Warner Bros. Discovery seemingly faces an impossible choice between relinquishing the NBA — by far the most important of its sports properties — or paying at least $2.5 billion to retain rights that are, based on the reported inventory, worth considerably less. When faced with impossible choices, it is not unusual to engage in a bit of magical thinking. Per the most recent reports, WBD president and CEO David Zaslav may have a trick up his sleeve.
The key factor in WBD’s attempt to hold onto the NBA is the extent of its matching rights. Thus far, these rights have been discussed entirely in the context of Comcast’s $2.5 billion/year bid to acquire a slimmed-down version of WBD’s current “B” package, consisting of All-Star weekend, regular season games, early round playoff games and a biennial conference final.
The latest reporting in Sports Business Journal is that WBD believes it can match Comcast’s offer on price alone, while the NBA believes that a match would need to include similar platform offerings. As Comcast has platforms that WBD does not — a broadcast network (NBC) and, if reluctantly, a handful of regional sports networks — simply matching Comcast’s inflated price tag would not be enough. SBJ reported that WBD might thus have to pay as much as $2.8 billion/year, exceeding even Disney’s “A” package that includes the NBA Finals ($2.6B/year).
No matter how important the NBA is to WBD’s bottom-line, it would constitute something akin to highway robbery it became the NBA’s highest-paying rights partner while not even guaranteed an annual conference final.
WBD would seem to have three options: lose the NBA, sue the NBA or be fleeced by the NBA. In the best-case of those scenarios, a successful lawsuit against the league, WBD would still be paying $2.5 billion/year and for the added price of presumably bitter feelings.
In an earnings call Thursday, Zaslav said little and still generated a number of headlines. In briefly addressing the NBA negotiations, he noted that WBD matching rights allow the company to “match third-party offers before the NBA enters into an agreement with them.” The reporting to this point has focused exclusively on WBD matching only one third party — Comcast. There is of course another third-party bidder, Amazon, whose $1.8 billion/year offer for the league’s new “C” package has been largely viewed as a fait accompli.
Even though Zaslav’s statement was in no way new, Joe Flint of The Wall Street Journal and Ryan Glasspiegel of the New York Post interpreted it as a sign that WBD could try to match Amazon, rather than Comcast. That scenario would have always been possible, but had previously not been mentioned as a serious possibility.
The idea of WBD settling for the “C” package sounds worse on paper than in reality. The “B” and “C” packages are a push when it comes to the most valuable inventory — alternating a conference final, per John Ourand of Puck — but while the only other marquee item in the “B” package is All-Star weekend, the “C” package comes with the NBA In-Season and Play-in tournaments.
The All-Star Game is an outsized draw — through Wednesday, only two playoff games had averaged more viewers — but it is clearly an event on the decline. More importantly, All-Star Weekend is three nights and the IST and Play-in accounted for 14 solid days of programming this season.
Beyond the marquee games, both packages come with weekly regular season windows and early round playoff games. Amazon’s deal for the “C” package may also include a bevy of local rights, though those details are less certain. To be sure, any inclusion of such rights would only sweeten what now appears to be a bargain.
A key question is whether WBD can match Amazon platform-for-platform. As mentioned before, WBD has no broadcast network or RSNs, putting it at a decided disadvantage compared to Comcast. It compares more favorably to Amazon, which has a direct-to-subscriber streaming platform — Prime Video — and global reach. WBD has Max and an extensive international sports operation that originated with Zaslav-led Discovery.
Max had nearly 100 million subscribers at the end of last year, and while that pales in comparison to Prime Video’s 150 million — a figure no doubt inflated by Amazon’s Prime delivery service — Max could potentially narrow the gap with its inclusion in a soon-to-launch bundle with Disney+ and Hulu.
Of course, a deal that focuses heavily on Max does nothing to protect WBD’s linear cable networks, which need NBA programming to sustain their current rates from carriers. Then again, it was Zaslav himself who floated the possibility that WBD’s next NBA deal could be primarily for then-HBO Max. He made those comments at the same 2022 investor conference in which he infamously said WBD did not “have to have” the NBA, so it may have gone under the radar. His direct quote — “you could put the NBA on HBO Max” — reads like spitballing, and given the cavalier nature of his other, aforementioned statement, it does not seem as if he was putting a great deal of thought into what he said that day.
Bidding exclusively or primarily for Max is of course a stretch. WBD could argue that its linear cable operation is equivalent in exposure to Prime Video, but given the NBA’s apparent desire to add Amazon as a new partner, it is entirely possible the league will suggest that is not a sufficient match — leaving WBD in the same position it is in with Comcast. It is also the case that Amazon could raise its bid, rendering moot any advantage of the “C” package.
The biggest obstacle WBD faces is that the NBA simply appears to want to move on. Amazon and Comcast are, along with Disney, among the biggest companies in the world. WBD occupies a lesser tier — along with Paramount and Fox Corporation — of companies that are continually absorbed, sold or spun-off. The stability of Amazon and Comcast, especially as compared to the uncertain future of WBD, is simply too much for the league to want to pass up.
WBD can push the issue, but the NBA will not make it easy. It can try to match dollar-for-dollar or platform-for-platform, but the most likely “match” at this point would be preceded by the words “game” and “set.”
