Amazon Reportedly Paying Three Years of NBA Contract Upfront to Stifle WBD’s Matching Rights Clause
Even if it loses the NBA rights, Warner Bros. Discovery still operates NBA TV, which could be a major bargaining chip.
Warner Bros. Discovery is on the clock. The struggling media entity has until the end of the day — Monday, July 22 — to decide if it will officially exercise its contractual right to match third-party bids for a portion of the NBA’s next set of broadcast rights. Last Wednesday, the league’s board of governors officially accepted the terms of a new $7.6 billion per season media rights deal that for the first time in what will be more than 35 years, did not include WBD’s cable network TNT. Thanks to its existing broadcast deal, which runs through the 2024-25 season, Warner Bros. Discovery has the right to match either Amazon or Comcast’s offers. While Comcast’s bid to put games on NBC and Peacock appears to be too rich for WBD CEO David Zaslav, Amazon is reportedly offering to pay the first three years of its deal upfront, in order to make it fiscally impossible for WBD to match the terms and steal back the rights.
Key Details:
- Prime Video’s NBA contract reportedly defines it as “streaming only,” making it difficult for WBD to match its reach.
- Amazon is also willing to pay the first three years of its deal up front, making it difficult for WBD to match.
- Could these moves lead to ESPN taking over control of NBA TV?
According to long-time NBA columnist and media mogul Bill Simmons, Amazon is taking a unique step in order to secure the “C” package of basketball rights beginning in the fall of 2025. While appearing on “The Town” podcast — which is part of the Ringer, a website and podcast network founded and run by Simmons — he reported that Amazon is planning on paying for the first three years of its NBA deal upfront as a way to make it difficult for WBD to match the deal.
Since merging Discovery and WarnerMedia over two years ago, Zaslav has been fighting to reduce the new company’s debt load, despite some progress, it still sits at $39 billion. Warner Bros. Discovery’s financial situation is so dire that it is reportedly looking to spinoff its flagship streaming service Max and its successful movie studio into a separate company, leaving its declining linear channels to shoulder the debt alone.
With those facts in mind, Amazon believes that if it pays $5.4 billion in rights fees up front, it would make its offer financially impossible for WBD to match.
“If you’re buying a house and you’re competing against other people, what do you do if you feel like ‘I just want this house,’? You offer all cash,” Simmons said. “I don’t understand all the specifics, but apparently, [Amazon] guaranteed multi years upfront that they just deliver right away. And I think it’s three years, that you put into escrow, but you have to put it in escrow immediately … Now Warner, which doesn’t have a ton of cash, would then have to take on way more debt, and basically risk the future of the company.”
In the episode, Belloni also noted that Amazon and the NBA have put language into their contract indicating that the package of games that would go to Prime Video is “streaming only.” That matters because if Warner Bros. Discovery attempts to match this deal, it would only be able to do so using Max. However, at last reporting, Prime Video had nearly twice the reach of WBD’s service at more than 200 million to 99.6 million as of April 2024. Therefore, the NBA could legitimately argue that, without the added scale of TNT, WBD cannot match the reach that Amazon is offering.
The Streamable’s Take
The deck is clearly stacked against Zaslav and Warner Bros. Discovery. The NBA has picked Disney, Comcast, and Amazon as the three media rights partners that it wants to work with for the next 11 years, and it has structured its contracts to make it incredibly difficult for WBD to match any of them. Since Disney and WBD are the Association’s current media partners, the “A” deal — which will feature games on ESPN and ABC — is not eligible to be matched by WBD; and at $2.6 billion per season, Zaslav likely wouldn’t be able to afford it anyway.
That means that if WBD wants to retain the NBA right — which Zaslav once said his company “doesn't have to have” — it must go after NBC and Peacock’s “B” contract or Amazon’s “C.” However, similar to Amazon’s creative construction, Comcast is planning to run multiple games per week on broadcast network NBC, but Warner Bros. Discovery does not own a broadcast channel, meaning that the company cannot “match” that deal either.
At this point, it would likely be better for WBD to get some sort of financial dispensation from the NBA for not exercising its right to match. A lawsuit against the second-largest sports league in the country would not be good business for Zaslav and WBD, but there are other alternatives that could be attractive to the company.
Warner Bros. Discovery currently operates the NBA-owned NBA TV, which seems like it would be a logical place for any discussions about a settlement to start. Sports Business Journal's Tom Friend is reporting that some options include allowing WBD to license “Inside the NBA” to Amazon or produce the broadcasts that will air on Prime Video, or for WBD to continue running NBA TV and therefore keep its hand in NBA games.
While all of those seem possible, if TNT can’t broadcast games, I do wonder if WBD would just rather move on and invest time and money on products it has the ability to grow and build upon. If the company could come to some sort of financial agreement with the NBA to turn over control of NBA TV to the league or one of its new broadcast partners, that might be better for Zaslav. A financial agreement would allow the company to either pay down its debt a little, or continue to invest in live sports to fill the gaps left by the exiting NBA.
In May, reports emerged that the NFL was set to invest in ESPN, and in turn, would turn over control of the NFL Network and the rest of NFL Media to the worldwide leader in sports. There have also been reports that the NBA was interested in acquiring a piece of ESPN, so the Disney-owned family of sports networks would make for a logical new home for NBA TV.
No matter the eventual resolution, it seems clear that TNT will no longer be the home of NBA basketball following the upcoming season. The end of an era, certainly, but also the beginning of a new and exciting chapter for basketball fans.
Amazon Prime Video
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