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In a dramatic turn of events, the National Basketball Association (NBA) has moved to dismiss Warner Bros. Discovery's (WBD) lawsuit over media rights, escalating tensions between the longtime partners. On August 24, 2024, the NBA filed documents in the Supreme Court of the State of New York seeking to shut down WBD's legal efforts to retain a portion of the league's media rights.
The dispute stems from the NBA's decision in July to award new 11-year rights deals to Disney, NBCUniversal, and Amazon, effectively ending its three-decade relationship with Warner. The new agreements, valued at $76.9 billion, are set to begin after the 2024-25 season.
At the heart of the conflict is WBD's claim that it properly exercised its right to match Amazon's offer for a package of games. However, the NBA contends that WBD failed to meet the terms of the Amazon deal, which hinged on streaming-only distribution.
William Koenig, the NBA's head of media distribution, detailed the league's position in a letter to Luis Silberwasser, president of Warner's TNT Sports. Koenig stated, "In its purported match of the Amazon Offer, TBS also changed – and thereby failed to accept – numerous other substantive terms of the Amazon Offer, with each of these changes representing an independent basis for concluding that it has failed to make a proper Match."
The NBA's filing reveals that Amazon had agreed to establish a rights fee escrow account containing three seasons of payments, totaling approximately $5.4 billion. In contrast, WBD offered letters of credit as an alternative form of security, which the NBA deemed less favorable.
Industry analyst Robert Fishman of MoffettNathanson noted WBD's recent efforts to bolster its sports portfolio, acquiring rights to events like the French Open and certain college sports. However, he expressed caution about whether these acquisitions would sufficiently offset the loss of NBA content in the eyes of linear distributors.
The stakes are high for WBD, which recently took a $9.1 billion write-down on its cable portfolio, citing the impending loss of NBA games as a significant factor. NBA games have been a crucial component of TNT's schedule, attracting the live audiences coveted by advertisers and cable distributors alike.
The NBA maintains its position that WBD's actions are unjustified. The league intends to pursue dismissal at an October 4 hearing in New York City. Meanwhile, WBD stands firm, stating, "We maintain our position that the NBA's actions are unjustified, and we strongly believe we have fulfilled our contractual right to match the third-party offer."
