NBA Commissioner Adam Silver speaks to the media at the Thomas & Mack Center on July 16, 2024 in Las Vegas.
Mick Akers | Las Vegas Review-Journal | Tribune News Service | Getty Images
Warner Bros. Discovery sued the NBA on Friday as it attempts to maintain broadcast rights for a series of live games.
“In light of the NBA’s unreasonable refusal to match our third-party offer, we have taken legal action to defend our rights,” the company’s TNT Sports division said in a statement. “We firmly believe that this is not only our contractual right, but also in the best interest of fans who want to continue to watch our industry-leading NBA content, and we provide them with choice and flexibility through our widely distributed WBD video-first distribution platform – Includes TNT and Max.
The media company is trying to prevent the NBA from awarding the rights to Amazon (Warner Bros. Discovery Channel is trying to match Amazon’s game package), or aiming to win monetary damages.
The NBA said on Wednesday it had disney, ComcastNBCUniversal and Amazon Three different game packages, ending a nearly 40-year relationship with Turner Sports, a division of Warner Bros. Discovery Channel. The 11-year media rights agreement is worth approximately $77 billion, a significant increase from previous agreements as the value of live sports continues to grow.
In response to the lawsuit, NBA spokesman Mike Bass said, “Warner Bros. Discovery’s allegations are baseless and our attorneys will address these issues.”
Warner Bros. Discovery Channel said earlier this week that it submitted documents to the alliance matching one of the packages, which people familiar with the matter said was a $1.8 billion-a-year games group specifically for Amazon. The tech giant’s deal includes the regular season, in-season tournaments and some playoff games.
The NBA granted matching rights to Warner Bros. Discovery Channel in 2014 when it signed a previous media deal.
But Warner Bros. Discovery decided to match Amazon’s package instead of the $2.5 billion a year NBCUniversal deal, leading the league to say Wednesday that the matching rights were invalid. The package offered by Warner Bros. Discovery Channel includes NBA games on its cable network TNT and simultaneous broadcast on its streaming service Max. The alliance believes this is not an apples-to-apples comparison with Amazon Prime Video, which is a pure streaming service.
Warner Bros. Discovery argued in a court filing Friday that its matching rights should still apply to the Amazon bundle because many of the games in the bundle had previously aired on cable TV.
“MRE (Matching Rights Exhibition) further stipulates,”[i]If TBS matches a third-party offer that contains cable television rights and there are no other incumbent matches, TBS shall have the exclusive right and obligation to exercise the third party’s stated cable rights bid (and on the same terms as provided),” Warner Bros. Discovery said in a statement court documents read. “That’s exactly what happened here: Amazon made an offer for cable TV rights as defined in the MRE, and TBS matched it. However, the NBA violated the agreement and refused to honor TBS’s games.” TBS is a cable affiliate of Warner Bros. Discovery Channel television network.
In a letter sent by the NBA to Warner Bros. Discovery on Wednesday, the league pointed to contract language for the 2014 matching rights as the reason it rejected the offer.
The NBA cited the provision: “If an incumbent is matched with a third-party offer that provides for the exercise of gaming rights through any specified form of audio and video combination distribution, such incumbent shall have the right and obligation to exercise such Game rights may only be distributed through specified forms of audio and video combination distribution (for example, if the specific form of audio and video combination distribution is network distribution, the matching operator may not exercise such game rights through television distribution).
CNBC’s David Faber reported Thursday that Warner Bros. Discovery Channel has sued the NBA.
NBA value to Turner
In 2022, Warner Bros. Discovery Channel CEO David Zaslav said his company “doesn’t have to own the NBA” if the economy takes a turn for the worse.
“For sports, we are a tenant,” Zaslav said at an investor conference in November 2022. “This is not a good business.”
Still, Friday’s lawsuit sheds light on the NBA’s value to Turner Sports. Owning the NBA rights would be valuable to the health of Warner Bros. Discovery’s cable TV business, which has suffered in recent years as millions of Americans canceled traditional pay TV in favor of a range of streaming services.
“NBA games generate significant viewership and viewership as consumers are more likely to watch live games immediately. This in turn impacts the fees TBS and WBD charge their advertisers and downstream distributors who authorize TNT to transmit to their customers price,” the company wrote in its complaint. “As such, NBA distribution rights enable TBS and WBD to develop their brands and reach a larger consumer base that only NBA games can bring. NBA television rights also give TBS and WBD a competitive advantage over other programmers, especially It’s in negotiations with other leagues for sports rights.
Warner Bros. Discovery argued that the NBA provides “intangible and immeasurable benefits” to the company’s business and asked for “preliminary and permanent injunctive relief to prohibit the NBA from licensing these unique and irreplaceable rights.” [to Amazon]”, while adding that the NBA is expected to award “monetary damages” if “equitable relief is not granted.”
Revealed: NBCUniversal is the parent company of CNBC.
Watch: Warner Bros. Discovery Channel sues NBA over matching rights
