This game may never start.
The NBA decided on Friday to dismiss Warner Bros.’ ambitious legal effort. to shut down Discovery to force the league to return some of its media rights to the company. In documents filed with the New York State Supreme Court, the NBA requested a dismissal of the case, alleging that Warner had effectively failed to meet the terms of a package of games destined for Amazon’s Prime Video. letter how the company, its former sports media ally, had tried to negotiate an alternative deal that essentially didn’t offer the same things as Amazon.
NBA spokespeople could not immediately respond to requests for comment. The NBA said in its filings that it planned to seek dismissal at an Oct. 4 hearing in New York City.
“We maintain our position that the NBA’s actions are unjustified, and we believe we have fulfilled our contractual right to match the third-party bid. Not only is it our contractual right, but it is also in the best interests of fans who want to continue to enjoy our industry-leading NBA content with the choice and flexibility we offer them across our widespread platforms, including TNT and Max.” Warner Bros. Discovery said in a statement. “We will file an appeal in the coming weeks.”
The NBA awarded new 11-year rights deals to Disney, NBCUniversal and Amazon in July, rejecting a bid from Warner to remain in its circle of media partners after a relationship that lasted about three decades. The new agreements will take effect after the next NBA season.
Among the documents submitted is a July 24, 2024 letter from William Koenig, the NBA’s head of media distribution, to Luis Silberwasser, the president of Warner’s TNT Sports. In the message, Koenig says Warner’s efforts to match Amazon’s package are “ineligible” because the deal hinges solely on streaming distribution and Warner’s bid included both TNT’s cable network and the Max streaming service.
“In the alleged match with the Amazon offer, TBS also changed – and therefore did not accept – numerous other substantive terms of the Amazon offer, with each of these changes representing an independent basis for the conclusion that it failed to make a good match, Koenig said.
Warner Bros. Discovery needs the games – and badly. They are a crucial part of TNT’s schedule, generating the live concurrent audience that both advertisers and cable distributors crave. Warner took a $9.1 billion writedown on its cable portfolio earlier this month, citing the looming loss of NBA games as one of the main factors in his decision.
Koenig also provided details on how Amazon agreed to ensure the league would be paid, citing “the establishment of a rights fee escrow account into which the licensee is required to deposit and withdraw three seasons of rights fees on a rolling basis retained and from what rights fees would be automatic
paid to the NBA according to the agreed payment schedule (avoiding the possibility of late payments). Amazon “also committed to maintain a credit rating above investment grade, with failure to meet this obligation giving rise to a termination right in favor of and a related termination fee to the NBA.”
Meanwhile, Koenig said, Warner did not meet those conditions, but instead offered to “provide the NBA with letters of credit as an alternative form of security,” and would only make them accessible if it first “fails to secure a rights fee on a timely basis (which creates a delay before funds can be received by the NBA).
The NBA executive also noted that Amazon promised to promote NBA games in the broadest-reaching sports activities, including “Thursday Night Football,” while Warner Bros. Discovery ‘a
obligation to promote the NBA in any “Major Sporting League” distributed on TNT or Max, a defined term that TBS has expanded to include NASCAR and certain college sporting events – making this promotional commitment less valuable to the NBA.
Warner has worked in recent weeks to strengthen its sports portfolio by acquiring rights to the French Open and a handful of college sports. “WBD has been busy buying sports rights recently, having secured the rights to select College Football Playoff games, French Open, Big East college basketball and NASCAR, but we remain cautious that these are sufficient in the eyes of linear distributors will be to offset the NBA loss,” Robert Fishman, an analyst at the independent firm MoffettNathanson, said in a research note in early August.