In a legal clash echoing the drama of its blockbuster productions, Warner Bros Discovery emerged victorious as U.S. District Judge Valerie Caproni in Manhattan dismissed a proposed class action led by Ohio Attorney General Dave Yost. The lawsuit alleged that the media conglomerate concealed crucial financial information in the lead-up to the April 2022 merger of AT&T’s WarnerMedia and Discovery.
Yost, representing the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio, contended that the merger’s offering documents overstated streaming subscribers, concealed content licensing strategies, and obscured the impending demise of the CNN+ streaming service. As the truth unraveled, Yost claimed Warner Bros Discovery’s stock plummeted over 40%, erasing nearly $25 billion of market value in four months.
Judge Caproni, however, ruled in favor of Warner Bros Discovery, emphasizing that the offering documents accurately detailed streaming calculations. She asserted that Chief Executive David Zaslav and other defendants were not obligated to disclose additional information under federal securities laws. Moreover, the judge questioned the connection between the planned CNN+ cancellation and the broader content strategy of Warner Bros Discovery.
The dismissal, delivered with prejudice, signifies that the lawsuit cannot be resurrected. Warner Bros Discovery, encompassing an array of brands such as DC Comics, Food Network, Magnolia Network, TBS, and TNT, celebrated the legal triumph. Represented by the law firm Weil, Gotshal & Manges, the company deemed the decision a “complete victory,” affirming that the challenged statements were “objectively true.”
Despite the legal saga, Warner Bros Discovery’s stock closed at $10.07 on Monday, reflecting a 58% decline from its trading debut on April 11, 2022. The legal battle, encapsulated in the case of Ohio Public Employees Retirement System et al v Discovery Inc et al, unfolded in the U.S. District Court, Southern District of New York (No. 22-08171). As the curtains fall on this legal drama, Warner Bros Discovery stands resilient, ready to script its next chapter in the ever-evolving landscape of entertainment and media.
