Warner Bros. Discovery, Inc.

Defendants Made False and Misleading Statements in Connection with the Merger Between Discovery, Inc. and the WarnerMedia division of AT&T, Inc.

A shareholder filed a class action on behalf of all persons and entities who (1) exchanged Discovery, Inc. common stock for Warner Bros. Discovery, Inc. (NASDAQ: WBD) common stock pursuant or traceable to Discovery’s February 4, 2022 Registration Statement on Form S-4 (the “Registration Statement”) and Joint Proxy Statement/Prospectus filed with the SEC on February 10, 2022 (the “Prospectus”), or (2) purchased shares of WBD common stock on the open market traceable to the Prospectus through the date of the filing of this Complaint. The class action is also brought on behalf of Discovery shareholders who exchanged Discovery common shares for WBD common stock pursuant to the Prospectus.  

According to the complaint, Discovery and the WarnerMedia division of AT&T, Inc. completed its merger on April 8, 2022. After the merger, Discovery’s former senior officers – named as individual defendants in the class action – managed WBD. At the time of filing the Registration Statement and Prospectus, Discovery and the individual defendants knew or had access to adverse information concerning operations of the WarnerMedia business. However, defendants failed to disclose this information to Discovery shareholders prior to the vote on the merger.

Specifically, defendants failed to disclose that: (i) WarnerMedia’s HBO Max streaming business had a high churn rate that made the business not “viable” unless the churn rate was reversed; (ii) AT&T was overinvesting in WarnerMedia entertainment content for streaming, without sufficient concern for return on investments; (iii) WarnerMedia had a business model to grow the number of subscribers to its streaming service without regard to cost or profitability; (iv) WarnerMedia was improvidently concentrating its investments in streaming and ignoring its other business lines; and (v) 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.

Between April 11, 2022, the first trading day after completion of the merger, and September 22, 2022, WBD’s stock price fell by 52.4%, from $24.78 to $11.79 per share, as the market became aware of the foregoing misrepresented and omitted facts.


Next Steps: If you acquired shares of Warner Bros. Discovery, Inc. pursuant to the merger between Discovery and WarnerMedia division of AT&T, you have until November 22, 2022, to ask the court to appoint you lead plaintiff for the class.  A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.  You do not have to participate in the case to be eligible for a recovery.  

All representation is on a contingency fee basis. Shareholders pay no fees or expenses.

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