Warner Bros. Discovery is being sued by several different shareholder entities, which claim Warner inflated its subscriber count in the run-up to its spinoff from AT&T and subsequent $43 billion merger with Discovery.
In a suit filed earlier this week, the Collinsville Police Pension Board claims that in Securities and Exchange Commission filings, the erstwhile WarnerMedia included around 10 million additional subscribers in HBO Max's customer count -- users who received HBO Max through their AT&T unlimited wireless subscription as a free add-on service, but who had not actually signed up for the streaming platform.
The group said it accepted WBD shares in exchange for Class C common Discovery shares, which were trading at $24.78 at the time of the merger. As of Tuesday, WBD shares were trading at just over $11.
“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," reads the suit, which was obtained by TheWrap.
Separately on Friday, New York-based law firm Bronstein, Gewirtz & Grossman, LLC announced that it's putting together a class-action complaint against WBD. One of the key beefs: "WarnerMedia had 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 law firm also said that WarnerMedia improperly downplayed HBO Max's churn rate and "over-invested" in streaming content. ■
