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

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.

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.

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.