Warner Bros. Discovery loses the rights to broadcast the NBA. What's next?
A published statement from the NBA confirmed that Warner Bros. Discovery (WBD) will lose key rights to broadcast NBA games. The news led to a significant drop in the company's stock, which fell approximately 7% in morning trading on Thursday.
It's a big blow for the media giant, which has broadcast NBA games through its TNT network since 1989. The company was reportedly paying $1.2 billion annually for those rights, which expire at the end of next season.
The loss of those rights also impacts other NBA-related content, such as the popular "Inside the NBA" show hosted by former players Shaquille O'Neal, Charles Barkley and Kenny Smith.
In recent months, Warner Bros. tried unsuccessfully to negotiate a new deal, which ended on April 22. This has led to an intense battle to acquire the media rights, further increasing their value.
On Monday, Warner Bros. $WBD-2.7% announced that it matched Amazon's $AMZN-3.7% offer for the rights to broadcast NBA games, in what was seen as a last-ditch effort to secure those rights. However, the NBA confirmed Wednesday that it had rejected the offer. "The latest proposal from Warner Bros. Discovery did not meet the terms of Amazon Prime Video's offer, and we have entered into a long-term agreement with Amazon," the league said in a statement.
Warner Bros. responded with a statement that "matched Amazon's offer, as we are contractually entitled to do, and we do not believe the NBA can reject the offer." The company also warned that it believes the NBA has misinterpreted contractual rights regarding the 2025-26 season and beyond and will take appropriate action.
According to CNBC reports, the company plans to sue the NBA. However, Wall Street analysts say that any lawsuits may not be enough for Warner Bros. Discovery could end favorably. Macquarie analyst Tim Nollen downgraded WBD stock to "Neutral" and said, "WBD clearly intends to sue the NBA, which it may have the right to do, but it's hard to see how it could end amicably. Even if WBD wins, the costs could be prohibitive."
The NBA has entered into a media rights package worth about $77 billion over 11 years with new partners that include tech giants Amazon and Comcast's NBCUniversal. The league also struck a new deal with another current media partner, Disney.
Amazon, NBCUniversal and Disney have acquired various rights to broadcast NBA games. Amazon has secured streaming rights through Prime Video for about $1.9 billion, NBCUniversal has offered $2.5 billion to stream about 100 games a season, and Disney has agreed to increase its annual payment from $1.5 billion to $2.6 billion while retaining some key games.
As the media landscape continues to change and technology plays an increasingly important role, traditional media companies face growing competition and high costs. For Warner Bros. Discovery, this means not only the loss of important content, but also a challenge in streaming services and advertising revenue.
Source: Yahoo Finance, CNN.
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