Hollywood's biggest merger saga adds a new twist! The aggressive fund makes a "surprise" investment in Warner(WBD.US), opposing Netflix's acquisition.

According to reports citing informed sources, aggressive activist investment firm Ancora Holdings Group has quickly established a stock investment position in Hollywood streaming and film production leader Warner Bros. Discovery (WBD.US). According to media reports, details of the position and Ancora’s plans are currently unavailable, and representatives of Ancora and Warner Bros. have not immediately responded to requests for comment.

Sources reveal that this newly invested and potentially influential activist investor plans to oppose Warner Bros. management’s recent acquisition deal with streaming giant Netflix (NFLX.US)—a deal in which Warner will sell its film and television studios along with HBO Max streaming service outright to Netflix.

Recently, Warner Bros. management issued a statement indicating plans to seek shareholder approval for the acquisition deal with Netflix before April. The company will hold its annual shareholder meeting in a few months to elect directors, which could render any proxy fight irrelevant.

Warner Bros. is the target of two competing acquisition offers: one from Netflix and another from Paramount Skydance Corp., a Hollywood rival. Warner has agreed to sell its film and TV studios and HBO Max streaming service to Netflix at $27.75 per share as part of a total transaction valued at $82.7 billion, including debt, and plans to spin off traditional cable networks like CNN and TNT to shareholders shortly thereafter.

Paramount Skydance, led by tech heir David Ellison and backed by his billionaire father Larry Ellison, founder and CEO of Oracle, is currently offering $30 per share—implying a valuation higher than Netflix’s—for the entire Warner Bros. company.

This Hollywood mega-merger faces another major twist

Latest developments show that this Hollywood mega-merger has encountered new uncertainties. Warner Bros. has repeatedly rejected Paramount Skydance’s overtures and publicly stated it will actively pursue a merger with Netflix. However, Paramount Skydance has launched a tender offer for Warner’s shares.

On one hand, Warner Bros. management and the board continue to push forward with a cash deal with Netflix and plan to submit it for shareholder approval before April 2026. The company has also publicly advised shareholders to reject Paramount Skydance’s tender offer. On the other hand, Paramount Skydance has bypassed management and directly extended its tender offer to shareholders, proposing to cover Warner’s $2.8 billion break-up fee if the deal is terminated, aiming to increase shareholder acceptance.

On Tuesday, Paramount Skydance announced an improved offer, proposing to cover the approximately $2.8 billion termination fee payable to Netflix if Warner terminates the deal. It also pledged to provide solid debt refinancing support for Warner Bros. if needed, along with an additional $1.5 billion in related costs.

To demonstrate confidence that its offer will quickly gain U.S. antitrust approval, Paramount Skydance announced it will pay a “ticking fee”: starting December 31, if the deal is not completed within one quarter, shareholders will receive $0.25 per share as a dividend.

Previously, when Norfolk Southern Corp., a major competitor of Norfolk Southern in U.S. freight rail, announced a merger with Norfolk Southern, Ancora advocated for the railroad giant CSX Corp. to pursue a merger, publicly pressuring CSX to accelerate merger efforts. However, no merger between CSX and Norfolk Southern materialized as per Ancora’s push.

Last year, Ancora attempted to force U.S. Steel to abandon its acquisition bid from Japanese steel giant Nippon Steel. After several months, the activist investor ultimately withdrew, and U.S. Steel completed the acquisition.

Activist investors’ shareholding often signals “strengthening bid negotiations or raising bargaining chips”

Currently, Warner Bros. Discovery’s (WBD.US) stock price is primarily anchored by merger scenarios: the market is pricing in both the $27.75 per share acquisition deal with Netflix and Warner’s management, and the $30 per share bid from Paramount Skydance (implying a valuation of about $108.4 billion).

Ancora’s decision to buy in at this time may aim to push the question of “accepting a higher bid” to the forefront, increasing the likelihood of a “higher offer or better terms.” Media reports indicate Ancora has built a position of around $200 million and leans toward opposing Netflix’s bid, advocating for the company to take Paramount Skydance’s offer more seriously, and possibly even engaging in a proxy fight. Such aggressive funds often exert pressure through shareholder letters, public statements, or proxy contests to compel management to maximize shareholder value.

In the short term, Ancora’s involvement is likely bullish for Warner’s stock and could lead to short-term volatility and upside surprises in option value. However, it does not automatically mean a significant rally, as the stock price is strongly anchored by the merger bids, with key factors including (a) whether a more attractive bid emerges, (b) shareholder voting and board processes, and © regulatory review and deal completion timing.

For Netflix, acquiring Warner would mean controlling an enormous IP library

For Netflix’s core streaming revenue platform, successfully acquiring Warner Bros. (including the “non-cable assets” under this deal, such as Warner Bros. film/TV studios, HBO, HBO Max, and their content libraries) would essentially upgrade Netflix from a “platform-only streaming service” to an integrated “platform + top-tier studio + massive IP library” giant. This would allow Netflix to convert high-value content that it currently sources externally into long-term owned assets, gaining a significant advantage in the “streaming wars.”

For the global streaming giant Netflix, which already owns a vast array of popular IP, acquiring Warner Bros. would significantly strengthen its content moat and pricing power: leveraging classic libraries and long-running series to boost retention, and using blockbuster IP to drive new films, spin-offs, games, licensing, and merchandise. It could also incorporate HBO’s globally acclaimed “premium series” capabilities into Netflix’s worldwide distribution system.

If the deal goes through, Netflix would control a treasure trove of popular IPs, including numerous fantasy and superhero franchises such as Harry Potter and the Wizarding World (including Fantastic Beasts), DC Universe (Batman, Superman, Wonder Woman, Suicide Squad), The Matrix series, Conjuring universe, Lord of the Rings and Hobbit series, Dune, and more. It would also include HBO’s flagship series universe—like Game of Thrones (including House Targaryen, Seven Kingdoms, and other spin-offs).