This game may never start.
The NBA on Friday decided to halt an ambitious legal effort by Warner Bros. Discovery to force the league to return a portion of its media rights to the company. In documents filed in New York State Supreme Court, the league sought to have the case dismissed, alleging that Warner had in fact failed to meet the terms of a bundle of games for Amazon Prime Video, detailing in a letter how the company, its former sports media ally, tried to craft an alternative deal that didn’t actually offer the same things Amazon did.
NBA spokespeople did not immediately respond to requests for comment. The league said in its filing that it intends to file a motion to dismiss the lawsuit at a hearing on Oct. 4 in New York City.
“We stand by our position that the NBA’s actions are unjustified, and we strongly believe that we have satisfied our contractual right to match the third-party offer. Not only is this our contractual right, but it is in the best interests of fans who want to continue to enjoy industry-leading NBA content with the choice and flexibility we offer them through our widely distributed platforms including TNT and Max,” Warner Bros. Discovery said in a statement. “We will file our opposition in the coming weeks.”
In July, the NBA awarded new 11-year broadcast rights deals to Disney, NBCUniversal and Amazon, rejecting an offer from Warner to remain its media partner after nearly three decades of relationships. The new deals go into effect after the next NBA season.
One of the documents provided is a July 24, 2024, letter from William Koenig, the NBA’s president of media distribution, to Louis Silberwasser, president of Warner’s TNT Sports subsidiary. In the letter, Koenig says Warner’s efforts to match Amazon’s package “do not qualify” because the deal is based on broadcast distribution only and Warner’s offer included both the TNT cable network and the Max streaming service.
“In its alleged match to Amazon’s offer, TBS also changed — and thus failed to accept — several other substantive terms of Amazon’s offer, each of which constitutes an independent basis for concluding that it failed to make a proper match,” Koenig said.
Warner Bros. Discovery desperately needs these games. They are a staple of TNT’s programming schedule, generating the live, simultaneous audiences that both advertisers and cable distributors crave. Earlier this month, Warner took a $9.1 billion loss on its cable portfolio, citing the impending loss of the NBA as a major factor in its decision.
Koenig also provided details on how Amazon agreed to ensure the league would pay, citing “the creation of a rights fee escrow account, where the licensee would be required to deposit and maintain three seasons of rights fee payments on an ongoing basis and from which the rights fee would be automatically deducted.”
“These amounts were disbursed to the NBA in accordance with the agreed-upon payment schedule (thus avoiding the possibility of default).” Amazon also “committed to maintaining a credit rating above investment grade, with failure to meet this obligation giving rise to a termination right in favor of the NBA and an associated termination payment.”
Meanwhile, Koenig said Warner did not comply with those terms, instead offering to “provide the NBA with letters of credit as an alternative form of security,” and would only make them available if it “first failed to pay the rights fees in a timely manner (thus adding delay before the NBA could receive the funds).”
The NBA executive also noted that Amazon has promised to promote NBA games across its broader sports properties, including Thursday Night Football, while Warner Bros. has replaced Discovery with a “new website.”
The commitment to promote the NBA in any “major sports league” distributed on TNT or Max, a specific term that TBS has expanded to include NASCAR and some college sporting events — makes this promotional commitment less valuable to the NBA.
Warner has been bolstering its sports portfolio in recent weeks, snapping up the French Open and a handful of college sports. “Warner First Pay has been on a sports rights buying spree recently, picking up rights to some college football playoffs, the French Open, Big East college basketball and NASCAR, but we remain cautious that these will be enough for linear distributors to offset the loss of the NBA,” Robert Fishman, an analyst at independent firm MoffettNathanson, said in a research note in early August.
