Ohio AG wants to take lead in lawsuit against Warner Media
Logan Daily News, The (OH)
(The Center Square) – Ohio wants to take the lead in a class-action lawsuit that claims Warner Media and Discovery, Inc. misled investors and caused more than $25 million in losses for public employee retirement systems in the state.
Ohio Attorney General Dave Yost filed his motion in the U.S. District Court for Southern New York, claiming two Warner Bros. Discovery executives either knew or had access to harmful financial information about Warner Media and did not disclose it before the merger on April 8.
Yost said that disclosure is required by federal securities law.
"Warner Bros. Discovery willfully withheld financial information that it was legally obligated to reveal for one highly self-serving reason – to ensure the merger's approval," Yost said. "In doing so, it created market distortions that cost Ohio's pension systems and other institutional investors dearly, and that is not OK."
Yost alleges the failure to disclose fueled $25.5 million in losses for the Ohio Public Employees Retirement System and the State Teachers Retirement System.
The lawsuit claims that at the time of the merger WarnerMedia was in financial turmoil and intentionally hid it from Discovery stockholders. The suit alleges WarnerMedia had overinvested in some business lines, inflated subscriber numbers by up to 10 million and provided other false financial information.
The lawsuit says that from April 11 – the first trading day after the merger – to Sept. 23, the price of WBD's common stock dropped 52.4%, from $24.78 per share to $11.79, as the market became aware of the misrepresented and omitted facts.
The decline erased more than $31 billion in WBD's market capitalization, Yost said in a news release.
Lawsuits were filed in New York as early as late September targeting WarnerMedia's alleged failure to disclose financial information.