Warner Bros. Discovery shareholder Harris Associates is calling on Paramount to revise its $108.4 billion bid for the media giant.
In an interview with Reuters, portfolio manager Alex Fitch said that Netflix’s $82.7 billion deal for WBD’s studio and streaming assets is “superior on deal terms” but “comparable on value” with Paramount’s offer for the entire company.
“The good news is that the concerns on deal terms seem entirely addressable,” Fitch added. “If Paramount decides to come forward with superior financial consideration and properly addresses the issues with deal terms, we would be very open to a revised Paramount offer. The ball is in their court.”
Harris Associates holds a 3.9% stake in Warner Bros. Discovery, making it the media giant’s fifth largest shareholder. A spokesperson for the firm did not immediately return TheWrap’s request for comment.
Though David Ellison has previously said that the offer is not his “best and final,” has been holding firm on his latest all-cash $30 per share bid, which has been taken directly to shareholders.
Paramount’s tender will be open for a minimum of 20 business days, or until Jan. 8, with the option for an extension. Under the terms, shareholders have withdrawal rights that expire at 5 p.m. ET on Jan. 8 unless the offer is extended.
Fitch’s comments come after GAMCO Investors chairman Mario Gabelli previously told TheWrap that he’s “highly likely” to tender his clients’ WBD shares to Paramount. However, Gabelli acknowledged that the company is still in the “early innings” with Netflix, signaling his support for higher bids from the two companies.
Paramount’s bid includes a total of $40.7 billion in equity financing, including $11.8 billion from the Ellison family and $24 billion from Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority and Abu Dhabi’s L’imad Holding Company, according to a filing with the U.S. Securities and Exchange Commission. Jared Kushner’s Affinity Partners had also contributed $200 million prior to backing out, according to the New York Times.
The Ellisons and Gerry Cardinale’s RedBird Capital Partners agreed to fully backstop 100% of the equity financing through the Ellison family trust, which contains over $250 billion of assets including 1.16 billion Oracle shares.
The bid also includes $54 billion in committed debt financing from Bank of America, Citibank and Apollo Global Management. Roughly $17 billion has been reserved to allow WBD to extend an existing bridge loan.
Meanwhile, the Netflix deal, which is valued at $27.75 per WBD share, is a combination of cash, stock and committed debt financing from Wells Fargo, BNP and HSBC.
The deal includes $23.25 in cash, plus $4.50 in shares of Netflix stock based on a collar range of $97.91 to $119.67 at the time of closing. It will also provide shareholders with additional value from the separation of Discovery Global in the third quarter of 2026.
Paramount has valued the cable networks business at $1 per share, while analysts have pegged the value between $3 and $5 per share.
Despite Paramount’s assurances, Warner Bros. Discovery’s board has said that the offer is “inadequate” and “illusory,” with “significant risks and costs imposed on our shareholders.”
WBD said that Paramount Skydance has “consistently misled” shareholders on its claim that the Ellison family was fully backstopping the deal, arguing a revocable trust is “no replacement for a secured commitment by a controlling stockholder” and that its assets and liabilities are “not publicly disclosed and are subject to change.”
It also said that the bid relies on relies on “the credit worthiness of a $15 billion market cap company with a credit rating at or only a notch above “junk” status from the two leading rating agencies” and that its $9 billion in proposed synergies are “both ambitious from an operational perspective and would make Hollywood weaker, not stronger.”
Additionally, it said the offer is “not capable of being completed by its current expiration date,” due to the need for, among other things, global regulatory approvals. Paramount has maintained that its deal would close within a year, while Netflix has said its deal would close within 12 to 18 months.
“Nothing in this structure offers WBD shareholders any deal certainty. The PSKY offer provides an untenable degree of risk and potential downside for WBD shareholders,” the board concluded. “We look forward to moving ahead with our combination with Netflix and delivering the compelling and certain value it will create for shareholders.”
