Warner Bros. Has Been Accused Of "Cooking" HBO Max Subscriber Numbers By As Much As 10 Million

Things have gone from bad to worse for Warner Bros. Discovery, with the studio now accused of "cooking" its streaming service's subscriber numbers.

According to a class action lawsuit filed last week in New York on behalf of the Collinsville Police Pension Board, an Illinois-based shareholder of Warner Bros. Discovery stock, the studio exaggerated HBO Max's subscriber figures by 10 million. It's also claimed that WBD "misled shareholders in other ways that violate the Securities Act to complete its merger with Discovery."

The lawsuit, which could potentially represent “hundreds of thousands” of plaintiffs, names Warner Bros. Discovery, CEO David Zaslav, and CFO Gunnar Wiedenfels as defendants.

“The Registration Statement and Prospectus and certain of the Defendants’ other public statements, contained untrue statements of material fact or omitted to state material facts required to be stated therein or necessary to make the statements therein not misleading,” it reads. "AT&T was overinvesting in WarnerMedia entertainment content for streaming, without sufficient concern for return on investments … WarnerMedia had a business model to grow the number of subscribers to its streaming service without regard to cost or profitability.”

Yeah, this does not look good.

Warner Bros. Discovery and recently appointed CEO Zaslav have been facing a lot of scrutiny since the cancellation of Batgirl and the handling of the Ezra Miller situation, so the last thing they need is more bad press. A recent report indicated that the heavily indebted studio is also in dire financial straits, so an expensive lawsuit like this obviously won't help matters.

All signs point to another merger being the only option, with Comcast’s Brian Roberts emerging as the most likely candidate to propose combining NBCUniversal and WBD. But is that deal - or any other for that matter - still going to be on the table after this?