Warner Bros. Discovery has been sued by investors who claim that the media conglomerate lied about potential fallout from its loss of NBA rights.

A proposed class action, filed in New York federal court on Monday, accuses WBD of mischaracterizing the impact that losing rights to regular and postseason games for its TNT network would have on its business. In August, a month after the NBA officially rejected WBDs offer to match the rights package that it cut with Amazon, the company took a $9.1 billion goodwill impairment charge related to the depreciation of its TV networks, which accounts for its failure to renew its deal with the league. The companys stock fell by nearly nine percent in after-hours trading the day the announcement was made. TNT has been a broadcast partner with the NBA since 1988, paying an annual average fee of $1.2 billion under its existing agreement with the league. Earlier this year, the NBA entered into discussions with various partners for a new round of deals after WBD failed to reach a new contract within its exclusive negotiating window. In July, the NBA announced a trio of blockbuster TV and streaming rights packages with Disney, NBCUniversal and Amazon.

The lawsuit takes issue with WBDs failure to disclose that the loss of NBA rights were likely to cause the company to significantly reevaluate its business, reflected in the massive impairment charge. It points to optimistic statements about WBDs prospects this year from chief executive David Zaslav, who said in a February earnings calls that the company is now on solid footing with a clear pathway to growth and is confident in its ability to drive sustained operating momentum and enhanced shareholder value. In regard to the state of negotiations with the NBA at the time, he said discussions were constructive and productive.

When an analyst noted the positive news, WBD chief financial officer Gunnar Wiedenfels responded, Its very easy to lose control over sports rights investments, the lawsuit says. He added, Thats not what we do. Were going we know exactly what value we assign and we stay disciplined during our discussions.

Investors take aim at boilerplate representations regarding WBDs investments in securing licenses for sports programming in its impairment analysts last year. The company stated that its ability to obtain the licenses will not have a material adverse effect on our business, financial condition or results of operations while downplaying the risk of impairment charges, according to the complaint.

Plainly, the foregoing risk warning was a generic, catch-all provision that was not tailored to WBDs actual known risks regarding its sports rights negotiations with the NBA, states the lawsuit.

In May, after WBDs exclusive sports rights negotiating window with the NBA expired without a deal, Zaslav in an earnings call touted the companys decades-long partnership with the league and its rights to match any competing offers. The lawsuit targets WBD neglecting to disclose in financial filings the increased risk of recording billions of dollars in impairment charges if it were to lose NBA rights.

When WBD reported its second quarter earnings in August, Wiedenfels pointed to sports right discussion like the one with the NBA as a triggering event for the reevaluation of the companys business. He explained, Thats what then leads to evaluation, which in the second quarter happened to be $9.1 billion below what was on the books for the network segment.

To pursue the lawsuit, investors must prove that the defendants, who include Zaslav and Wiedenfels, knew that their statements were misleading or were acting in reckless disregard of the information known to them at the time.

WBD didnt immediately respond to a request for comment.

In July, WBD sued the NBA in New York state court after the league refused to accept the companys matching offer for one of the packages in its new 11-year media rights deal. As part of a settlement, reached earlier this month, Inside the NBA will appear on ESPN and ABC beginning next season. TNT Sports will continue to produce the show, with the quartet of Ernie Johnson Jr., Charles Barkley, Kenny Smith and Shaquille ONeal expected to remain.