Discovery is set to sue the National Basketball Association (NBA) in New York after the NBA rejected its bid to match TV broadcasting rights.
According to a source, the NBA declined Warner’s TNT sports division’s offer on Wednesday, opting instead for new 11-year agreements with Walt Disney’s ESPN, Comcast-owned NBCUniversal, and Amazon.com, valued at $77 billion, ending a four-decade partnership with Warner.
The current company was formed when WarnerMedia and Discovery merged in 2022. Its shares dropped over 5%, and if the decline persists, it could erase more than $1 billion in market value.
After the NBA rights loss, Macquarie Equity Research downgraded Warner’s stock to “neutral.” Analysts highlighted the significance of NBA rights to the success of the Max streaming service and noted the potential accelerated decline of linear networks due to this loss.
Industry experts have expressed concerns that suing the NBA could negatively impact Warner Bros. Discovery’s long-term competitiveness. Ross Benes, a television and streaming analyst at eMarketer, suggested that such a lawsuit could complicate future negotiations with other leagues, turning an awkward end to the partnership into a hostile one.
Barton Crockett from Rosenblatt advised that losing NBA rights might compel Warner to consider restructuring their assets, given that the current structure as a consolidated public company has not been advantageous. In July, BofA Global Research analysts recommended a strategic review of Warner, including potential asset sales, to enhance shareholder value.
The lawsuit was first reported by CNBC, signalling a contentious battle ahead for Warner in its efforts to secure a favourable outcome in the broadcasting rights debacle.
