In re Warner Bros. Discovery Inc. Stockholders Litigation

Pending Court Approval

Labaton Keller Sucharow is co-lead counsel representing former shareholders of Discovery Inc. (Discovery) in a lawsuit challenging Advance/Newhouse Partnership and Advance/Newhouse Programming Partnership’s (together, A/N) use of its equity stake, board designees, and a contractual veto right to extract an approximately $1.1 billion side payment in connection with Discovery’s $43 billion purchase of AT&T. Inc.’s WarnerMedia business (the Transaction).

Following a Section 220 demand and thorough investigation, on December 2, 2022, Plaintiffs filed a complaint alleging that A/N used its nearly 25% equity stake, related board representation and a contractual veto right to coerce Discovery’s Board of Directors into agreeing to the side payment to A/N in connection with the Transaction.   More specifically, Plaintiffs alleged that A/N’s director designees learned of the highly valuable nature of the Transaction because they failed to recuse themselves from the Transaction process despite A/N’s intention to seek differential consideration, voted with the remainder of Discovery’s Board to approve the Transaction, and only then threatened to invoke A/N’s contractual right to veto the Transaction unless it received a massive side payment.  Despite the other directors’ reluctance to revise the deal, A/N and its designees succeeded in leveraging their fiduciary status to extract a side payment of approximately $1.1 billion based on Discovery’s then-trading price.  

In March 2023, Labaton Keller Sucharow was appointed co-lead counsel for the matter.  On April 12, 2024, the class was certified by Vice Chancellor Laster, and the case was scheduled for a five-day trial to occur in November 2024.  

On May 17, 2024, the Parties reached a settlement of $125 million.   The settlement still must be approved by the Court.  

The case is In re: Warner Bros. Discovery Inc. Stockholders Litigation, C.A. No. 2022-1114 (Del. Ch.).  Labaton Keller Sucharow represents Bricklayers Pension Fund of Western Pennsylvania.