Some of the largest shareholders of Warner Bros Discovery are split over a revised takeover proposal from Paramount Skydance, highlighting growing tension as investors weigh competing bids for the Hollywood studio group.
Paramount has until Jan. 21 to convince shareholders to accept its latest all-cash offer of $30 per share, valuing Warner Bros Discovery at about $108.4 billion. The Warner Bros board, however, has reiterated its support for a previously announced agreement with Netflix, which values the company at roughly $82.7 billion, or $27.75 per share. The board argues that Netflix’s financing is more secure and that Paramount’s proposal would saddle the combined company with excessive debt.
Alex Fitch, partner and portfolio manager at Harris Oakmark, which held around 96 million shares, or about 4% of Warner Bros Discovery as of Sept. 30, said he agrees with the board’s assessment. “The value still isn’t clearly superior to what has already been agreed to with Netflix. A tie goes to the incumbent,” Fitch said in comments to Reuters.
Warner Bros Discovery has said Paramount’s higher headline offer does not fully account for costs tied to abandoning the Netflix deal, including a $2.8 billion breakup fee, $1.5 billion in advisory fees, and roughly $350 million in financing expenses. Factoring in those costs, the board said, would significantly reduce the appeal of Paramount’s bid, which it estimates would leave the merged company with about $87 billion in debt.
Other investors share that view. Yussef Gheriani, chief investment officer at IHT Wealth Management, said the board’s rejection was reasonable given the added fees and borrowing costs, despite the higher nominal valuation.
Not all shareholders agree. Pentwater Capital Management, which said it owns more than 50 million shares, has urged the board to reconsider. In a letter to Warner Bros Chairman Samuel DiPiazza, Pentwater founder Matthew Halbower accused the board of breaching its fiduciary duty by dismissing Paramount’s offer without further engagement, arguing it offered better value and potentially smoother regulatory approval.
Similarly, media investor Mario Gabelli, whose Gabelli Funds hold about 5.7 million Warner Bros Discovery shares, said he is likely to tender his shares to Paramount, describing the all-cash proposal as simpler and faster to clear regulators. “At the moment, Paramount has a superior bid,” Gabelli told CNBC.
Warner Bros Discovery remains one of the most coveted media assets on the market, with a portfolio that includes HBO Max, the “Harry Potter” franchise, and DC Comics. Its three largest shareholders — Vanguard, State Street, and BlackRock — together control about 22% of the company, but all declined to comment on the competing bids.
