Ancora Holdings Threatens to Go Toe-to-Toe with Warner Bros. Discovery Over Netflix Deal

In a move that could potentially upend the proposed acquisition of Netflix by Warner Bros. Discovery, activist investor and WBD shareholder Ancora Holdings has issued a threat. The hedge fund, which holds a significant stake in the media conglomerate, is demanding that the board engage with Paramount Global, the parent company of Netflix.

The Backstory

In May 2022, it was announced that Warner Bros. Discovery had agreed to acquire Netflix for approximately $52 billion. The deal was seen as a bold move by WBD CEO David Zaslav, who aimed to expand the company's reach into the streaming market and bolster its content offerings.

However, not everyone is thrilled about the acquisition. Ancora Holdings, which holds around 9% of WBD's outstanding shares, has expressed concerns about the deal. The hedge fund believes that the acquisition will dilute shareholder value and lead to a misalignment of interests between WBD's management and its investors.

Ancora Holdings' Demands

In a statement released earlier this week, Ancora Holdings outlined its demands for the WBD board. The hedge fund is calling on the board to engage with Paramount Global in good faith, including:

1. Direct talks: Ancora is requesting that the WBD board initiate direct talks with Paramount Global to discuss the terms of the acquisition and address any concerns they may have.
2. Independent committee: The hedge fund wants an independent committee formed to review the deal's financial terms and provide recommendations to the board.
3. Shareholder satisfaction: Ancora is pushing for the board to prioritize shareholder satisfaction, including regular updates on the acquisition process and opportunities for shareholders to participate.

Consequences of a Proxy Fight

If WBD fails to engage with Ancora Holdings' demands, the hedge fund has threatened to launch its own proxy fight. This would involve submitting a slate of candidates to the WBD board, who would be tasked with overseeing the acquisition process and representing the interests of shareholders.

A proxy fight could lead to a prolonged and expensive battle for control of WBD. It would also risk alienating other shareholders and potentially destabilizing the company's leadership.

Why Ancora Holdings is Right to Speak Out

Ancora Holdings' decision to speak out against the acquisition deal reflects its commitment to protecting shareholder interests. The hedge fund has a vested interest in ensuring that the deal benefits WBD shareholders, rather than just the acquirer.

By demanding greater engagement and transparency from WBD management, Ancora is helping to ensure that the acquisition process is fair and equitable for all stakeholders involved. This is especially important given the significant stakes at play, with billions of dollars in value potentially being transferred between two major media companies.

Conclusion

The battle over the Netflix deal has only just begun. With Ancora Holdings' threat to launch a proxy fight, WBD management faces an uncertain future. As the acquisition process unfolds, it remains to be seen whether the board will listen to shareholder concerns and engage in good faith with Paramount Global.

One thing is clear: the fate of this deal hangs in the balance, and all parties involved must be prepared for a potentially long and contentious battle ahead.