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Warner Bros. Discovery, which was formed in 2022 from the merger of AT&T’s WarnerMedia and Discovery Communications, has agreed to pay $125 million to settle a shareholder lawsuit over the deal.
A handful of pension funds filed a lawsuit in Delaware court after the $43 billion merger closed, alleging the deal unfairly favored top investors at Discovery over ordinary investors. On Friday, the court released a document detailing the settlement, which was reached in May on the recommendation of a mediator.
Once Delaware Judge Travis Laster approves the agreement, holders of Discovery shares prior to the merger closing date in April 2022 will be eligible to receive funds from the settlement.
The defendants in the lawsuit include several former Discovery backers, including the Advance/Newhouse Partnership and Robert Miron; his son, Steven Miron; and Susan Swain. All are former members of Discovery’s board of directors. Robert Miron was chairman of the board. Swain is CEO of C-SPAN but has announced she will step down later this year.
The Advance/Newhouse Partnership is a private limited liability company owned by the Newhouse family. This family owns approximately 8% of WBD shares through its previous ownership of Discovery shares.
The lawsuit alleged that the merger was “not entirely fair,” in the words of Friday’s filing, because it generated payouts of more than $1 billion to select insiders and left common shareholders out in the cold. Of the total settlement amount, $100 million will be provided by the Advance/Newhouse Partnership, with Robert and Steven Miron adding $12.5 million each.
Under the merger structure, AT&T owns 71% of WBD, with Discovery owning the remaining 29%. However, Discovery’s former management team, led by CEO David Zaslav, retains control over WBD’s operations.
Last April, Warner Bros. Discovery announced that Steven Miron and Steven Newhouse had resigned from its board of directors. They left after the U.S. Department of Justice notified them that it was investigating whether their terms violated Section 8 of the Clayton Antitrust Act. The section prohibits directors and officers from serving concurrently on the boards of competitors, with limited exceptions. Miron is also a director of Charter Communications.
Miron is CEO of Advance/Newhouse Partnership, which is privately held by the Newhouse family. The family owns approximately 8% of WBD stock through its previous stake in Discovery. Miron is also a director of Charter, as is another member of the Newhouse family, Michael Newhouse.
The plaintiffs included the Bricklayers Pension Fund of Western Pennsylvania, the City Pension Fund for Firefighters & Police Pension Officers in the City of Pembroke Pines, the Key West Police and Firefighters’ Pension Fund, and Steve Silverman.
A representative for WBD declined to comment on the settlement when reached by Deadline.