Activist Investor Ancora Holdings Signals Opposition to Netflix–Warner Bros. Deal

The saga of a potential Netflix and Warner Bros. deal took another twist this week, as Ancora Holdings, a US-based activist investor with a $200 million stake in Warner Bros. Discovery, plans to oppose the deal, according to The Wall Street Journal.

The deal they're opposing would see Warner Bros. sell its movie and TV studios, along with the HBO Max streaming service, to the streaming giant. 

Ancora Holdings Challenging the Deal

The basis of Ancora's plan is its belief that Warner Bros. didn't engage with Paramount sufficiently following an all-cash offer for the entire company. That deal would've included its cable-network group, and the deal would've been for $30 per share. 

While the overall stake of $200 million is small relative to the company as a whole, it introduces a new factor. 

On the one hand, Netflix has signed a $72 billion deal, while Paramount, which is bidding $78 million in all cash, has gone directly to shareholders and may even seek to get the board to fight. 

The Journal reports that Ancora, an $11 billion fund, has gone directly to Warner Chief Executive David Zaslav and told him that it is "considering launching its own proxy fight if Warner’s board doesn’t negotiate the best deal for shareholders with Paramount."

Right now, Warner is valued at $69 billion, so Ancora's share is less than 1%. However, it plans to purchase additional shares, which could galvanize other investors. 

A shareholder vote is expected in March. 

Paramount Bid Gaining More Attention

While Warner has argued that Netflix's offer has greater value, Paramount, which is again seeking the entirety of the company, including networks such as CNN, TNT, Food Network, and others, recently enhanced its offer.

It now includes a $2.8 billion termination fee that Warner would owe to Netflix if the transaction were terminated. Also, Paramount said it was adding a "ticking fee" of 25 cents per share. That would be paid to Warner shareholders for each quarter its deal hasn't closed, beginning in Jan. 2027, per the Journal. 

Ancora has called the Netflix deal “uncertain and inferior.” It also questions the spin-off of Discovery Global, as that would impose $17 billion in debt on Warner Bros. Discovery's cable-TV networks, which have declining viewership. 

Additionally, analysts at Raymond James, according to the Journal, believe Paramount could increase its offer by up to $3 per share.