Investor Pressures Warner Bros to Reject Netflix Deal and Reconsider Paramount Offer

In a dramatic twist in the ongoing media merger saga, a major investor is urging Warner Bros. Discovery to rethink its $82.7 billion Netflix deal and give Paramount’s offer the serious consideration it deserves. What’s unfolding isn’t just a boardroom dispute it’s a high-stakes battle over shareholder rights, corporate governance, and the future of one of America’s most iconic entertainment giants.

Cleveland-based Ancora Holdings, which controls roughly $200 million in Warner Bros. stock, has gone public with its concerns. The firm believes Warner Bros. Discovery failed to properly evaluate Paramount’s amended all-cash offer of $30 per share. That proposal the sixth bid from Paramount now includes covering the $2.8 billion termination fee Warner Bros. would owe Netflix if the existing agreement were scrapped.

At the heart of the controversy is whether Warner Bros. leadership truly pursued the best deal for shareholders or rushed into an agreement with Netflix that leaves value on the table.

Ancora isn’t mincing words. In a presentation sent to CEO David Zaslav, the firm argued that the Warner Bros. board has “no choice” but to deem Paramount’s revised offer as potentially superior to Netflix’s bid. If the board refuses to engage, Ancora has threatened to:

• Vote “NO” on the Netflix deal

• Push for accountability at the board level

• Potentially initiate a proxy fight

While Ancora currently owns less than 1% of Warner Bros., the firm is reportedly increasing its stake and seeking to rally other shareholders. In major corporate battles, even small shareholders can sway outcomes when institutional investors begin to question board decisions.

And make no mistake shareholder activism is on the rise. According to recent market data, activist investor campaigns jumped more than 7% year-over-year in the U.S., as investors push back against what they see as complacent corporate leadership. In 2023 alone, over 200 public companies faced some form of activist pressure.

Warner Bros. leadership has defended its agreement with Netflix, insisting the board acted in shareholders’ best interests. In a statement, the company emphasized its “proven track record” and commitment to maximizing shareholder value.

But critics argue that the board moved too quickly.

Paramount’s revised bid includes tangible advantages:

• An all-cash offer at $30 per share

• Coverage of the $2.8 billion Netflix termination fee

• Potential for competitive bidding that could raise the final price

In an era of rising interest rates and tightened credit markets, cash offers carry significant appeal. The Federal Reserve raised interest rates 11 times between 2022 and 2023, dramatically increasing borrowing costs and reshaping merger strategies across corporate America. Companies with strong balance sheets and liquidity have leverage and shareholders know it.

There’s also the regulatory elephant in the room. Media consolidation has increasingly drawn scrutiny from federal regulators, especially under the current administration’s aggressive antitrust posture. With federal agencies blocking or challenging major mergers at the highest rate in decades, regulatory risk is not a trivial concern.

That risk, according to Ancora, has not been sufficiently addressed in the Netflix agreement.

This dispute goes beyond price per share. It raises fundamental questions about fiduciary responsibility. Directors are legally obligated to pursue the best outcome for shareholders not the quickest or most convenient deal.

When boards appear to sidestep alternative offers, even amended ones that improve financial terms, investors naturally ask why.

Warner Bros. Discovery sits atop a vast portfolio of media assets, from film studios to cable networks to streaming platforms. With streaming subscriptions in the U.S. surpassing 260 million paid accounts and global streaming revenue projected to exceed $115 billion this year, the long-term value of these assets is enormous. Shareholders want assurance that leadership isn’t undervaluing them.

If Paramount’s bid sparks a competitive bidding war, shareholders could benefit from upward pressure on valuation. That’s standard free-market dynamics something corporate America used to embrace unapologetically.

As the broader economy faces uncertainty, from inflation that peaked above 9% in 2022 to persistent market volatility, investors are less tolerant of questionable deals. Corporate boards are being watched more closely than ever.

The Warner Bros. situation is a reminder that shareholders, not executives, ultimately own public companies. And when management appears to dismiss higher or potentially superior offers, investors are increasingly willing to push back.

Whether this evolves into a full-scale proxy battle remains to be seen. But one thing is clear: the Netflix deal is no longer a done deal in the court of shareholder opinion.

And in today’s climate, shareholder opinion matters.

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