Warner Bros Discovery sues NBA over Media Rights Deal

Warner Bros Discovery (WBD.O) and its sports division, Turner Broadcasting System, initiated legal action against the National Basketball Association in New York on Friday over the league's refusal of their bid for media rights. The company argued that the NBA's decision not to honor their right to match third-party offers breached their agreement with Turner.

TNT Sports issued a statement asserting that their right to match bids is not only contractual but also benefits fans who enjoy their NBA content.

NBA spokesman Mike Bass dismissed Warner Bros Discovery's claims as unfounded. On Wednesday, the NBA announced an 11-year, $77 billion deal granting media rights to Walt Disney's ESPN, Comcast's NBCUniversal, and Amazon.com. The NBA rejected a last-minute offer from TNT Sports, which it said did not meet Amazon's proposal, ending a nearly 40-year partnership with Turner after the next season.

Turner contended that it has heavily invested in NBA rights, production, and talent, including the Emmy-winning "Inside the NBA" show. They argued that NBA games are irreplaceable assets that drive significant viewership and ratings, impacting advertising revenue and negotiations with other leagues.

Turner said the NBA presented them with Amazon's terms for streaming 64 regular-season games and at least 30 playoff games. On Monday, Turner responded with a letter agreeing to match Amazon's offer. The NBA's refusal to honor this match led to the lawsuit.

The lawsuit's outcome may depend on the court's interpretation of matching rights, according to Emarketer senior analyst Ross Benes. He noted that the distinction between digital and traditional TV rights remains unsettled.

Douglas Arthur, an analyst with Huber Research, questioned whether Turner could profit under the new NBA deal, which would increase their costs by $700 million compared to the current contract. He suggested that to be profitable, Turner would need to raise subscriber fees and hope for increased advertising revenue.

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