Warner Bros. Discovery sues NBA to secure media rights awarded to Amazon

Warner
Bros.
Discovery
sued
the
NBA
on
Friday
as
it
tries
to
maintain
broadcast
rights
for
a
package
of
live
games.

“Given
the
NBA’s
unjustified
rejection
of
our
matching
of
a
third-party
offer,
we
have
taken
legal
action
to
enforce
our
rights,”
the
company’s
TNT
Sports
unit
said
in
a
statement.
“We
strongly
believe
this
is
not
just
our
contractual
right,
but
also
in
the
best
interest
of
fans
who
want
to
keep
watching
our
industry-leading
NBA
content
with
the
choice
and
flexibility
we
offer
them
through
our
widely
distributed
WBD
video-first
distribution
platforms
—
including
TNT
and
Max.”

The
media
company
seeks
to
prevent
the
NBA
from
awarding
the
rights
to
Amazon,
whose
games
package
Warner
Bros.
Discovery
tried
to
match,
or
aims
to
win
monetary
damages.

The
NBA
said
Wednesday
it
had

reached
agreements
with


Disney,


Comcast‘s
NBCUniversal
and


Amazon
on
three
different
packages
of
games,
ending
its
nearly
40-year
relationship
with
Warner
Bros.
Discovery’s
Turner
Sports.
The
11-year
media
rights
deal
is
worth
roughly
$77
billion
—
a
massive
increase
over
the
previous
agreement
as
the
value
of
live
sports
booms.

In
response
to
the
suit,
NBA
spokesman
Mike
Bass
said
“Warner
Bros.
Discovery’s
claims
are
without
merit
and
our
lawyers
will
address
them.”

Warner
Bros.
Discovery
said

earlier
this
week
it
submitted
paperwork
to
the
league
to
match
one
of
the
packages,
which
people
familiar
with
the
matter
identified
as
the
$1.8
billion-per-year
group
of
games
earmarked
for
Amazon.
The
tech
giant’s
deal
includes
regular-season
games,
the
in-season
tournament
and
some
playoff
games.

The
NBA
granted
Warner
Bros.
Discovery
matching
rights
when
it
signed
its
previous
media

deal
in
2014.
The
provision
is
meant
to
give
an
incumbent
company
the
right
of
last
refusal
to
maintain
its
position
as
a
media
partner.

But
Warner
Bros.
Discovery’s
decision
to
match
the
Amazon
package,
rather
than
the
$2.5
billion-per-year
NBCUniversal
agreement,
caused
the
league
to
say
Wednesday
that
the
matching
rights
are
invalid.
Warner
Bros.
Discovery’s
offer
for
that
package
involves
airing
the
NBA
games
on
its
cable
network
TNT
and
simulcasting
them
on
its
streaming
service,
Max.
That’s
not
an
apples-to-apples
comparison
to
Amazon
Prime
Video,
which
is
a
streaming-only
service,
the
league
argued.

Warner
Bros.
Discovery
argued
in
a
court
filing
Friday
that
its
matching
rights
should
still
apply
to
the
Amazon
package
because
many
of
the
games
in
that
package
previously
aired
on
cable
TV.

“The
MRE
(Matching
Rights
Exhibit)
further
provides
that,
“[i]n
the
event
that
TBS
Matches
a
Third
Party
Offer
that
includes
Cable
Rights”
and
no
other
Incumbent
matches,
then
TBS
shall
have
the
exclusive
right
and
obligation
to
exercise
the
Cable
Rights
provided
for
(and
on
the
same
terms
set
forth)
in
the
Third
Party
Offer,”
Warner
Bros.
Discovery
wrote
in
its
court
filing.
“That
is
exactly
what
happened
here:
Amazon
made
an
offer
for
Cable
Rights
as
defined
in
the
MRE,
and
TBS
matched
it.
But,
in
breach
of
the
Agreement,
the
NBA
has
refused
to
honor
TBS’s
match.”
TBS
is
a
cable
TV
network
owned
by
Warner
Bros.
Discovery.

In
a
letter
the
NBA
sent
to
Warner
Bros.
Discovery
on
Wednesday,
the
league
pointed
to
the
contractual
language
of
the
2014
matching
rights
as
its
reason
for
rejecting
the
offer.

The
NBA
cited
the
clause:
“In
the
event
that
an
incumbent
matches
a
third
party
offer
that
provides
for
the
exercise
of
game
rights
via
any
specific
form
of
combined
audio
and
video
distribution,
such
incumbent
shall
have
the
right
and
obligation
to
exercise
such
game
rights
only
via
the
specified
form
of
combined
audio
and
video
distribution
(e.g.
if
the
specific
form
of
combined
audio
and
video
distribution
is
internet
distribution,
a
matching
incumbent
may
not
exercise
such
games
rights
via
television
distribution).”

CNBC’s
David
Faber on
Thursday
reported Warner
Bros.
Discovery
had
moved
to
sue
the
NBA.

In
2022,
Warner
Bros.
Discovery
CEO
David
Zaslav

said
that
his
company
did
not
“have
to
have
the
NBA”
if
the
economics
weren’t
sound.

 “With
sport,
we’re
a
renter,”
Zaslav
said
at
a

November
2022
investor
conference.
“That’s
not
as
good
of
a
business.”

Still,
Friday’s
lawsuit
expounded
on
the
value
of
the
NBA
to
Turner
Sports.
Owning
NBA
rights
is
valuable
to
the
health
of
Warner
Bros.
Discovery’s
cable
TV
business,
which
has
suffered
in
recent
years
as
millions
of
Americans
cancel
traditional
pay
TV
in
favor
of
a
bundle
of
streaming
services.

“NBA
games
drive
significant
viewership
and
ratings,
as
consumers
are
more
likely
to
watch
games
live,
in
real
time.
This,
in
turn,
affects
the
price
TBS
and
WBD
can
charge
to
their
advertisers
and
downstream
distributors
that
license
TNT
for
transmission
to
their
customers,”
the
company
wrote
in
the
complaint.
“NBA
distribution
rights
thus
give
both
TBS
and
WBD
the
ability
to
grow
their
brands
and
reach
a
larger
group
of
consumers
that
only
NBA
games
bring.
NBA
telecast
rights
also
give
TBS
and
WBD
a
competitive
advantage
over
other
programmers,
particularly
when
negotiating
with
other
leagues
for
sports
rights.”

Warner
Bros.
Discovery
argued
the
NBA
brings
“intangible
and
incalculable
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
if
“equitable
relief
is
not
granted,”
it
expects
“monetary
damages”
from
the
NBA.

Disclosure:
NBCUniversal
is
the
parent
company
of
CNBC.

WATCH:
Warner
Bros.
Discovery
sues
NBA
over
matching
rights