As a seasoned cinephile who has witnessed countless corporate battles unfold over the airwaves, this latest tussle between the NBA and Warner Bros. Discovery is a fascinating spectacle to behold. The stakes are high, with the NBA’s coveted games at the heart of this legal drama.
This game may never start.
On Friday, the NBA took action to dismiss Warner Bros. Discovery’s legal attempt to make the league reinstate some media rights back to the company. In papers submitted to the Supreme Court of New York, the NBA argued that Warner had actually failed to meet the terms of a package of games assigned to Amazon’s Prime Video. The NBA explained in a letter how Warner, once a longtime sports-media partner, attempted to negotiate an alternative deal that did not provide the same benefits as what Amazon offered.
Representatives from the NBA and TNT Sports could not provide immediate comments regarding recent queries. In court documents, the NBA has stated their intention to seek a dismissal during a hearing scheduled for October 4 in New York City.
In July, the NBA granted 11-year contracts for broadcast rights to Disney, NBCUniversal, and Amazon, turning down Warner’s bid to continue their partnership which spans almost three decades. These agreements will commence after the conclusion of the following NBA season.
Among the submitted documents is a letter dated July 24, 2024, penned by William Koenig, NBA’s head of media distribution, addressed to Luis Silberwasser, president of Warner‘s TNT Sports. In this correspondence, Koenig expresses that Warner’s attempt to correspond with Amazon’s offer is not suitable because the agreement depends on exclusive streaming and Warner’s proposal encompassed both the TNT cable network and the Max streaming service.
According to Koenig, when attempting to match the Amazon Offer, TBS made several alterations to key conditions, which they didn’t accept. Each modification, in itself, provides a reason to determine that TBS did not correctly match the offer.
Warner Bros. Discovery desperately needs the games because they are essential for TNT’s programming lineup. These games attract live, simultaneous viewers, which are highly sought after by advertisers and cable providers. Recently, Warner Bros. Discovery recorded a $9.1 billion loss on its cable assets, with the upcoming loss of NBA games being one of the key reasons for this decision.
As a passionate movie-goer, I’d rephrase it like this: When negotiating with Amazon, they ensured that the league would receive its due payments. They achieved this by setting up an escrow account for rights fees. This means that the licensee is required to deposit and keep three seasons’ worth of payment in this account at all times. The payments would then be automatically distributed to the NBA according to our agreed-upon schedule, thus eliminating the risk of late payments. Additionally, Amazon pledged to maintain a credit rating higher than investment grade. If they fail to do so, the NBA has the right to terminate the agreement and receive a compensation payment.
In summary, Koenig stated that Warner did not agree with those conditions. Instead, Warner proposed offering “letters of credit as an alternative form of security” to the NBA. However, these letters would only become available if Warner first failed to make a rights fee payment on time, thereby causing a delay before the NBA could receive the funds.
The NBA executive mentioned that Amazon agreed to advertise NBA games across its most extensive sports broadcasts, such as “Thursday Night Football.” On the other hand, Warner Bros. Discovery replaced their obligation to promote NBA games on any league aired on TNT or Max, which now also includes NASCAR and specific college sporting events. This change in promotion commitment may seem less beneficial for the NBA.
Warner has been actively expanding its sports offerings over the past few weeks by obtaining rights for events such as the French Open and several college sports games. As Robert Fishman, an analyst from the independent MoffettNathanson firm, noted in a research report from early August, the company has been acquiring rights to certain College Football Playoff games, French Open, Big East college basketball, and NASCAR. However, Fishman cautions that it remains uncertain whether these acquisitions will be sufficient for linear distributors to compensate for the loss of the NBA.
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2024-08-24 04:16