NBA Commissioner Adam Silver speaks to the media during a press conference as part of the 2022 All-Star Weekend at Rocket Mortgage Fieldhouse on February 19, 2022 in Cleveland, Ohio.
Jason Miller | Getty Images
Whether it's two people in a marriage or a company and a sports league, it's not easy to break up a 40-year-old partnership.
National Basketball Association and Warner Bros. DiscoveryTurner Sports have been in business together for nearly four decades. The relationship is now in danger, as well ComcastNBC affiliate NBCUniversal is trying to steal its toy portfolio with a $2.5 billion-a-year offer, as CNBC previously reported.
The league ended its exclusive window to renew its agreement with its current media partners, Disney and Warner Bros. Discovery, on April 22. Since then, the league has put together a renewal framework with Disney, bringing in Amazon as a new third partner. , and sells its other packages either to Warner Bros. Discovery or NBCUniversal, according to people familiar with the matter. The league is expected to triple the total amount of the new deal from about $24 billion to $76 billion or more.
Warner Bros. continues Discovery is in discussions with the NBA about preserving the rights, according to people familiar with the matter. Two of the people, who asked to remain anonymous because the conversations are private, said the league could still decide to simply renew with its current partner, but that is unlikely.
The most likely path would be for the league to sign paperwork with NBCUniversal, officially securing its bid. This would trigger a contractual option for Warner Bros. Discovery to match the offer.
This is where things can get sticky.
Both the NBA and Warner Bros., the people said. Discovery began researching the legal language to determine whether the league could reject a potential match. The contractual language is vague, and it's not clear whether the NBA has full discretion to pull out of Warner Bros., the people said. Discovery if it matches the view.
If Warner Bros. decides to Discovery matches, and the NBA chooses NBCUniversal's offer anyway, so both parties may be headed to a lawsuit. One person said that Warner Bros. Discovery believes it is fairly well protected by the contractual language.
However, this remains hypothetical at this point. Warner Bros. probably won't match. Discovery with the NBCUniversal show, which would avoid potential conflict.
Some league officials are concerned that Warner Bros.'s balance sheet is… Discovery can't handle spending $2.5 billion annually on the NBA, according to people familiar with the matter. Warner Bros. owns Discovery had a market capitalization of approximately $20 billion and an enterprise value of approximately $60 billion, including $43.2 billion in total debt, as of the end of the company's first fiscal quarter. The company had a leverage ratio (net debt to adjusted EBITDA) of 4.1.
David Zaslav, CEO of Warner Bros. Discovery, by publicly and privately preaching the importance of corporate financial discipline.
Comcast has a market capitalization of approximately $154 billion and an enterprise value of $244 billion. Comcast's leverage ratio is about 2.5.
NBA officials are more comfortable that Comcast can pay what could be more than double the previous price for the package. Warner Bros. was Discovery pays $1.2 billion a year to broadcast NBA games. The new package also includes fewer games than the current one, because the NBA is likely to introduce a third partner – most likely Amazon.
Warner Bros. spokespeople declined. Discovery and NBA commentary.
Fino's fate
warner Bros Discovery, Disney And Fox It announced Thursday that it plans to name its new sports streaming platform Venu, inspired by the venue for live sports. The new joint venture, of which each media company owns a third, will offer a combination of sports networks and ESPN+ at a yet-to-be-determined price that is less expensive than traditional cable. CNBC reported earlier this year that the price could be around $45 or $50 a month. The companies said the service will begin in the fall.
The three companies have not yet officially signed the papers for the project, as they are awaiting regulatory approval. If Warner Bros. loses… Discovery NBA, this will reduce the value of the service to consumers, since NBCUniversal and Amazon are not partners on the product.
Warner Bros. Discovery has licensed the rights to other sports, including Major League Baseball, the National Hockey League, and the National Collegiate Athletic Association's March Madness. The company will also have the NBA next year no matter what, as the new rights deal doesn't kick in until the end of the 2024-25 season.
There was no discussion of shutting down the project before release if Warner Bros. lost out. Discovery NBA, according to a person familiar with the matter. However, without the NBA, Disney and Fox will contribute the lion's share of the service's sports content while holding the same one-third stake in the project. Disney's ESPN and Fox affiliates have college football and NFL packages, unlike Warner Bros. Discovery.
Warner Bros. could Discovery will use the money it saves from not acquiring NBA rights to spend on other sports, such as more MLB games or bidding for the UFC, which will likely begin renewal discussions with media companies in early 2025.
ESPN plans to launch its “flagship” streaming service in the fall of 2025.
Disclosure: Comcast's NBCUniversal is the parent company of CNBC.
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