Adam Silver at the Allen & Company Sun Valley Conference on July 10, 2024 in Sun Valley, Idaho.
David Grogan CNBC
The invention of Warner Bros sued the National Basketball Association as an attempt to maintain the broadcasting rights for live game packages.
“Given the NBA’s unfair refusal to match third-party offers, we have taken legal action to enforce our rights,” the TNT Sports unit said in a statement. “We believe this is not only a contractual right, but also in the best interest of fans who want to continue watching industry-leading NBA content with the choice and flexibility offered through WBD’s first video distribution platforms – including TNT and Max.”
The NBA said Wednesday it has reached an agreement with Disney, ComcastNBCUniversal and Amazon in three different game packages, ending almost 40-year relationship with Warner Bros Discovery’s Turner Sports. The 11-year media rights deal is worth an estimated $77 billion — a huge increase from previous agreements as the value of live sports has skyrocketed.
Warner Bros. Discovery said earlier this week submitted documents to the league to match one of the packages, which people familiar with the matter identified as $1.8 billion per year game group earmarked for Amazon. The tech giant’s deal includes regular season games, an in-season tournament, and some playoff games. The NBA gave Warner Bros. Discovery the right to match when it signed a media deal earlier in 2014. The provision is intended to give the incumbent company the right of last refusal to maintain its position as a media partner.
But Warner Bros. Discovery’s decision to match Amazon’s package, rather than NBCUniversal’s $2.5 billion-a-year deal, prompted the league Wednesday that the matching rights were invalid. Warner Bros. Discovery’s offer for the package includes broadcasts of NBA games on cable network TNT and simulcasting on its streaming service, Max. This is not an apples-to-apples comparison with Amazon Prime Video, which is a streaming service only, the league argued.
In a letter the NBA sent to Warner Bros. Discovery on Wednesday, the league pointed to the language of the 2014 contract of matching rights as a reason to reject the offer.
The NBA noted the clause: “If a supporter matches the offer of a third party that provides for the exercise of game rights through a certain form of combined audio and video distribution, the incumbent will have the right and obligation to use the game rights. only through the combined form of audio and video distribution video (for example, if the special form of combined audio and video distribution is internet distribution, the relevant incumbent may not exercise the rights to the game through television distribution). according to people familiar with the matter.
Warner Bros. Discovery responded there with a lawsuit arguing that it paid to match the rights “in the same material terms and conditions that the NBA is willing to accept from Amazon,” according to the New York state court filed.
“Unless the NBA is specifically ordered to fulfill its obligations before the 2025-2026 season, TBS will lose the unique and valuable distribution rights designed to protect the Agreement (including MRE), as well as many intangible and incalculable benefits. these rights bring to Plaintiff’s business,” Warner Bros. Discovery wrote in the filing.
The company is seeking “early and permanent injunctive relief to prohibit the NBA from licensing these unique and irrevocable rights” to Amazon, while adding that “equitable relief is not granted,” expecting “monetary damages” from the NBA.
Warner Bros. Discovery wants to keep its partnership with the NBA at $1.8 billion a year, but doesn’t want to match NBCUniversal’s $2.5 billion a year offer, according to people familiar with the matter. Media companies can boost cable network affiliation fees with pay TV operators when they have important programming, such as live sports rights.
Owning the NBA rights is important to the health of Warner Bros. Discovery’s cable TV business, which has suffered in recent years as millions of Americans ditch traditional pay TV in favor of streaming services.
