Adam Silver at the Allen & Company Sun Valley Conference on July 10, 2024 in Sun Valley, Idaho.
David Grogan | CNBC
Warner Bros. Discovery sued the National Basketball Association on Friday as it tries to maintain broadcast rights for a package of live games.
“Given the NBA’s unjustified rejection of our matching of a third-party offer, we have taken legal action to enforce our rights,” the company’s TNT Sports unit said in a statement. “We strongly believe this is not just our contractual right, but also in the best interest of fans who want to keep watching our industry-leading NBA content with the choice and flexibility we offer them through our widely distributed WBD video-first distribution platforms – including TNT and Max.”
The NBA said Wednesday it had reached agreements with Disney, Comcast‘s NBCUniversal and Amazon on three different packages of games, ending its nearly 40-year relationship with Warner Bros. Discovery’s Turner Sports. The 11-year media rights deal is worth roughly $77 billion — a massive increase over the previous agreement as the value of live sports booms.
Warner Bros. Discovery said earlier this week it submitted paperwork to the league to match one of the packages, which people familiar with the matter identified as the $1.8 billion-per-year group of games earmarked for Amazon. The tech giant’s deal includes regular-season games, the in-season tournament, and some playoff games. The NBA granted Warner Bros. Discovery matching rights when it signed its previous media deal in 2014. The provision is meant to give an incumbent company the right of last refusal to maintain its position as a media partner.
But Warner Bros. Discovery’s decision to match the Amazon package, rather than the $2.5-billion-per-year NBCUniversal agreement, caused the league to say Wednesday that the matching rights are invalid. Warner Bros. Discovery’s offer for that package involves airing the NBA games on its cable network TNT and simulcasting them on its streaming service, Max. That’s not an apples-to-apples comparison to Amazon Prime Video, which is a streaming-only service, the league argued.
In a letter the NBA sent to Warner Bros. Discovery on Wednesday, the league pointed to the contractual language of the 2014 matching rights as its reason for rejecting the offer.
The NBA cited the clause: “In the event that an incumbent matches a third party offer that provides for the exercise of game rights via any specific form of combined audio and video distribution, such incumbent shall have the right and obligation to exercise such game rights only via the specified form of combined audio and video distribution (e.g. if the specific form of combined audio and video distribution is internet distribution, a matching incumbent may not exercise such games rights via television distribution).” The league pointed to that language in a letter addressed to TNT Sports Chairman and CEO Luis Silberwasser, according to people familiar with the matter.
Still, Warner Bros. Discovery’s matching rights agreement is five pages long, and the company believes it has a strong case, the people said.
Warner Bros. Discovery wants to maintain its partnership with the NBA at $1.8 billion per year, but didn’t want to match NBCUniversal’s bid of $2.5 billion per year, according to people familiar with the matter. Media companies can boost cable network affiliate fees with pay TV operators when they own prized programming, such as live sports rights.
Owning NBA rights is valuable to the health of Warner Bros. Discovery’s cable TV business, which has suffered in recent years as millions of Americans cancel traditional pay TV in favor of a bundle of streaming services.