engagement of Quinn Emanuel, the same firm that [Elon] Musk retained to seek to avoid closing the Twitter transaction, suggests a highly litigious posture rather than a constructive attempt to achieve a negotiated agreement in the best interests of WBD stockholders.” Musk signed a binding agreement to acquire Twitter in 2022 before his Quinn Emanuel reps unsuccessfully tried to back out of the deal.
“Indeed, representatives of PSKY’s legal and financial advisors reached out separately to WBD’s legal and financial advisors on December 3 and 4, 2025 to indicate that, in their respective views, the Dec. 3 Quinn Emanuel Letter should not have been sent, and was ‘not helpful’ and a ‘mistake,’” WBD wrote.
Paramount confirmed previously that it offered Zaslav the role of co-chairman and CEO of a combined Paramount-WBD. The new WBD filing was the first reference to the “hundreds of millions of dollars.”
All In The Timing
The epistle was launched at a crucial moment on December 3, two days after second-round bids came in and the day after WBD’s board decided that Netflix had “submitted the meaningfully highest bid … accompanied by the most readily actionable legal documentation, with few issues remaining to be resolved” and decided to accelerate discussions with the streamer. “At the same time,” WBD said, “the WBD Board instructed WBD’s management and advisors to remain engaged with Company A [Comcast] and PSKY and provide them feedback consistent with the WBD Board’s discussions regarding the deficiencies in their proposals.”
WBD said the letter was sent by David Ellison directly to Zaslav via email, and separately sent by email, by in-person delivery by a litigation delivery services firm, and by overnight courier to four law firms advising WBD and to its financial advisor Allen & Company.
“The Dec. 3 Quinn Emanuel Letter contained no specific proposals for changes to the transaction documents or valuation that would have improved the PSKY Dec. 1 Bid. The December 3 Quinn Emanuel Letter largely relied for its assertions on partial summaries of inaccurate and incomplete newspaper reports that were not relevant to the evaluation of a potential transaction, while other assertions had no factual basis whatsoever. The Dec. 3 Quinn Emanuel Letter further sought confirmation as to whether WBD had appointed ‘an independent special committee of disinterested members of its board to consider the potential transaction opportunities’ and ‘strongly urge[d]’ WBD to empower such a committee if one did not already exist.
“WBD’s legal advisors provided the December 3 Quinn Emanuel Letter to the WBD Board, as requested in the letter. PSKY did not submit any revisions to the PSKY December 1 Bid on December 3, 2025.”
Netflix did, however. Its lawyers sent revised drafts of the merger agreement and other transaction agreements to WBD attorneys.
PSKY submitted a revised proposal on the morning of December 4.
Still, WBD says, the updated Paramount offer “was not superior to the value offered by Netflix.” Also, according to WBD, Netflix “said it would abandon its offer if it were not accepted that evening and would disengage from the process.”
The WBD board met to consider.
At approximately 5pm on Dec. 4, “while the meeting of the WBD Board to consider the various proposals was ongoing, Mr. Zaslav received a text message from Mr. D. Ellison. Notwithstanding that PSKY had been repeatedly advised that it should not expect an additional opportunity to improve its bid after the December 1, 2025 bid date, and that PSKY had nonetheless been given an opportunity to do so, the message stated that PSKY’s offer of a few hours earlier was not ‘best and final.’
“A representative of [WBD banker] Evercore previously had received a similar text message from a representative of [PSKY banker] Centerview at approximately 4:30 p.m. Neither Evercore nor Mr. Zaslav responded to these messages as they did not present any actionable improved proposal for consideration and it would not have been appropriate to do so in the midst of the WBD Board’s deliberations.
“Later in the evening on December 4, 2025, WBD entered into the Netflix Merger Agreement.”
Checkmate.
Paramount launched a hostile takeover offer the following Monday morning. It set an initial deadline of January 8 for WBD stockholders to tender their shares for the offer price of $30 each in cash.
The Netflix deal is for $23.25 in cash and around $4.50 worth of stock depending on share price ahead of closing but with a collar.
Argument To Shareholders
In its first official response to the hostile bid, WBD recommended strongly that shareholders reject it, listing numerous reasons it chose Netflix over Paramount. It contradicted Paramount’s previous blow-by-blow of the process that accompanied its hostile tender offer with criticism of WBD. Paramount accused WBD of being unresponsive and providing little to no feedback or guidance throughout the bidding process.
Paramount made six bids to buy WBD, three unsolicited, three as part of the formal auction, all with increasingly sweeter financial terms culminating in an all-cash $30 a share offer.
Paramount insists its offer is higher, has a better chance of passing regulators and that financing, backed by the Ellison Family Trust, is unassailable, calling it absurd to think otherwise. David Ellison’s father, billionaire Oracle co-founder Larry Ellison, is one of the world’s richest men.
Warner disputes it all. It noted numerous dinners, meetings and calls and said it raised the same issues and doubts repeatedly but that Paramount declined to address them. Financing was key.
Along with the Ellisons and RedBird Capital, Paramount’s investor group includes three Middle East sovereign funds. This outside financing is not backstopped by Larry Ellison personally, says WBD, but by an Ellison Family Revocable Trust, which, it insists, is not at all the same thing. It called the Trust “an opaque entity whose assets, liabilities, beneficiaries, terms, conditions and limitations are not publicly disclosed, and are subject to change.
“Regardless of the assets the Revocable Trust may or may not hold, PSKY has provided no information with respect to the terms or governance of the Revocable Trust, nor other liabilities it may have. A revocable trust generally has terms that would pose substantial risks to WBD stockholders.”
Taking Digs
A host of other issues were raised, along with the “pressure tactics” and digs at PSKY’s “inappropriate” behavior.
“On November 25, 2025, WBD and PSKY executed a ‘clean team’ confidentiality agreement to facilitate PSKY’s review of competitively sensitive information. The execution of this agreement required extensive negotiation regarding the scope of access, as PSKY had initially requested admission for an unusually large number of individuals, including certain personnel that WBD believed were inappropriate for access to highly sensitive competitive data given their roles at PSKY. Once PSKY agreed to a customary and appropriate list of access parties, WBD promptly executed the agreement and provided access to the ‘clean room.’”
Paramount had accused Warner of being slow to open up its data room.
The role and compensation for serially highly paid David Zaslav, noted by Paramount and hinted at in the Quinn Emanuel letter, has been a running theme of the process. Netflix and WBD have not discussed any role for the WBD CEO at this point in the process.
However, in its SEC filing Wednesday, WBD noted that if Paramount’s $30-a-share tender offer succeeds, Zaslav could in any case be set for a total “golden parachute” payout worth well north of $500 million based on his contract and severance agreements with Warner.
A PSKY transaction would potentially give him $30 million in cash severance ($6 million in salary and a $24 million bonus), according to a separate SEC filing in a flurry of action around a WBD transaction. The pay package would also include nearly $538 million in equity and $44 million in perquisites and benefits. Other named executives would also fare well, a potentially head-shaking end to a nearly three-year misadventure since Discovery and WarnerMedia’s ill-fated marriage began.
WBD is still to file the merger proxy for the Netflix deal. That document could include potential executive payouts under that pending agreement.