Adam Silver at the Allen & Company Sun Valley Conference on July 10, 2024 in Sun Valley, Idaho.
David Grogan | CNBC
Warner Bros. Discovery on Friday sued the National Basketball Association as it attempts to maintain broadcast rights to a series of live games.
“In light of the NBA's unreasonable refusal to match our third-party offer, we have taken legal action to defend our rights,” the company's TNT Sports division said in a statement. “We firmly believe that this is not only our contractual right, but also in the best interest of fans who want to continue to watch our industry-leading NBA content by providing them with choice and flexibility through our widely distributed WBD video-first distribution platform – Includes TNT and Max.
The NBA said on Wednesday it had disney, ComcastNBCUniversal and Amazon Three different game packages, ending a nearly 40-year relationship with Turner Sports, a division of Warner Bros. Discovery Channel. The 11-year media rights agreement is worth approximately $77 billion, a significant increase from previous agreements as the value of live sports continues to grow.
Warner Bros. Discovery Channel said earlier this week that it submitted documents to the alliance matching one of the packages, which people familiar with the matter said was a $1.8 billion-a-year games group specifically for Amazon. The tech giant's deal includes the regular season, in-season tournaments and some playoff games. NBA awards matching rights to Warner Bros. Discovery Channel as it signs previous media 2014 transactions. The clause is intended to give existing companies the final right to refuse to maintain their status as media partners.
But Warner Bros. Discovery decided to match Amazon's package instead of the $2.5 billion a year NBCUniversal deal, leading the league to say Wednesday that the matching rights were invalid. The package from Warner Bros. Discovery Channel includes NBA games on its cable network TNT and simultaneous broadcast on its streaming service Max. The coalition believes this is not an apples-to-apples comparison with Amazon Prime Video, which is a pure streaming service.
In a letter sent by the NBA to Warner Bros. Discovery on Wednesday, the league pointed to contract language for the 2014 matching rights as the reason it rejected the offer.
The NBA cited the provision: “If an incumbent is matched with a third-party offer that provides for the exercise of gaming rights through any specified form of audio and video combination distribution, such incumbent shall have the right and obligation to exercise such Game rights may only be distributed through specified forms of audio and video combinations (for example, if the specific form of audio and video combination distribution is network distribution, the matching operator shall not exercise such game rights through television distribution). According to sources, the league pointed out this language in a letter to TNT Sports Chairman and CEO Luis Silberwasser.
Warner Bros. Discovery Channel filed the lawsuit on Friday, saying it paid for the matching rights “on the same material terms and conditions that the NBA is willing to accept from Amazon,” according to New York state court documents.
“Unless the NBA is ordered to specifically perform its obligations before the 2025-2026 season, TBS will lose the unique and valuable distribution rights that this agreement (including the MREs) is designed to protect, as well as many intangible and immeasurable benefits. These rights will give Plaintiff's business had an impact,” Warner Bros. Discovery wrote in the filing.
The company is asking for “preliminary and permanent injunctive relief to prohibit the NBA from licensing these unique and irreplaceable rights to Amazon,” while adding that it wants “monetary damages” from the NBA if “equitable relief is not granted.”
Warner Bros. Discovery Channel wants to maintain its $1.8 billion-per-year partnership with the NBA but does not want to match NBCUniversal's $2.5 billion-per-year offer, people familiar with the matter said. When media companies own prized programming, such as live sports rights, they can charge cable networks higher affiliate fees to pay-TV operators.
Owning the NBA rights would be valuable to the health of Warner Bros. Discovery's cable TV business, which has suffered in recent years as millions of Americans canceled traditional pay TV in favor of a range of streaming services.