Feb 12 (Reuters) – Paramount Skydance is eyeing a prominent hedge fund manager and investor in Warner Bros Discovery to run for a seat on the media company’s board to try and scuttle its proposed tie-up with Netflix. Paramount is holding discussions with Matthew Halbower, the founder of Pentwater Capital Management, to be a potential director-candidate later this year if the company pursues a board fight at Warner Bros, he confirmed to Reuters.
Pentwater is the seventh-largest investor in Warner Bros with about 50 million shares. News that Halbower, who has expressed support for Paramount’s bid to buy Warner Bros, might be a candidate was first reported by the Financial Times. It also signals a further escalation of tensions after another hedge fund, Ancora Holdings, which said it has established a position in Warner Bros, voiced disapproval of the Netflix deal and might run its own proxy contest.
Halbower said that neither he nor Paramount has made a final decision on his appointment.
“I want the board of Warner Bros to exercise their fiduciary duties and negotiate with Paramount,” he said in an interview. “If they’re exercising their fiduciary responsibilities, then there’s no need for me to go on the board.”
The FT report had said that Paramount is planning to nominate enough directors to overturn a majority of Warner Bros’ 14-person board. The list of nominees was still being drafted.
Paramount Skydance declined to comment, while Warner Bros and Netflix did not immediately respond to Reuters’ requests for comment.
Halbower had in January told Warner Bros Chairman Samuel DiPiazza in a letter that the board “breached its fiduciary duty” to shareholders by rejecting Paramount’s offer out of hand, saying it was a better deal and had a better chance of clearing regulatory scrutiny.
He wrote that if Paramount does eventually further improve its $30-per-share offer, the Warner Bros board should at least talk with the suitor, or his firm will not support any Warner Bros directors at their next election.
Since then, Paramount has sweetened its bid by offering Warner Bros investors about $650 million in extra cash for each quarter the deal fails to close after this year and agreeing to cover the $2.8 billion breakup fee the HBO owner would owe Netflix if it walked away.
Netflix has offered to pay Warner Bros shareholders $27.75 per share in cash for the film and television studios, the extensive library and its HBO Max streaming service, instead of a mix of cash and stock.
(Reporting by Juby Babu in Mexico City, Dawn Kopecki in New York and Svea Herbst-Bayliss in Boston. Editing by Alan Barona)
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