Legal wrangling could delay deal on NBA rights

After news surfaced that NBCUniversal might be taking over most of Warner Bros. Discovery’s NBA rights, the rights deal has apparently become murky, according to CNBC reports.

As previously reported, Disney and WBD’s exclusive renewal window with the NBA closed April 22, 2024. The two partners were still allowed to continue talks and Disney ended up signing a new deal.

WBD, however, didn’t close a deal, so the NBA explored bringing in Amazon Prime Video and NBC to divvy up most of the remaining rights.

NBC and the NBA reportedly have a deal set in principle that could be signed.

That, however, could be the start of a sticky legal situation, according to CNBC sources.

The challenge is that WBD’s current contract with the NBA has language in it that allows WBD to match what NBC is proposing to pay — and it’s not clear if the NBA can opt to decline that offer and still go with NBC.

Should the NBA turn down such an offer, perhaps preferring a broadcast TV network partner, it could trigger a lawsuit by WBD.

It does appear that the delay in a deal announcement, despite it being a potential shake-up being one of the worst-kept secrets in the broadcast business, may be to allow WBD and NBA attorneys review the contract language.

Advertisement

All that said, WBD might ultimately decide not to match NBCU’s offer, making the entire issue moot. 

There are some signals that WBD might walk away from the deal as concerns over the $2.5 billion annual cost of the NBA deal are bandied about.

The company, which already made significant cuts after the merger of WarnerMedia and Discovery was completed, is becoming more cost-conscious in light of concerns over debt.

According to CNBC figures, WBD has a marker valuation of around $20 billion and $43.2 billion in gross debt, whereas NBCU’s parent company Comcast has a market cap around $154 billion with a significantly lower debt leverage ratio.

The financial situations of both companies is reportedly one of the reasons the NBA prefers NBC’s offer. The package is reportedly around double the current cost and there appear to be concerned within the NBA that WBD might have trouble juggling the cash needed to pay for its rights.

At this point, the timing of a NBC-Amazon deal could be largely dependent on the legal review and ultimately decision of what route to take after that, assuming WBD doesn’t opt to simply opt out of a renewal. It’s not entirely clear how quickly he issue could be wrapped up.

NBC’s move back to the NBA would likely be a significant shift in sports broadcasting when the potential deal starts in 2025. Not only would it leave significant holes in the TBS, TNT and truTV schedules, but it would also add significant live programming to NBC’s (live sports are also becoming a hot commodity among broadcasters thanks to their popularity and that many people chose to watch them live).