In December 2022, KTMC brought a class action on behalf of shareholders of Discovery, Inc. related to the April 2022 merger of Discovery, Inc. and a unit of AT&T, WarnerMedia, against one of Discovery’s founding shareholders, Advance/Newhouse Communications (“Advance”). The combination formed the company Warner Bros. Discovery, Inc. The lawsuit alleged that Advance promoted its own interests over those of Discovery and its public shareholders by threatening to withhold its approval of the merger unless it received preferential treatment in the form of an outsized share of the merger compensation. Ultimately, Advance was able to extract a $1.1 billion side payment in exchange for its approval of the merger. KTMC alleged that this side payment was improperly extracted, reduced the compensation received by the rest of Discovery’s former stockholders, and was extracted in violation of Advance’s and it’s director appointee’s fiduciary duties.
Between December 2022 and May 2024, the parties heavily litigated the action and engaged in extensive discovery. In July 2024, after mediation, Advance agreed to settle the lawsuit for a payment to Discovery’s former stockholders of $125 million.