Warner Bros. Discovery (WBD) filed a lawsuit against the NBA on Friday, alleging that the NBA “wrongfully rejected” a matching rights proposal made by the company earlier last week.
The lawsuit, filed privately in New York County Supreme Court by WBD and its subsidiary TBS and obtained by Yahoo Finance, states that the NBA “refuses to honor TBS's match. Not only that, but also alleges that despite TBS's apparent match, the NBA granted rights to Amazon in direct breach of the contract.”
Warner Bros. is reportedly paying $1.2 billion per year for the rights, which expire at the end of next season. Under the terms of the deal for the 2024-2025 season, the company maintains a rights package that includes at least 64 regular season games and at least 30 playoff games.
“TBS has a vested interest in maintaining these streaming rights and the brand it has painstakingly built over four decades,” the lawsuit states. “In addition to the billions of dollars it pays the NBA for streaming rights, TBS has invested hundreds of millions of dollars in production and talent, including its award-winning 'Inside the NBA' programming.”
In response to the lawsuit, NBA spokesman Mike Bass told Yahoo Finance, “Warner Bros. Discovery's claims are without merit and will be addressed by our lawyers.”
In response to the incident, Warner Bros. shares closed down about 4% on Friday.
The news came less than two days after the NBA formally approved a media rights package that eliminated one of the league's current partners, WBD, and replaced it with two new entrants: tech giant Amazon (AMZN) and Comcast-owned NBCUniversal (CMCSA). The NBA was able to reach a new deal with Disney (DIS), another current media partner.
The NBA said at the time that “Warner Bros. Discovery's most recent proposal did not match the terms of Amazon Prime Video's proposal, so we entered into a long-term agreement with Amazon.”
Wall Street analysts say the lawsuit may not amount to much to anything for the veteran media giant, which has aired NBA games on TNT since 1989.
“Even if WBD were to prevail, costs could be prohibitive,” Macquarie Bank analyst Tim Nolen wrote in a client note on Thursday.
The analyst later told Yahoo Finance that the NBA is clearly a “valuable asset for TNT,” benefiting both the company's linear TV advertising business and its “revenue muscle” — the fees payable by pay-TV providers to network owners to broadcast their channels.
“But what we're more concerned about is the opportunity cost of Max's streaming service, because streaming is the present and future of TV,” he said, adding that Max will have a hard time attracting new subscribers and retaining existing ones without the NBA.
“This is expensive content and holding onto it may result in losses. … But to me, this was a vital asset to hold onto. Not holding onto it would take a big hit to advertising and subscription revenue.”
The loss of rights will also affect TNT's NBA content, including the acclaimed show “Inside the NBA,” hosted by retired players Shaquille O'Neal, Charles Barkley and Kenny Smith.
Front Office Sports reported that both ESPN and Amazon are interested in keeping the show's cast intact, but Barkley has said he plans to retire after next season, which would also see the end of his current media deal.
“It's been clear from the beginning that the NBA wanted to part ways with us,” Barkley said in a statement posted to Instagram on Friday. “I don't know if TNT had a chance. They offered the same amount, but the league knows Amazon and these other tech companies are the only ones willing to pay double the rights in the future.”
“It's sad to see owners and commissioners putting money above the fans,” he continued. “It really is the worst.”
Alexandra Canal She is a senior reporter at Yahoo Finance. Follow her on X translator, LinkedIn, Please email me at alexandra.canal@yahoofinance.com.
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