Warner Bros Discovery and its sports division, Turner Broadcasting System, filed a suit against the National Basketball Association in New York Friday after the league rejected its offer for media rights. It accused the NBA of breaching their agreement with Turner by choosing not to exercise their right to match third-party offers.
TNT Sports released a statement specifying that the right to match bids is not a strictly contractual issue but a benefits-deriving scenario for the fans that view NBA content over the network.
NBA spokesman Mike Bass said the claims from Warner Bros Discovery were unfounded. The NBA announced an 11-year deal worth $77 billion that gives media rights to Walt Disney’s ESPN, Comcast’s NBCUniversal, and Amazon.com on Wednesday. The NBA turned down a last-minute bid from TNT Sports, which it said did not match Amazon’s proposal, thus ending a nearly 40-year partnership with Turner after the next season.
Turner contended that it has heavily invested in NBA rights, production, and talent—for instance, the Emmy-winning “Inside the NBA” show. Further, it was their argument that NBA games are a sort of crown-jewel, unique products that deliver viewers and serious ratings, which not only have a bearing on their advertising revenues but also on their negotiations with other leagues.
Turner said the NBA provided them with Amazon’s terms for streaming 64 regular-season games and at least 30 playoff games. Turner, on Monday, answered the letter by offering to match Amazon. The NBA would not honor this match; a lawsuit ensued.
The outcome of the lawsuit may really turn on how the court interprets matching rights, Emarketer senior analyst Ross Benes said. He further remarked that it remained unclear where digital TV rights end and traditional TV rights begin.
Douglas Arthur of Huber Research pegged the question of whether Turner could even make money under the new NBA deal, which would add $700 million in costs to their current contract. He indicated that for Turner to reach a profit, it would have to increase subscriber fees and hope ad revenue increased.
