Paramount extends tender offer deadline to woo Warner shareholders as proxy fight heats up

David Ellison is not abandoning his quest to build a new Hollywood juggernaut.

Ellison-controlled Paramount disclosed Thursday in a regulatory filing that it was extending the deadline of its tender offer for Warner Bros. Discovery stock. The firm had previously asked Warner stockholders to sell their shares to Paramount for $30 apiece by Wednesday.

The new deadline is Feb. 20.

Paramount faces an uphill battle in its pursuit of its larger entertainment industry rival. Investors so far have pledged 168.5 million of Warner’s shares to Paramount, according to Thursday’s filing with the Securities and Exchange Commission. Warner, in a statement, said the response represented only about 7% of its investors.

Paramount also filed proxy materials, saying it would challenge an alternative bid by Netflix at an upcoming special meeting of Warner shareholders to vote on the company’s sale. Warner’s board has not yet set the meeting date but has suggested the pivotal vote could occur by April — pushing the pitched battle for the company into spring.

Warner’s board unanimously agreed on Dec. 4 to sell much of the company to Netflix for $27.75 a share. Before that can happen, Warner must spin off CNN and other basic cable channels into a new publicly traded company called Discovery Global.

The multistep process is giving Paramount a wide window to make its case to Warner shareholders.

Warner Bros. Discovery, in a statement, was dismissive of Paramount’s efforts.

“Once again, Paramount continues to make the same offer our Board has repeatedly and unanimously rejected in favor of a superior merger agreement with Netflix,” Warner Bros. Discovery said in a statement. “It’s also clear our shareholders agree, with more than 93% also rejecting Paramount’s inferior scheme. We are confident in our ability to achieve regulatory approval for the Netflix merger.”

Paramount has sued Warner Bros. and its chief executive, David Zaslav, in a Delaware court, but the judge turned down Paramount’s request to expedite the legal proceedings to help Paramount make its case to Warner shareholders.

Paramount hopes that, over time, the proxy battle will be more fruitful. It plans to ask Warner shareholders to vote against the Netflix deal at the special meeting. Paramount has also said it would put forth its own slate of directors to be elected during Warner’s annual meeting with shareholders.

“The consideration payable to WBD shareholders in the Netflix transaction falls well short of Paramount’s $30 per share all-cash offer,” Paramount said in Thursday’s announcement.

Billionaire Larry Ellison and his family took control of Paramount in August, determined to become major players in Hollywood.

The following month, the Ellisons began an audacious pursuit of Warner Bros. Discovery. Their goal is to combine two century-old film studios and vibrant television production capabilities and marry such popular TV networks as HBO, CBS, Comedy Central, HGTV and TBS.

Netflix was the surprise suitor after Warner opened the auction to other bidders in late October.

Paramount launched its hostile takeover last month after failing to gain traction with Warner’s board, which remains steadfast in its support for Netflix’s $72-billion proposed purchase of HBO, HBO Max, television production and the Warner Bros. film studio, which led the Hollywood pack in the prestigious Oscar nominations, which were announced Thursday.

Earlier this week, Netflix converted its $27.75-a-share bid to an all-cash offer in hopes of defusing some of Paramount’s criticisms of its deal.

Paramount, which enjoys support from President Trump, has been stressing that Netflix’s regulatory path is uncertain.

Both sides plan to make their case to U.S. and European regulators.

Unlike Netflix, Paramount wants to buy all of Warner Bros. Discovery, including CNN and other basic cable channels. The value of the proposed cable channel company, Discovery Global, factors into the ultimate value that shareholders would receive if the Netflix bid prevails.

Warner’s cable channel spin-off is expected to be completed this summer. The value of the channels is in doubt, giving Paramount ammunition to claim that its $30-a-share tender offer for the entire company was more lucrative than Netflix’s offer for Warner’s studios and HBO.