Warner Bros. Discovery made it official on Monday, announcing that it has exercised its matching rights for one of the NBA’s new media rights contracts. Per multiple reports, WBD is matching Amazon’s bid for the “C” package, the least expensive of the NBA’s three new deals. In a statement, WBD said that it had “acted in good faith to present strong bids that were fair to both parties,” and that its matching rights are an “integral part” of its existing agreement with the league. It is not much of a stretch to interpret those statements in the context of a potential legal argument that 1) the NBA did not act in good faith and 2) the matching rights in WBD’s contract are sacrosanct.
The NBA confirmed Monday that it has received WBD’s proposal and is now reviewing it.
That WBD would exercise its matching rights is no surprise; that has been expected for weeks. The question is what does the company intend to extract from the NBA. It has been clear for months that the NBA intends to move on from WBD, and in fact the league’s other contracts are in some ways dependent on that happening. Per prior reporting by John Ourand of Puck, the league’s two other contracts with Disney and Comcast were structured under the assumption that the third deal would be with a streamer, rather than another cable company. (Comcast, which in addition to owning NBC is the nation’s largest cable provider, is in prime position to benefit from TNT losing rights and thus becoming less expensive.) The league risks a haircut from the other two partners in the event that TNT remains in the picture.
Per Tom Friend of Sports Business Journal Monday, the NBA believes that any match must be streaming only — which would force WBD to place all of its inventory exclusively on its Max service. Perhaps WBD will successfully argue in court that it can carry games earmarked for Amazon on linear cable, though that seems doubtful. (As Ourand reported Monday, WBD will argue it has the right to match because Amazon’s bid consists of TNT inventory.) Absent games on TNT, it does not seem like a successful exercise of WBD’s matching rights would be worth the effort.
Max was always expected to play a key role in any WBD NBA renewal, and David Zaslav himself said in 2022 that “you could put the NBA on [then-HBO] Max.” (Given he made that statement at the same conference where he said TNT did not “have to have” the NBA, it is clear he was not being particularly cautious with his speech.) Nevertheless, it is hard to see what WBD would get out of a Max-only deal, short of a burst in subscribers that would do nothing to mitigate the decline of its more lucrative basic cable business. The value of the NBA for WBD is primarily to protect TNT from losing its most important programming and suffering a reduction in its affiliate fees.
(It is even harder to see the logic if WBD spins off its digital assets, as The Financial Times reported last week is under consideration. The motivation for doing so would be to shed said assets of debt, making a $2 billion/year NBA deal counterproductive at best.)
Thus, it is frankly difficult to take the WBD effort all that seriously. To begin with, it would not have been overly difficult for WBD to hold onto its rights had it truly wanted to. ESPN stood firm on holding onto the NBA Finals and it kept the NBA Finals. Had WBD wanted to stay in the NBA business, it had the opportunity during its exclusive negotiating window and made the calculation that it could play hardball on price — and not even particularly meaningful hardball, as the difference was reportedly between $2.1 and $2.3 billion per year, per prior reporting in Bloomberg.
Even after Comcast made its $2.5 billion bid for WBD’s existing package, there was still opportunity. Ourand of Puck reported last week that WBD was approached by Google for a potential joint NBA bid, but it was not interested. There is plenty of precedent for networks holding onto rights by partnering with rivals, and WBD should know — the only reason CBS still has the NCAA men’s basketball tournament is because it paired with Turner Sports on a joint bid to hold off ESPN in 2010.
A possible counterargument is that the NBA was never particularly eager to renew with WBD. It is clear the league in this new deal is making a break with basic cable. The only NBA games on cable in the new deal would be on ESPN — Comcast’s USA Network would air WNBA games, but none in the NBA — with the remainder on broadcast television (ABC and NBC) or streaming (Amazon, Peacock and ESPN+). This is no coincidence, but a statement of where the NBA believes the future is heading. It is hard to see how TNT fits into that vision.
The deployment of matching rights thus seems less to be a last-ditch bid for WBD to hold onto the NBA than for it to extract whatever it can to save face and mitigate the loss of its core programming. The question then becomes what the NBA can offer to make WBD go away. That is perhaps a harsh way to characterize the end of a fruitful relationship — marked by some of the best NBA coverage ever on any network — but the reality is that the negotiations are not between the NBA and TNT, but between the NBA and a Warner Bros. Discovery brass that has no history with the league beyond the past three years.
So what can the NBA offer WBD to put an end to the company’s challenge? A financial settlement seems like the simplest idea, as it would allow for a clean break between the sides, and WBD CEO Zaslav has a well-earned reputation for cutting costs — sometimes even at the expense of fully-finished projects. At the same time, it would surely be a tough pill to swallow for the NBA if it had to pay millions to WBD because of a long-overlooked clause.
Perhaps the ideal scenario for all parties is if Amazon compensated WBD for producing its NBA coverage on both the game and studio side. Amazon has no NBA infrastructure and would benefit handsomely from being able to tap into the decades of credibility TNT has covering the game. WBD would get its desired financial compensation. The NBA might — if Charles Barkley flips on retirement as he has so many times — placate a fanbase dreading the end of “Inside the NBA.” Prior reporting has indicated that Amazon is interested in using TNT to produce its NBA coverage, and Tom Friend of SBJ mentioned such an arrangement as a possible part of an eventual settlement.
The NBA does have additional rights outside of the new deal that could theoretically be part of a settlement, specifically two additional WNBA packages that could go for a combined $60-100 million per year. If not necessarily impossible, that option — floated by this writer last week — is highly unlikely. The WNBA is expected to award those packages to CBS and ION, with whom it already has existing deals. (As a side note, the WNBA is poised to end up on four broadcast networks, including the three oldest — ABC, CBS and NBC — though you can expect most NBC games to air on USA.)
There continues to be some mention of a fourth package, but the complications of such an arrangement — specifically the possibility of having to take less money from the three other partners — are prohibitive.
Could WBD continue to run NBA TV? Beyond the fact that NBA TV is highly unlikely to retain a significant amount of game inventory, league-owned sports channels are the opposite of a growth property. It is hard to see how WBD would benefit in such a scenario.
It may be the case that the only positive outcome would be WBD running Amazon’s NBA coverage, and the most realistic is the NBA paying WBD a settlement and the sides washing their hands of each other. Less realistic is the prospect that the NBA will lose its desired relationship with Amazon and remain tethered to WBD for the next 11 years.
