Senator Tim Scott has formally raised concerns with Securities and Exchange Commission Chairman Paul Atkins over the scope of information Warner Bros. Discovery has provided to investors about its pending deal with Netflix.
In a letter to the SEC chair, Scott criticized what he characterized as insufficient disclosure in Warner Bros. Discovery’s regulatory filings tied to the proposed transaction. The senator singled out language in the company’s proxy statement warning that the cash payment from Netflix could be reduced depending on the amount of debt shifted from Warner’s cable operations to the streaming and studio assets that Netflix intends to acquire.
"W.B.D.’s stockholders are being asked to evaluate competing offers without access to material information necessary to make an informed decision," Scott wrote, noting the limitations he sees in the filings.
The schedule for a shareholder vote on the Netflix arrangement remains unclear because Warner Bros. Discovery cannot put the vote on the calendar until the SEC grants approval of its proxy materials. That regulatory sign-off therefore determines when investors will be able to formally consider the transaction.
Scott’s correspondence arrives while a competing proposal from Paramount is on the table. The senator has previously referred to Larry Ellison - the principal backer of Paramount’s offer and the father of Paramount’s CEO David Ellison - as a "mentor." The letter also highlights that Larry Ellison has made substantial donations to a super PAC aligned with Scott.
The issues raised by Scott focus squarely on the completeness of the disclosures provided to Warner Bros. Discovery’s shareholders and the consequences that ambiguity could have for their ability to compare bids. The senator’s letter asks the SEC to assess whether the current filings give investors the material facts they need ahead of any vote.
At present, no new timeline for the shareholder vote has been announced and no additional facts about the structure of debt transfers or how they would affect the Netflix payment have been provided beyond the proxy statement’s warning. The SEC review of the proxy remains the gating item for any upcoming vote.