An open class action against Warner Bros. Discovery (WBD) on Friday (9/23) in New York, on behalf of minority shareholders, claims the conglomerate has inflated the number of HBO Max subscribers to 10 million to get approved the merger.
According to The Wrap, the lawsuit was filed on behalf of the Collinsville Police Pension Board, an Illinois pension fund that said it was tricked into swapping its WarnerMedia common stock for the new company’s stock to facilitate a coalition with Discovery.
“WarnerMedia was focusing its investments on streaming and ignoring its other lines of business …” the lawsuit reads. “[E] exaggerated the number of HBO Max subscribers to up to 10 million subscriptions, including AT&T customers who received free access to the HBO Max package but did not subscribe to the service. “
The lawsuit names David Zaslav, CEO of WBD, and Chief Financial Officer Gunnar Wiedenfels as defendants. WBD has yet to comment on the action.
Discovery finalized its merger with AT&T-owned WarnerMedia in late April in a $ 43 billion deal. With that, HBO, HBO Max, CNN, Warner Bros., DC Films, New Line Cinema, Cartoon Network and other former WarnerMedia companies join Discovery Channel, Food Network, TLC, Animal Planet and Oprah Winfrey Network in a new media conglomerate.
More than 700 million shares of WBD were issued to Discovery’s common and preferred shareholders in the merger agreement, which, according to the lawsuit, means that “hundreds of thousands” of people could participate in the class action lawsuit against the company.
The public reports of the companies seem to corroborate the accusation.
In January of this year, WarnerMedia’s then CEO Jason Killar announced that HBO Max had 73.8 million subscribers worldwide. But in August, WBD decided to bring different numbers to the market. Without differentiating HBO Max and Discovery + subscribers, he reported that the two platforms combined had 92.1 million subscribers. This indicated a loss of 8.7 million subscribers between the two services.
Virtually admitting the issue with numbers, WBD noted at the time that, by its own decision, it decided not to consider 10 million subscribers who gained access to one of the services in a promotional partnership with AT&T. That is, who has won the subscription as a bonus in purchasing internet packages with the telephone company.
This is exactly what the cause claims.
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Source: Terra
Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.
