Warner Bros Discovery is facing allegations of misleading shareholders about HBO Max’s subscription numbers.
In a report from The Wrap, we learn that a lawsuit has been filed last Friday in New York by the Collinsville Police Pension Board, an Illinois-based shareholder of Warner Bros. Discovery stock, who claimed that WBD lied about HBO Max’s Subscription numbers and is seeking a jury trial for “monetary damages” claiming three separate securities and exchange commission violations:
“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.”
It also alleges that AT&T, Warner Bros.’s previous owner, overinvested in WarnerMedia entertainment content for “streaming without sufficient concern for return on investments,” claiming that Warner Media had a business model to increase its subscriber number “without regard to cost or profitability.”
The lawsuit names WBD, CEO David Zaslav, and CFO Gunnar Wiedenfels as defendants.
This lawsuit is just one of the many controversies that Warner Bros. Discovery has found itself in this year. The studio canceled the upcoming Batgirl movie and Scoob! sequel, both reportedly in post-production so that they could serve as tax write-offs.
Later, HBO Max removed several exclusive shows and films to avoid paying creators residuals (particularly in animated programs). Additionally, within the past 40 days, WBD saw several layoffs as it attempted to climb out of debt.