Warner Bros. Discovery is in hot water over a class action lawsuit that claims Warner Bros. baked its 10 million HBO Max subscriber numbers in order to complete the merger with Discovery.
In addition to lying about HBO Max’s subscriber numbers, the lawsuit claims the studio also misled shareholders in other ways that violate securities law. The lawsuit was brought by the Collinsville Police Pension Board, a shareholder of Warner Bros. Discovery.
The Collinsville Police Pension Board lawsuit claims it can represent “hundreds of thousands” of plaintiffs and named Warner Bros. Discovery, company CEO David Zaslav and chief financial officer Gunnar Wiedenfels as defendants.
Plaintiff is seeking a jury trial for monetary damages based on allegations of three separate Securities and Exchange Commission violations in the lawsuit against Warner Bros. Discovery.
The Collinsville Police Pension Board agreed to exchange its Class C Discovery common stock prior to the merger. Since the merger, the stock’s value has fallen from $24.78 to just over $11 on Tuesday.
In addition to hiding other “adverse information,” the lawsuit alleges that the two merged companies exaggerated HBO Max subscriber counts:
“WarnerMedia recklessly focused its investments in streaming and ignored its other lines of business… [and] overestimated the number of HBO Max subscribers by up to 10 million subscribers, including as subscribers AT&T customers who had received bundled access to HBO Max, but had not signed up for the service.
The lawsuit follows criticism of decisions made by Warner Bros. Discovery regarding their handling of several film projects in production, including the cancellation of the near-completed film bat girl and the decision to move forward with Ezra Miller the flash after the actors series of controversies.
Now there is talk of another merger as a solution to the company’s lingering problems. Regardless of the studio’s future, things aren’t looking good as this new lawsuit adds to ongoing struggles at Warner Bros. Discovery.
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Source: The Envelope
