American University
Discovery_HBO Max Merger.pdf (70.66 kB)

Discovery/HBO Max Merger

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journal contribution
posted on 2023-07-28, 19:03 authored by Lainey Anshutz


The streaming service industry is one of the more popular industries that are constantly growing. By 2030, it is anticipated that the streaming market will be worth $330 billion. Incredibly, 60% of American families and 85% of U.S. households each have at least one paid music streaming subscription [1]. Recently, the merging of HBO Max and Discovery took place, involving HBO Max getting rid of original HBO originals located on their streaming service. However, there is a lawsuit alleging that Warner Bros Discovery misled shareholders about the amount of HBO Max subscribers that has complicated this transaction [2]. 

Case Presented:

In Collinsville Police Pension Board v. Discovery, Inc, Wolf Popper LLP asserts that the defendants failed to disclose material information regarding WarnerMedia’s HBO Max streaming business before a March 2022 shareholder vote on the merger. The lawsuit was brought on behalf of the Collinsville Police Pension Board [3]. The 31-page lawsuit claims that because AT&T’s WarnerMedia division included AT&T customers who had obtained bundled access to HBO Max in the subscriber count, the Dallas phone titan “overstated the number of subscribers to HBO Max by as many as 10 million subscribers.” However, the lawsuit claimed that those AT&T customers had not subscribed to the HBO Max subscription [4]


After the merger, Discovery told the investors that due to a high churn rate, the HBO Max streaming business was not “viable” unless the churn rate was reduced. They then revealed a $3.42 billion loss for the month of August in the second quarter, which was partially caused by transaction-related expenses. In that earnings announcement, the company said it had modified the “subscription definition” for its streaming service and had eliminated 10 million AT&T Mobility users from the number [4]. 



American University (Washington, D.C.); Juris Mentem Law Review


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