Feb 11 - Activist investor Ancora Capital said it has taken a roughly $200 million position in Warner Bros Discovery and intends to oppose the company’s proposed sale of its studios and streaming operations to Netflix. Ancora told investors that Warner Bros’ board has not adequately engaged with Paramount Skydance over a rival proposal that would acquire the whole company, including cable networks like CNN and TNT.
Both Paramount and Netflix are chasing Warner Bros for its film and television production units, extensive content library and marquee franchises including "Game of Thrones," "Harry Potter" and DC Comics characters such as Batman. Ancora’s move marks the latest escalation in the takeover contest for the HBO owner.
Paramount, led by David Ellison, on Tuesday enhanced its proposal by offering Warner Bros shareholders additional cash for each quarter the transaction does not close after this year and by agreeing to assume the $2.8 billion breakup fee that Warner Bros would owe Netflix if it were to terminate their agreement. Paramount did not raise its per-share cash price of $30 - a transaction value of $108.4 billion when including debt - but emphasized that its offer, it says, has a clearer route to regulatory approval than Netflix’s bid.
Netflix’s offer stands at $27.75 per share, which equates to about $82.7 billion including debt. A central element of the competitive dynamic is a proposed separation of Warner Bros’ cable assets that is critical to the economics and structure of the Netflix transaction. Warner Bros’ board has concluded that the Netflix acquisition is superior, citing that shareholders would retain an interest in a separately traded entity called Discovery Global under that arrangement.
Paramount has countered by characterizing the cable businesses as having minimal value and asserting that the Netflix proposal leaves Warner Bros shareholders exposed to meaningful uncertainty because the cash consideration they would ultimately receive depends on Discovery Global’s financial health at the time of the planned spinoff.
The David Ellison-led suitor has extended the deadline for its tender offer to February 20, providing more time to persuade shareholders to back its acquisition plan.
Investment research note included in the filing
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