Variety: Warner Aims to Match Amazon’s $1.8 Billion Per Year NBA Package in Sports-Rights Showdown

Story from Variety:

Warner Bros. Discovery won’t let the NBA go without one more drive to the net.

The media conglomerate on Monday indicated it plans to work to match the terms of a package of NBA games the league is poised to award to Amazon, a last-ditch effort by Warner Bros. Discovery CEO David Zaslav to retain the rights to professional basketball that have helped his company thrive for more than three decades.

Warner Bros. Discovery sent a letter to the NBA Monday detailing its plans to match one of the rights deals the league has already struck with Disney, NBCUniversal and Amazon. That package is widely understood to be the smallest package, which was crafted with the digital and e-commerce giant.

“Regrettably, the league notified us of its intention 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 rights we have paid for under it,” Warner Bros. Discovery said in a statement. “We have reviewed the offers and matched one of them. This will allow fans to keep enjoying our unparalleled coverage, including the best live game productions in the industry and our iconic studio shows and talent, while building on our proven 40-year commitment for many more years. Our matching paperwork was submitted to the league today. We look forward to the NBA executing our new contract.”

The NBA, like the NFL before it, is looking to strike long-term deals that reflect the value of sports in the current media ecosystem. In a fast-growing era of streaming video, sports represent one of the few genres that continue to lure the large, simultaneous crowds that advertisers, distributors and the leagues themselves crave. The league’s current pacts with Warner and Disney’s ESPN expire after the next season of play.

“We’ve received Warner Bros. Discovery’s proposal and are in the process of reviewing it,” the NBA said in a statement. Amazon declined to comment.

The league has already chosen its new roster of rightsholders, and Warner isn’t on it. Disney could pay approximately $2.6 billion per year under a new 11-year contract for a smaller passel of games than it currently enjoys, according to people familiar with the talks.

Amazon could pay around $1.8 billion per year for a new package that would give the NBA a new foothold with a major streaming platform that has already expanded the NFL’s reach among broadband audiences. And NBCU could pay around $2.5 billion per year under terms that appear to be all but ratified at this point.

The new deals would make NBC a new sports powerhouse, flush with agreements with both the NBA and NFL that people familiar with terms of the pact would put top-flight basketball on its broadcast schedule twice a week as well as on its Peacock streaming service. The new NBA pacts would also lend more heft to Amazon’s still-nascent efforts to become a sports giant. Amazon has continued to expand its offering since acquiring rights to the NFL’s “Thursday Night Football.”

The NBA’s desired arrangement would also leave Warner with a major hole in its sports portfolio and in the schedule of its TNT cable network, a flagship property that relies heavily on sports to lure big audiences. “The NBA is a significant driver of TNT’s affiliate value, and losing out on a key rights package is likely to hinder” Warner Bros. Discovery’s “leverage in future affiliate negotiations,” said Robert Fishman, an analyst with MoffettNathanson, in a research note issued last week. “Over the past few months, Warner Bros. Discovery has been doling out money to secure incremental sports rights; however, it is unclear if these deals will be able to replicate the value of the NBA in the eyes of distributors.”

Many sports observers believe Warner Bros. Discovery executives overplayed their hand in negotiations. In remarks to investors delivered in the fall of 2022, Zaslav said he felt Warner Bros. Discovery doesn’t “have to have the NBA” to operate in the media sector. NBA officials have been dismayed by Warner Bros. Discovery’s cost cuts in recent months, including those that removed Warner Bros. Discovery sports executives like Lenny Daniels, the company’s former sports chief, and staffers who worked on “Inside the NBA,” Warner Bros. Discovery’s signature NBA studio show with Charles Barkley and Shaquille O’Neal, among others. Barkley in June vowed to retire from sportscasting after Warner Bros. Discovery’s last season with the NBA ends in 2025.

Warner Bros. Discovery executives think they can put on a new show — at least one that will impress NBA negotiators. People familiar with the company’s stance say Warner Bros. Discovery is likely to impress upon the league that TV viewers know how to find the games on TNT, and can help them understand how to access them on Max, the company’s streaming service, which is likely to play a role as Warner Bros. Discovery tries to play up its streaming abilities against those of Amazon. Moving the games to Amazon, executives are likely to point out, could confuse audiences who already have a regular habit in place. Warner Bros. Discovery is also likely to spotlight its “Inside the NBA” studio show, perhaps the best-known news-and-notes program about NBA play in all of sports media.

But such arguments may not wash. Amazon has developed a track record with sports, delving not only into NFL play, but also NASCAR. The digital giant has developed so-called “alterna-casts” for its “Thursday Night Football” that feature NFL commentary from the improv troupe Dude Perfect, for example, as well as interactive stats and video packages that allow viewers to customize how they watch every contest.