WBD takes on activist investor backing rival Paramount Skydance over Netflix deal
Activist investor Ancora Holdings is preparing to fight the proposed sale of Warner Bros. Discovery for $72 billion for the movie and TV studio and HBO Max streaming service from Netflix, according to the report.
The Cleveland-based company, which has assets of about $11 billion, has built a stake worth $200 million and is expected to announce on Wednesday that it is in favor of rival Paramount Skydance for the whole company, the Wall Street Journal reported.
Paramount offered $30 per share in cash for all of WBD, valuing the company at about $78 billion, as it mounts an aggressive challenge to the Netflix deal.
Ancora, which owns less than 1% of WBD’s stock, emailed CEO David Zaslav on Tuesday saying it is considering starting a fight if the board won’t negotiate with Paramount about its rival’s takeover, the Journal reported.
The activist investor plans to continue buying Warner shares, according to the report.
People familiar with the matter told the Journal that if Ancora continues to appoint directors, it will seek to remove board members with ties to Zaslav.
Ancora privately asked whether Zaslav had agreed to a Netflix deal in exchange for a senior position at the streaming company after the transaction closed, the Journal reported.
Ancora has raised antitrust concerns about the Netflix transaction, which it described as “uncertain and low,” and is targeting a proposed Discovery Global spinoff that would have saddled the cable-TV networks with about $17 billion in debt despite declining viewership, according to a presentation from an activist reviewed by the Journal.
In the same presentation, Ancora defended Paramount’s performance as a buyer, citing the record of David Ellison and his father, Oracle founder Larry Ellison, and said he expected Paramount to receive antitrust approval soon.
Paramount said Tuesday it has sweetened its bid for Warner Bros. Discovery, added a so-called “markup fee” and other financial enhancements, although it failed to raise its $30-per-share cash offering.
The company maintains that its offer remains higher than Warner’s pending deal with Netflix.
Chief Executive Officer David Ellison said in a statement that the changes “clearly underscore our strong and unwavering commitment to delivering the full value of WBD’s shareholders’ investment,” adding, “We are making meaningful improvements – backing this offering with billions of dollars, providing shareholders with value assurance, a clear regulatory framework, and protection from market volatility.”
Under the revised terms, Paramount will pay WBD shareholders a mark-up fee of 25 cents per share for each quarter the deal remains open after the end of 2026, a move the company said underscores its confidence in securing regulatory approval.
The quarterly payment can account for $650 million in cash value each quarter after Dec. 31 when the work has not been closed.
Paramount also agreed to fund a $2.8 billion settlement of Warner’s debt to Netflix if that deal collapses and eliminate potential $1.5 billion in debt repayment costs.
The company said the revised offering — including a markup fee, severance financing and refinancing — was “fully funded” with $43.6 billion in equity commitments from the Ellison family and RedBird Capital Partners, and $54 billion in debt commitments from Bank of America, Citigroup and Apollo.
Warner said it has received the amended proposal and that its board will review and consider it, although the board continues to recommend that shareholders reject Paramount’s bid in favor of Netflix’s proposal to acquire Warner’s studios and broadcast assets.
RedBird founder Gerry Cardinale told CNBC that the changes were intended to “continue to strengthen and perfect” the offering, adding, “What we’ve done is to perfect it by taking off the table all of the, what I call, clerical stuff that they’ve been using to suggest that they’re not going to join us.”
The Post sought comment from WBD, Paramount and Netflix.
