Warner Bros. Inflated HBO Max Subscriber Numbers Ahead of Discovery Merger, Lawsuit Alleges

Hundreds of thousands of people could be eligible to join the class-action suit.

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By Amanda Breen

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Many people have strong feelings about the idea of an HBO Max and Discovery Plus streaming combo in 2023, the result of a WarnerMedia and Discovery merger.

But the Collinsville Police Pension Board, an Illinois-based shareholder of Warner Bros. Discovery stock, which it accepted in exchange for its pre-merger Class C common Discovery shares, has taken it a step further, The Wrap reported, filing a lawsuit in New York. The lawsuit alleges that the media conglomerate overstated the HBO Max subscriber base ahead of the deal.

Although Netflix remains the dominant streaming service with upwards of 220 million global subscribers, per IndieWire, it's faced significant challenges this year — including the controversy around its intent to crack down on password sharing — opening up the playing field for other streamers.

Related: What's Going on With Netflix? Everything You Need to Know About the Company's Massive Fall

According to the lawsuit, which names Warner Bros. Discovery CEO David Zaslav and CFO Gunnar Wiedenfels as defendants and seeks monetary damages for three alleged SEC violations, the merging companies didn't disclose "adverse information," including the real 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," the lawsuit states, "by including as subscribers AT&T customers who had received bundled access to HBO Max, but had not signed onto the service."

Discovery shares were valued at $24.78 at the time of the merger; as of Tuesday, Warner Bros. Discovery shares were trading just above $11.

Related: AT&T Offloads Media Division, Announces Mega-Merger With Discovery, Inc.

More than 700 million shares are in question, the lawsuit claims, meaning "hundreds of thousands" of people could be eligible to partake in the federal securities class-action suit.

Amanda Breen

Entrepreneur Staff

Features Writer

Amanda Breen is a features writer at Entrepreneur.com. She is a graduate of Barnard College and recently completed the MFA in writing at Columbia University, where she was a news fellow for the School of the Arts during the 2020-2021 academic year. 

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