Warner Bros. Discovery said Monday that it has informed the National Basketball Association that it intends to use the matchup rights for a package of games intended for another company. Warner Bros. Discovery is targeting the completed deal for Amazon Prime Video, according to a person familiar with the matter.
“In an effort to continue our long-standing partnership, during both exclusive and non-exclusive negotiating periods, we acted in good faith to present strong offers that were fair to both parties. Unfortunately, the league has informed us of the intent to accept other offers for the games in our current rights package, leaving us to proceed under the matching rights provision, which is an integral part of our current agreement and the royalties we have paid under it,” Warner Bros. said. Discovery in statement.
“We reviewed the offers and matched one of them. This will allow fans to continue to enjoy our unparalleled coverage, including the best live game producers in the business and our iconic broadcast studios and talent, while building on our proven 40-year commitment to many more years,” the company said. “The corresponding paperwork was submitted to the league today. We look forward to the NBA executing our new contract.”
The NBA “received the offer from Warner Bros. Discovery” and “is under review,” according to a league spokesperson.
Warner Bros. Discovery acquired matchup rights as part of its previous deal with the league, which expires at the end of next season. These rights allow the company to match payment for any of the games shown on TNT in the current deal.
The question for both the NBA and Warner Bros. Discovery is whether the rights extend to an all-streaming package, as carved out for Amazon. Warner Bros. Discovery also has a streaming service, Max, that it could use to stream games.
Still, Amazon Prime Video has more than twice as many global customers — more than 200 million to Max’s roughly 100 million — which may make the service a more attractive platform for the league. Streaming rights are worldwide, although Warner Bros. Discovery is only bidding for U.S. rights, according to people familiar with the contract language.
Amazon is also on more solid footing as a standalone company, with a market cap of nearly $2 trillion. The market valuation of Warner Bros. Discovery is down to about $20 billion, and CEO David Zaslav has repeatedly discussed his interest in more mergers or partnerships, putting the company’s future in doubt. That’s an added potential headache for the league, which wants stability in its broadcast partners.
The league has also signed deals Disney and of Comcast NBCUniversal for two more game packs. Both Disney and Comcast have market valuations of more than $150 billion.
If the NBA rejects Warner Bros.’ Discovery to match Amazon’s package, what happens next remains unclear. It is possible that Warner Bros. Discovery to sue the NBA. It’s also possible the league could reach an agreement with the company. It’s unclear whether the NBA would ask Amazon to pay more for its package.
One possibility that isn’t likely is the creation of a fourth bundle of games, according to people familiar with the matter. In the past two months, the NBA has entertained creating a fourth package, but those talks fell through because deals already existed with Disney, Comcast and Amazon and those partners didn’t want to provide inventory, the people said. All three partners plan to pay more money for fewer games than the league gets from either Disney or Warner Bros. Discovery in its current deal.
Disney will pay about $2.6 billion a year for its package and NBCUniversal about $2.5 billion a year, CNBC previously reported. Amazon’s deal is worth $1.8 billion a year. The less expensive price is why Warner Bros. Discovery has targeted that bundle of games for the matching rights, according to people familiar with the matter.
The NBA also didn’t want to create too many packages because it’s sensitive to consumer confusion and limits the number of services fans must sign up for, the people said. While Amazon plans to include NBA games with Prime subscribers at no extra charge, Max’s sports strategy includes an additional Charge $9.99 per month for access to live games in addition to a basic subscription Max. Warner County.
Discovery has not decided whether to include NBA games in its basic or sports tier, according to people familiar with the matter.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
