The National Basketball Association (NBA) has filed a motion to dismiss a lawsuit initiated by Warner Bros. Discovery, which alleges that the league violated its contract by not honoring their matching offer for a new media rights agreement. The lawsuit has arisen amid significant shifts in the broadcasting landscape, as the NBA recently agreed to an 11-year media rights deal worth nearly $76 billion with Disney, NBC, and Amazon Prime Video, set to commence from the 2025-26 season through the 2035-36 season.
Contentious Revisions
Warner Bros. Discovery has argued that their offer matched the terms set forth by Amazon, yet the NBA contends there were substantial discrepancies. According to the league, Warner Bros. Discovery altered significant portions of Amazon's proposal. Specifically, the network made substantive revisions to eight of Amazon's 27 sections, redefined 11 terms, struck out nearly 300 words, and added over 270 new words. These changes, according to the NBA, essentially converted what was supposed to be a matching offer into a counteroffer, thereby giving the league the right to reject it.
"Instead, TBS purported to match the less-expensive Amazon offer, but only after revising it to include traditional distribution rights and making numerous other substantive changes," stated the NBA.
According to the NBA's motion, Warner Bros. Discovery's alterations were aimed at incorporating linear television distribution rights similar to those in a separate third-party offer from NBC. This move was seen as a cost-saving measure, attempting to merge Amazon's lower price with the traditional TV rights offered by NBC. "If TBS wanted linear TV distribution rights, it could have matched a separate more expensive third-party offer from NBC, but TBS elected not to do so, attempting instead to save billions of dollars by combining Amazon's lower price with the linear television rights granted to NBC," the league noted.
Escrow vs. Letters of Credit
One of the critical points of contention revolves around the financial details of the offers. Amazon's offer included an upfront payment requirement of approximately $5.4 billion to be held in an escrow account. In contrast, Warner Bros. Discovery suggested using syndicated letters of credit instead of the escrow requirement, a revision that likely contributed to the NBA's decision to reject their proposal.
The NBA presented Amazon's offer to Warner Bros. Discovery on July 17, to which the latter responded five days later, claiming a successful match. However, on July 24, the NBA rejected Warner Bros. Discovery’s response, citing multiple discrepancies in their matching attempt. "Far from accepting each term of Amazon's offer, TBS's revisions constituted a counteroffer that the NBA was free to reject," asserted the NBA.
End of an Era
This new agreement marks the end of a nearly 40-year relationship between the NBA and Turner Networks. Turner had been broadcasting NBA games via its TNT network, a partnership that has become a staple for basketball fans nationwide. Bill Koenig, the president of NBA global content and media distribution, emphasized the NBA's stance: "The response made by TBS does not qualify as a match."
Warner Bros. Discovery, on the other hand, maintains that their contractual rights and the interest of fans are at stake. "Not only is it our contractual right, but it is in the best interest of the fans who want to continue to enjoy our industry-leading NBA content with the choice and flexibility we offer them through our widely distributed platforms including TNT and Max," stated a representative from TNT Sports.
Amazon's Expansive Coverage
Under the new deal, Amazon Prime Video will have exclusive rights to broadcast games on Friday nights, select Saturday afternoons, and Thursday night doubleheaders following "Thursday Night Football." The agreement also includes exclusive coverage of critical stages of the NBA Cup and the NBA League Pass package. These broadcast rights signify Amazon's deepening involvement in live sports, continuing its strategy of expanding digital sports streaming.
As both parties gear up for the next legal steps, Warner Bros. Discovery has until September 20 to file its response to the NBA's motion. The outcome of this legal battle will not only determine the immediate future of NBA broadcasting but also could have lasting implications for media rights negotiations in the sports industry. With the increasing influence of digital streaming services, the landscape of sports broadcasting is undergoing transformative changes, raising questions about how traditional networks will adapt.