The commencement of this basketball match is uncertain.
On Friday, the NBA took action to halt Warner Bros. Discovery’s determined legal bid to make the league return a portion of its media rights. The NBA filed for the case dismissal in the State of New York’s Supreme Court asserting that Warner failed to meet the terms of a set of games earmarked for Amazon’s Prime Video. A letter reveals how Warner, once a long-term sports-media ally, strove to formulate a deal not exactly matching what Amazon offered.
Immediate responses to inquiries aimed at the NBA were not forthcoming from NBA spokespeople. According to the NBA, they planned to petition for dismissal at a hearing in New York City scheduled for October 4.
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“We stand by our stance that the NBA’s actions are unwarranted, and we firmly believe we have satisfied our contractual right to correspond to the third-party proposal. This is not just our contractual right, but it would also serve the supporters’ best interests who would like to continue relishing our industry-leading NBA content with the versatility and choice provided through our extensive distribution platforms including TNT and Max,” conveyed Warner Bros. Discovery in an issued statement. “We will submit our contestation in the forthcoming weeks.”
In July, the NBA accomplished signing new rights agreements, valid for 11 years, with Disney, NBCUniversal, and Amazon, neglecting an offer by Warner to remain in its group of media partners, following a collaboration spanning roughly three decades. These new agreements become operational post the approaching NBA season.
A document among those filed comprises a letter from William Koenig, the NBA’s head of media distribution, to Luis Silberwasser, the president of Warner’s TNT Sports, dated July 24, 2024. In his letter, Koenig mentions that Warner’s attempts to match Amazon’s proposal “does not qualify” as the agreement is centered around distribution exclusively via streaming, and Warner’s offer encompassed the TNT cable network besides the Max streaming service.
“In its supposed match of the Amazon Offer, TBS also amended – thereby not accepting – multiple other substantive terms of the Amazon Offer, with each of these amendments serving as a separate reason to determine that it has failed to make an appropriate match,” expressed Koenig.
The games are an absolute necessity for Warner Bros. Discovery. These games are vital for the TNT schedule, attracting live concurrent audiences coveted by both advertisers and cable distributors. Earlier in the month, Warner recorded a $9.1 billion depreciation on its cable portfolio, attributing the imminent loss of NBA games as a primary factor influencing its decision.
Koenig also provided insights about how Amazon consented to ensure payment to the league, talking about “the instatement of a rights fee escrow account, into which the licensee is obliged to deposit and sustain three seasons of rights fee payments on a progressive basis and from which, rights fees would get automatically disbursed to the NBA according to the predetermined payment schedule (thereby evading the potential for late payments).” Amazon also “pledged to sustain a credit rating surpassing investment grade, with the non-compliance leading to a termination right favoring and a correlated termination payment to, the NBA.”
In contrast, as per Koenig, Warner did not match these terms, alternatively proposing “to provide the NBA with letters of credit as an alternate form of security,” making them accessible only if it initially “failed to make a rights fee payment within the stipulated time frame (thereby incorporating a delay before funds could get received by the NBA).”
The NBA executive also noted that Amazon committed to promoting NBA games in its largest-reaching sports properties, inclusive of “Thursday Night Football,” whereas Warner Bros. Discovery “substituted a commitment to endorse the NBA in any “Major Sporting League” propagated on TNT or Max, a defined term which TBS extended to cover NASCAR and specific college sporting events – rendering this promotional pledge less valuable to the NBA.”
In the preceding weeks, Warner has endeavored to bolster its sports portfolio by acquiring rights to the French Open and a selection of college sports. “Recently, WBD has been aggressive in acquiring sports rights, securing certain College Football Playoff games, French Open, Big East college basketball, and NASCAR. However, there is a certain level of apprehension whether these would be adequate in the perspective of linear distributors to compensate for the NBA loss”, mentioned Robert Fishman, an analyst with the independent firm MoffettNathanson, in a preliminary August research note.
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