Warner Bros. Discovery faces lawsuit from shareholders over loss of NBA
Warner Bros. Discovery faces lawsuit from shareholders over loss of NBA
Plaintiffs in the suit say the company intentionally misled them about the harm that the departure of the NBA would have.
There’s not much time left to watch the NBA on TNT or Max — relatively speaking, anyway. Live NBA games will officially depart from TNT and Max in the United States starting with the 2025 regular season, after WBD settled a last-ditch lawsuit intended to claw back one of the three broadcast and streaming rights packages the league sold earlier this year. Now, however, the company faces a lawsuit from investors who claim that it misled them about the hit the company’s value would take if it lost live NBA games.
Key Details:
- Richard Collura seeks class-action status for his suit, claiming that WBD willfully misled investors about the impacts of losing the NBA.
- The complaint says WBD execs made “materially false and misleading statements regarding the company’s business.”
- The NBA will shift to ESPN, NBC, and Prime Video in 2025.
The lawsuit against WBD has been filed by Richard Collura in New York federal court. He seeks class-action status for his complaint, which would cover any shareholders who purchased WBD stock between Feb. 23 and Aug. 7, 2024. The latter date is when WBD took a $1.9 billion write-down at its cable networks, reflecting how much value those channels had lost.
In part, that write-down was based on the loss of NBA rights on TNT. The lawsuit says that WBD CEO David Zaslav and CFO Gunnar Wiedenfels “made materially false and misleading statements regarding the company’s business, operations, and prospects,” and “failed to disclose that WBD’s sports rights negotiations with the NBA were causing, or were likely to cause, the company to significantly reevaluate its business and goodwill.”
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” Collura’s attorneys wrote.
WBD exited its exclusive negotiating window without a deal to keep the NBA on TNT in April, as Zaslav was determined not to overpay for a rights package. The league was more than willing to move on, however, and finalized deals with ESPN, NBC and Peacock, and Prime Video in July.
Zaslav and company sued the NBA to try and claim a clause in its current contract with the league that allows it to match outside offers was improperly disregarded by the league, but in mid-November, that case was settled. All throughout the negotiation process and that lawsuit, Zaslav made reassuring statements to investors that the company was on a pathway to growth, the suit says.
The case will keep WBD’s already-frenetic legal team working through the holidays. The company may have settled its suit against the NBA, but it is still wrapped up in an antitrust complaint against Venu Sports, the joint venture sports streaming service it is trying to launch with Disney and Fox.
Max
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