Activist investor Ancora Holdings, which has built a stake worth nearly $200 million in Warner Bros Discovery, has announced plans to oppose the company’s proposed deal with Netflix for its studios and streaming assets.
Ancora, which manages $11 billion in assets, said Warner Bros’ board failed to adequately engage in talks with Paramount Skydance over a rival offer for the entire company, including cable assets such as CNN and TNT.
Ancora revealed on Wednesday that it would vote against the Netflix deal at Warner Bros’ shareholder meeting, expected by April, unless the company reverses its recommendation in support of the acquisition.
The investor criticised the deal, arguing that it offers inferior value, gambling on an uncertain spinoff, and exposes shareholders to significant regulatory risks. Ancora pointed to a higher value and more certain $30 per share offer from Paramount, claiming it as a better alternative.
Warner Bros, Paramount, and Netflix have not responded to Reuters’ requests for comment. With a market value of around $68 billion, Ancora’s stake represents less than 1% of Warner Bros’ outstanding shares.
Both Paramount and Netflix are keen to acquire Warner Bros for its film and television studios, content library, and major franchises like “Game of Thrones,” “Harry Potter,” and DC Comics superheroes.
On Tuesday, Paramount sweetened its bid by offering an additional $650 million in cash for each quarter the deal is delayed, and it agreed to cover the $2.8 billion breakup fee Warner Bros would owe Netflix if the deal fell apart.
However, Paramount did not increase its $108.4 billion offer, which includes debt, but reiterated that its proposal has a clearer path to regulatory approval compared to Netflix’s $82.7 billion deal.
Warner Bros stated it would review the revised offer but maintained its support for the Netflix deal. Paramount extended its tender offer deadline to February 20, hoping to convince investors. However, Ancora believes that Paramount’s improved offer qualifies as a superior proposal under the Netflix agreement, potentially paving the way for renewed talks.
Ancora also criticised the Netflix deal for leaving Warner Bros shareholders exposed to uncertainty, as the cash payout would depend on the financial health of the cable assets to be spun off into Discovery Global. Paramount has deemed these cable assets worthless and pointed to the decline in valuation of Versant, a Comcast spinoff, as evidence.
The investor also flagged the potential antitrust challenges the Netflix-Warner Bros deal could face, as it would make Netflix the largest streaming service globally with roughly half a billion subscribers. The U.S. Department of Justice is reportedly examining whether Netflix engaged in anti-competitive practices during the regulatory review of the deal. The DOJ is also reviewing the Paramount bid.
Ancora noted that the antitrust concerns for Netflix are greater than for Paramount, as the Netflix deal could substantially reduce competition in several markets. Netflix, however, is hoping for a “Hail Mary” approach to approval.
