Investor Criticizes WBD’s Netflix Deal, Urges Paramount Talks Amid Rising Tensions
Activist investor and Warner Bros. Discovery (WBD) shareholder Ancora Holdings has expressed serious concerns regarding WBD’s recent deal with Netflix. The firm has threatened to vote against the Netflix agreement if the WBD board does not initiate discussions with Paramount amid a contentious takeover bid.
Concerns Over Netflix Deal
Ancora Holdings is pushing for WBD’s board to consider Paramount’s amended offer, which the investor believes could lead to a superior proposal. The firm holds a significant economic interest of approximately $200 million in Warner Bros. Discovery and manages assets close to $11 billion.
Pressure on WBD Board
In a presentation made by Ancora, it was suggested that the board’s decision to rush into a deal with Netflix was flawed. The board has a fiduciary duty to maximize shareholder value, but Ancora argues they have failed in this regard.
Ancora warned that, should WBD resist engaging with Paramount, they intend to campaign against the Netflix deal during the 2026 shareholder meeting.
Paramount’s Enhanced Offer
In response to WBD’s situation, Paramount has improved its takeover proposal, which includes:
- $30 per share cash bid for all of WBD
- A $0.25-per-share “ticking fee” payable for each quarter that the deal remains unresolved post-December 31, 2026
- A support commitment for a $2.8 billion termination fee payable to Netflix if WBD decides to back out of their deal
Additionally, Paramount aims to alleviate WBD’s concerns over compliance with debt financing costs and obligations.
Market Dynamics and Strategy
Both streaming titans, Netflix and Paramount, have differing strategies regarding the acquisition. Netflix proposes to purchase Warner Bros. studios and streaming assets for $27.75 in cash, while also outlining a spin-off plan for WBD’s linear television operations. This split could lead to varying debt allocations that may influence shareholder value.
Ancora emphasized that WBD’s board cannot provide shareholders with a concrete value from the Netflix deal, as it hinges on the uncertain market performance of the spinoff company, dubbed Discovery Global.
Regulatory Scrutiny
Amid these negotiations, regulatory challenges are also heating up. The U.S. Justice Department is investigating potential anticompetitive behaviors associated with Netflix’s acquisition plan. Co-CEO Ted Sarandos defended the Netflix deal during a recent Capitol Hill hearing, asserting it would be beneficial for consumers and the economy.
Future Implications
The developments surrounding WBD’s negotiations with both Netflix and Paramount are crucial. A special shareholder meeting is scheduled for April 2026, where the fate of the Netflix deal will be determined. Meanwhile, Paramount has extended its tender offer, hoping for increased shareholder support.
Investors and industry analysts are watching closely, as the unfolding events could reshape the landscape of the entertainment industry.
