*Update 7/26/24: On Thursday, as spotted by NextTV, Warner Bros. Discovery and its Turner Broadcasting unit filed a lawsuit against the NBA under seal, related to the failed NBA renewal rights deal.
Following months of chatter and negotiations, the NBA on Wednesday officially announced 11-year media rights deals with the Walt Disney Company, NBCUniversal and Amazon Prime Video that include streaming and broadcast distribution starting with the 2025-26 season. In doing so the league sidelined long-time partner Warner Bros. Discovery, rejecting its bid to match Prime Video’s reported $1.8 billion per year offer.
However, WBD doesn’t appear to be willing to let the NBA package go easily, with its TNT Sports unit releasing a statement saying it matched Amazon’s offer as is its right under an existing contract “and do not believe the NBA can reject it.”
“We think they have grossly misinterpreted our contractual rights with respect to the 2025-26 season and beyond, and we will take appropriate action,” TNT Sports stated. “We look forward, however, to another great season of the NBA on TNT and Max including our iconic Inside the NBA.”
Legal battle looms
TNT Sports’ statement falls short of confirming plans to take legal action against the NBA over contractual language and WBD did not respond to questions from StreamTV Insider.
That said, it appears willing, and both the NBA and WBD were aware a legal conflict could arise if the latter chose to match Amazon’s bid. According to Brett Sappington, founder and principal analyst at Sappington Media, the conflict is teeing up “a fascinating legal battle that will focus on the definition of ‘matching’ and the differences between broadcast rights and streaming rights.”
In terms of how “matching” is viewed, the analyst believes WBD’s position is that it owns the option to buy rights at a specific price – namely Amazon’s bid, and legal teams for both the NBA and WBD have likely already staked out their arguments.
In May, Sports Business Journal reported, citing industry sources, that in the event of a legal battle, the NBA would contend “a match is not dollar-for dollar and that, specifically a match would need to include the same ad revenue, broadcast windows, etc. – something WBD apparently disagrees with.”
And Amazon and Prime Video could bring distinct benefits that enticed the NBA to favor picking it over an equal monetary offer from WBD. TVREV co-founder and analyst Alan Wolk thinks Amazon brings “so much” to the table in that regard, including a plethora of data on viewers and various retail opportunities.
“[If] I watched two Celtics games, they’ll put Celtics gear on my home page next time I go to Amazon,” Wolk told StreamTV Insider.
Of the three announced rights agreements, Wolk also sees Amazon as the party benefiting the most. He noted it gives the company both NBA and NFL rights (via Thursday Night Football), “lots of new ad slots and lots of opportunity for retail sales.”
And Sappington noted the NBA “clearly wants a strong streaming-only partner” that can reach potential fans not currently watching through traditional pay TV. He also sees distinct benefits for the NBA from partnering with the e-commerce giant versus WBD.
“Amazon offers the NBA global reach, a base of users with relatively low churn and ready-made connection to merchandise sales,” Sappington commented.
As for broadcast versus streaming, the analyst pointed out that debates about splitting rights have been around since the start of streaming.
“Distributors generally interpret their rights as broadly as possible in order to allow consumer-focused monetization across as many platforms as possible,” Sappington told STV. “Content rights owners interpret those rights as narrowly as possible so that they can split their rights across multiple partners to maximize licensing revenues.”
As others have laid out, there are three packages involved worth a reported $76 billion, where Disney and NBCU’s respective deals include both streaming and broadcast distribution. More details on which entities ended up with what here. Amazon’s package is streaming-only (whereas currently WBD’s provides TNT linear TV and Max streaming distribution) and WBD could have tried to match Disney or NBCU that have both but decided for the least expensive option in matching Amazon’s, noted Sappington, who thinks the former would’ve provided a stronger position.
“Had WBD matched NBC or ESPN, the NBA would have had less maneuverability to decline their bid,” he said. “Interestingly, WBD relied on contractual language and a potential legal fight rather than its 40-year partnership with the NBA in order to try and secure these rights.”
That said, it’s unclear if WBD, with a near $40 billion debt load, could match pricier package offers.
Is NBA worth the fight?
The question then arises as to whether a legal battle against the NBA is worth the fight for WBD.
Just how badly does WBD need the NBA?
“Very badly,” according to Wolk.
For one, the analyst believes WBD needs them to make the forthcoming Venu Sports streaming service (a JV with Fox and Disney’s ESPN) “a viable app.” And because WBD’s vision for Max “as a three-legged stool” with news from CNN, sports from Bleacher Report, and its entertainment assets “falls apart without it,” he commented.
Sappington, meanwhile, views taking the NBA to court as “a bit of a lose-lose proposition” for the media company.
“Even if it wins the legal argument, it will have damaged its relationship with one of its long-time partners,” he said.
Still, WBD could be incentivized to fight for the rights. The aforementioned Venu streaming JV brings together sports assets of WBD, Fox and Disney’s ESPN. And aside from losing key sports programming for its own Max streaming service and linear networks, is WBD still a valuable JV partner without NBA rights?
“Not much of one,” in Wolk’s view, saying WBD doesn’t have much else in the way of sports rights and was the main source of NBA games for Venu.
Sappington has a slightly less stark view and thinks WBD should still have a stake in Venu thanks to other sports leagues rights such as NHL, MLB, NASCAR and men’s college basketball – but also thinks its position in the JV is hampered.
“However, it won’t have as much influence, and perhaps not as great a share of the resulting JV as a result [of losing NBA rights],” he noted.
Finally, the loss of NBA rights could also impact WBD’s reported consideration to separate out its linear and studio business from streaming or potentially sell assets.
“If TNT Sports doesn’t have the NBA, it could affect which companies are interested in acquiring that asset,” Sappington pointed out.
So plenty of reasons for WBD to fight for NBA rights, but the ultimate route it chooses to take, and resulting outcome remains to be seen.
Paramount opportunity?
While WBD may not have clinched NBA rights, the deals as they stand could open opportunities for other players like NBC and Paramount.
Neither NBCU nor Paramount are part of the Venu streaming JV and Sappington thinks NBC is the big winner from the rights deals as it gains a larger position in the U.S. sports scene.
“If NBC and the new ownership at Paramount wants to offer a rival sports-first service to counter Venu, NBC now has more valuable content to bring to the table,” he commented.
And without the NBA, WBD could also have more interest in teaming up on a streaming partnership with the new Paramount (which has a pending merger with Skydance Media) thanks to its CBS assets.
“Bundling the CBS sports rights into Max could be its best option for offsetting the loss of WBD’s NBA rights,” Sappington said.