Warner Bros. Discovery is in hot water over a class-action lawsuit that claims Warner Bros. cooked its HBO Max subscriber numbers by 10 million in order to complete the merger with Discovery.
In addition to lying about HBO Max subscriber numbers, the lawsuit claims that the studio also misled shareholders in other ways that violate the Securities Act. The lawsuit was filed by the Collinsville Police Pension Board, a Warner Bros. Discovery shareholder.
The lawsuit from the Collinsville Police Pension Board claims it may represent “hundreds of thousands” of plaintiffs and has named Warner Bros. Discovery, the company’s CEO David Zaslav and CFO Gunnar Wiedenfels as defendants.
Warner Bros. Discovery Faces Legal Action
The plaintiff is seeking a jury trial for monetary damages on the basis of allegations of three separate Securities and Exchange Commission violations in the lawsuit against Warner Bros. Discovery.
The Collinsville Police Pension Board accepted in trade for its pre-merger Class C common Discovery shares. Since the merger, the shares have dropped in value from $24.78 to just above $11 as of Tuesday.
As well as hiding other “adverse information,” the lawsuit alleges the two merging companies exaggerated the number of HBO Max subscribers:
“WarnerMedia was improvidently concentrating its investments in streaming and ignoring its other business lines … [and] overstated the number of subscribers to HBO Max by as many as 10 million subscribers, by including as subscribers AT&T customers who had received bundled access to HBO Max, but had not signed onto the service.”
The lawsuit comes following criticisms of decisions made by Warner Bros. Discovery regarding their handling of several in-production film projects, including the cancellation of the nearly completed Batgirl and the decision to go ahead with Ezra Miller’s The Flash after the actors spate of controversies.
Now, there is talk of another merger as a solution to the company’s ongoing woes. Whatever the future holds for the studio, things are not looking good as this new lawsuit adds to Warner Bros. Discovery’s ongoing struggles.
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Source: The Wrap