Warner Bros Discovery Sues NBA Over Rejected Media Rights Bid

Warner Bros Discovery and its sports division, Turner Broadcasting System, filed a lawsuit against the National Basketball Association (NBA) in New York on Friday, challenging the league's rejection of its matching bid for media rights.

The media company claims that the NBA's refusal to honour its right to match third-party offers violates its agreement with Turner.

"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," TNT Sports stated.

NBA spokesperson Mike Bass dismissed Warner Bros Discovery's claims as "without merit."

On Wednesday, the NBA awarded media rights to Walt Disney's ESPN, Comcast-owned NBCUniversal, and Amazon.com in an 11-year deal worth $77 billion.

The NBA rejected a last-minute offer from TNT Sports, stating it fell short of Amazon's proposal, thus ending nearly four decades of partnership after the next season.

Turner contends it has a significant interest in retaining NBA media rights, having invested billions in distribution and hundreds of millions more in production and talent, including the Emmy-winning "Inside the NBA" show featuring Ernie Johnson, Charles Barkley, Shaquille O'Neal, and Kenny Smith.

Turner argues that NBA games are "unique assets" driving significant viewership and ratings, impacting advertising rates and competitive negotiations with other leagues.

Turner claims the NBA presented the terms of Amazon's streaming deal, which includes 64 regular season games and at least 30 playoff games.

On Monday, Turner responded, matching Amazon's offer and agreeing to the same terms and conditions.

However, the NBA refused to honour Turner's match, prompting the lawsuit.

Emarketer senior analyst Ross Benes said the case may hinge on the court's interpretation of matching rights. Warner Bros Discovery claims it can match Amazon's price.

The NBA claims the Amazon portion is for streaming distribution, not linear," Benes explained.

The precedent on digital versus linear rights is not settled, so the outcome will be in the eye of the beholder."

Douglas Arthur, an analyst with Huber Research, questioned whether Turner could profit under the NBA's new deal, which represents a $700 million increase from its current contract.

"To make money on the step-up, subscriber fees would have to go up significantly, and WBD would have to hope that ad contracts would increase as well," Arthur wrote in an investor note on Friday.