Warner Bros. Discovery shareholder vote weighs Paramount deal

Warner Bros. Discovery shareholders approved The company’s proposed merger proposal Paramount Skydance An exciting sales process was brought one step closer to the finish line with preliminary voting on Thursday.

Paramount owns cable TV networks like TNT, CNN and Discovery Channel, as well as streaming service HBO Max and Warner Bros. Warner Bros., including the film studio. He offered $31 per share for all of Discovery. This offer was the result of multiple bids since September and a bidding war with the United States. netflix And comcast.

In late February, Paramount’s offer was increased to $31, prompting Netflix to abandon its proposed deal for WBD’s studio and streaming assets.

Paramount’s offer includes a $7 billion breakup fee if the proposed merger does not receive regulatory approval. The company also agreed to pay the $2.8 billion breakup fee that WBD owed Netflix as a result of the termination of that agreement.

“Shareholder approval marks another important milestone on the path to completing our acquisition of Warner Bros. Discovery, building on our successful equity and debt syndications and progress on regulatory approvals,” Paramount said in a statement Thursday. he said. “We look forward to completing the transaction in the coming months and realizing the creation of a next-generation media and entertainment company that will better serve both the creative community and consumers.”

Paramount and WBD said the deal is expected to close in the third quarter, pending regulatory approval.

“Over the last four years, our teams have transformed Warner Bros. Discovery and returned the company to industry leadership,” WBD CEO David Zaslav said in a press release Thursday. “Today’s shareholder approval is another important milestone toward completing this historic transaction that will deliver extraordinary value to our shareholders. We will continue to work with Paramount to complete the remaining steps in this process that will create a leading, next-generation media and entertainment company.”

Leading proxy advisory firm Institutional Shareholder Services recommended shareholders accept the deal, saying it was “the result of a competitive sales process and public bidding war.”

“In addition, shareholders receive a meaningful premium over the unaffected share price, there is potential downside risk of disapproval, and the cash consideration provides liquidity and value certainty to shareholders,” the ISS report said. he wrote. “Given these factors, support for the proposed transaction is warranted.”

According to WBD’s statement, while WBD shareholders voted “overwhelmingly” in favor of the deal with Paramount, they did not support the payments to WBD executives.

This comes as no surprise after the ISS’s previous report recommended against approval of the proposed golden parachute. Zaslav as part of the agreement. Zaslav’s exit package includes hundreds of millions of dollars in severance pay and other stock awards tied to the Paramount acquisition.

However, since this is a non-binding vote, payments to Zaslav and other executives will still be made.

The payout, which totals more than $800 million, highlights an obscure tax rule originally designed to cap CEO pay, CNBC recently reported.

Along with the proposed $500 million stock award, ISS also announced a “recently added gross excise tax of approximately $335 million,” or what is known as the golden parachute excise tax. First created by Congress in the 1980s, the tax was intended to limit what were considered large payouts to CEOs in the event of a change of control or sale.

— CNBC’s Robert Frank contributed to this report.