Academics specializing in corporate law suggest the competition to acquire Warner Bros. Discovery has transformed into an unusual form of legal reminiscence, bringing Paramount back into prominence after many years and reintroducing established principles from Revlon through to the “Cuban beer” defense as Netflix endeavors to secure a deal of unprecedented magnitude. While appearing at first glance to be a straightforward strategic addition for the leading global streaming service, it is perceived by those who instruct in these matters as a grand theatrical production of Hollywood's past, echoing the acquisition narratives that characterized the film industry in the previous century.
TL;DR
- The Warner Bros. Discovery acquisition battle echoes past legal disputes, notably Paramount v. Time and Revlon v. MacAndrews & Forbes.
- Legal experts see the current competition between Netflix and Paramount as a "sequel" to historical corporate takeover narratives.
- The Revlon doctrine requires boards to prioritize shareholder value and avoid favoritism when selling a company.
- Political considerations and Middle Eastern investment add unique, modern complexities to the traditional legal precedents.
Individuals who experienced the 1989 acquisition leading to the significant legal dispute Paramount Communications v. Time recognize a familiar pattern. At that time, Time Inc. Was pursuing a merger with Warner Communications, while Paramount attempted to disrupt the agreement by launching a substantial unsolicited offer for Time, sparking a bidding contest and a pivotal Delaware decision regarding the circumstances and methods by which directors can refuse proposals. Naturally, Time Warner became a dominant media entity, holding sway for many years until a 2000 combination with AOL, which numerous observers view as the most disastrous merger in corporate history.
Anthony Sabino, a seasoned legal expert and educator at St. John’s University in Queens, N.Y., who instructs on these legal matters, characterized today's struggle “a sequel, not a reboot,” with Paramount , —currently vying with Netflix for the acquisition of WBD—as once more at the center of a takeover storm. He noted that Paramount was also the primary party in the 1994 Paramount v. QVC confrontation—likewise resolved in Delaware—when Barry Diller’s QVC was rejected in favor of Sumner Redstone’s Viacom in an attempt to purchase Paramount, thereby establishing the contemporary conglomerate that has since evolved into Paramount Global and, as of 2024, Paramount Skydance.
Familiar corporations and several key figures, including John Malone and the individuals succeeding Redstone, are once again involved, though the current arena for conflict is digital streaming rather than traditional cable and print media. Diller himself concurred, telling The New York Times via electronic mail at the start of this week, “yes, it is turning into a repeat.”
However, the swift developments where Netflix finalized a firm agreement valued at $72 billion in equity (and approximately $83 billion when factoring in debt), only for Paramount go public with an all-but hostile bid to be valued at $77.9 billion in equity (and $108 billion including debt), have also introduced a cosmetics brand into discussions, well-known among legal professionals: Revlon.
The Revlon element
Named after the 1986 Delaware decision in Revlon v. MacAndrews & Forbes, the Revlon doctrine “governs sort of how you should behave when you’re selling [a] company, and it says you can’t favor, you can’t think about anything other than shareholder value,” according to Columbia law professor Dorothy Lund. She explained that in that deal, the hostile takeover of cosmetics firm Revlon by the famed financier Ronald Perelman in the mid-1980s, the Revlon CEO had a “deep personal antipathy” for Perelman and structured a deal with a different private equity buyer. Ultimately, the Delaware Supreme Court ruled that the board of Revlon, like every other company, has a “heightened responsibility to be an auctioneer and thinking about getting the best value for shareholders,” Lund said, “and what you can’t do is play favorites. Everything that you have to do has to be done in service of shareholder value.”
The declaration of the Netflix agreement on December 5th suggested that Warner had opted for the most advantageous path for its investors by selecting the prominent streaming service, yet Paramount's subsequent declaration on the following business day, featuring a potentially superior offer, introduced the Revlon precedent, as both Sabino and Lund clarified. Paramount’s subsequent regulatory filing disclosed what it asserted was a history of limited involvement from Key Warner stakeholders, encompassing CEO David Zaslav and the influential figure “cable cowboy” John Malone, who holds the position of chair emeritus, having stepped down from the board earlier this year while still possessing substantial shares. (Malone had previously supported Diller and QVC in their unsuccessful 1994 attempt to acquire Paramount, a point that both Malone and Diller addressed in individual autobiographies published in 2025.)
Lund stated that she doesn't personally believe there's a significant Revlon argument at this point, “I think the board has to be really careful what they do in the coming weeks,” as the Warner Bros. Discovery board must avoid showing partiality for individual motivations. “Now the tricky thing is going to be, clearly everybody’s got money left on the table, right?” Lund pointed out that Paramount has signaled its $30-per-share proposal isn't its final offer, and Netflix also has room for an increased bid. “Now the board is in this tricky position of trying to engineer this deal to get the most value for shareholders.” They may very well be obligated by their Revlon responsibility to either approach Netflix again and request a greater offer or return to Paramount and give its proposal genuine consideration.
Lund said that the two-way fight between Paramount and Netflix is almost a fact pattern ripped from one of her exam books, with Paramount’s David Ellison effectively accusing CEO David Zaslav and the Warner board of violating their Revlon duties by favoring a more complex, slower Netflix package over a simple all‑cash offer. Lund also raised the Paramount vs. Time precedent, which was essentially about the choice of a merger partner on cultural rather than financial grounds. “You can’t say, ‘Well, I just like the culture,” which was an argument in that deal where one bidder was seen as more likely to preserve the Time culture. Boards can discount a higher price only for concrete reasons like firmer financing or cleaner regulatory paths, not because they like a bidder’s vibe, in other words. This is on display between Netflix, Warner and Paramount, with Ted Sarandos and David Zaslav reported to be on friendly terms, and Paramount’s regulatory filings suggesting a frosty distance between Zaslav and Ellison.
The clash of personalities is part of why experts lick their lips over media megamergers. “These are media personalities,” Sabino said, “and these folks are very powerful individuals … these are fantastically successful folks. And they don’t like it when you say no.”
Paul Nary, an associate professor of management at the Wharton School of Business, who instructs on M&A and monitors numerous large-scale transactions, stated “this is like my equivalent of a Super Bowl.” He pointed out the peculiar allure that media properties often possess as time passes, referencing the blend of personal pride and what are considered to be “marquee assets.” Addressing the probable legal conflicts involving Revlon and Time that are anticipated to arise between these two proposals, Nary indicated that a disagreement over worth will be central. He mentioned that the proposals from Netflix and Paramount are similar in value, “depending on how much you assess the equity components, how you assess the value of the spin-out and all of these other things.”
The worth of the spin-out, a venture to be named Discovery Global, is likely to be a subject of considerable discussion in the ensuing months, potentially even in legal proceedings. However, at least one observer has assigned a monetary value to the assets Paramount intends to acquire—and Netflix does not—shedding light on the disparity in valuations. Bank of America Research analyst Jessica Reif Ehrlich and her colleagues issued a report on December 7th, following the Netflix agreement and preceding the Paramount proposal, estimating the Netflix transaction to be valued at over $30 per share for WBD stockholders. Ehrlich's group determined Discovery Global's worth to be approximately $3 per share, which would render Netflix's offer of $27.75-per per share more advantageous than Paramount's. Nevertheless, if Discovery Global were valued at $4 per share, then Paramount's proposal might be considered superior.
Cuban lager, dentists of Jewish faith, and funds from The Gulf
Sabino contended that this situation is likely to bring back even more obscure defenses, obscure selections such as the titles hidden within Netflix's collection. He referenced the “Jewish dentist” defense—a legal matter from the 1970s in which adversaries of an agreement cautioned that Jewish customers might avoid a dental supply company should a Kuwaiti investment entity prevail.
Additionally, there was the less effective “Cuban beer” defense, which Sabino described as a modified version of “Jewish dentist.”. This situation emerged in 2008 when InBev, a worldwide brewing giant with headquarters in Belgium, sought to purchase the renowned American brewery Anheuser-Busch. Via a subsidiary, InBev had business dealings in Cuba, and Anheuser-Busch attempted to highlight this as an issue while striving to maintain its autonomy. Sabino told Reuters at that point, stating it was a “brilliant but desperate move,”, and AB InBev was eventually established from the historic $107 billion merger.
The link to these agreements, naturally, is the financial backing from The Middle East that is part of the Paramount offer for WBD. Valued at $24 billion, the support from The Middle East was partly arranged by Jared Kushner, former President Trump’s son-in-law, and Sabino indicated he anticipates inquiries regarding whether the American public will ultimately desire Middle Eastern government investment funds possessing substantial ownership in a Hollywood entity, despite David Ellison's assertion that such ownership won't include any decision-making authority. Analyst Rich Greenfield of LightShed Partners questioned Ellison on this very point during a conference call about Paramount’s bid: “Just wondering if you could give us any color on why they’re investing so much with no governance, right? Like what’s the — is there any rationale you can provide?”
Ellison informed Greenfield that the significant “industrial logic” would lead to a business producing substantial immediate cash flow. “When you look at that from a returns perspective, it’s incredibly attractive to—obviously, to all shareholders. And from that standpoint, I think that’s why our partners obviously are here.”
Regarding the Middle Eastern and Kushner-related elements of this narrative, which diverge from standard legal case studies, Lund stated “there are aspects of this that feel like a throwback, and there’s aspects of this that just feel so 2025.”
“Under Revlon,” she said, “you have to think about what’s going to create shareholder value. You think that would be a politically neutral thing, right? But when you have a president that’s out there saying, I’ve got a perspective on this, and I’m going to be involved in this, and that’s going to affect regulatory clearance. Now, all of a sudden, you have to worry about that whole political aspect of it as a part of your Revlon duty. And that’s very new.” Lund said dealmakers are confronting political entanglements that they haven’t had to confront before.
Sabino, by contrast, downplayed the political aspect as “overblown,” arguing that both offers ultimately turn on money and law, not party ties. “I think politics has very little to do with it, okay? Because again, the bottom line is, this is business. This is about money, okay?” The president, Sabino added, is a “very energetic guy” who “says a lot of stuff.” At the end of the day, Sabino said, he thinks Revlon and Time and shareholder value will win out, with Sarandos, Ellison and Warner, regardless of their political persuasion, playing M&A hardball. “These folks are deadly serious.”
Editor’s note: The author worked for Netflix from June 2024 through July 2025.
