Warner Bros. Discovery (WBD) suffered a significant setback on Wednesday as it lost a key media rights deal with the NBA, causing its stock to drop more than 5% on Thursday.
This is a major blow for Warner Bros. Discovery, which has broadcast NBA games on its TNT network since 1989. The company had been paying $1.2 billion annually for the rights, which are set to expire at the end of next season. The loss will also affect TNT’s related NBA programming, such as the popular show “Inside the NBA,” featuring Shaquille O’Neal, Charles Barkley, and Kenny Smith.
Warner Bros. Discovery was unable to secure a new agreement after months of negotiations that ended on April 22. This led to a competitive bidding process that drove up the value of the media rights.
On Monday, Warner Bros. Discovery revealed it had matched Amazon’s bid to continue airing NBA games, a last-ditch effort to retain the rights. However, the NBA confirmed on Wednesday that it had accepted Amazon’s offer.
In response, Warner Bros. Discovery stated, “We have matched the Amazon offer, as we have a contractual right to do so, and we believe the NBA cannot reject it.” The company has indicated it will pursue legal action, with CNBC reporting that a lawsuit against the NBA is in the works. Neither Warner Bros. Discovery nor the NBA immediately commented to Yahoo Finance.
Wall Street analysts, however, are skeptical about the outcome of any potential litigation. Macquarie analyst Tim Nollen downgraded WBD’s shares to Neutral from Outperform, noting that while litigation is possible, it might be costly and unlikely to resolve favorably for the company.
The NBA’s new media rights package, valued at approximately $77 billion over 11 years, includes deals with Amazon, Comcast’s NBCUniversal, and a renewed agreement with Disney. NBA Commissioner Adam Silver stated, “Our new global media agreements with Disney, NBCUniversal, and Amazon will maximize the reach and accessibility of NBA games for fans in the United States and around the world. These partners will distribute our content across a wide range of platforms and help transform the fan experience over the next decade.”
