Photo Courtesy of https://unsplash.com/photos/nba-spalding-ball-kB5DnieBLtM.
By: Neel Sharma, Staff Writer
On July 26, 2024, Warner Bros. Discovery (“WBD”) and its subsidiary Turner Broadcasting System (“TBS”) filed a lawsuit in the Commercial Division of the New York State Supreme Court against the National Basketball Association (“NBA”) and its affiliates in a heated dispute over the league’s valuable exclusive television rights.[1]
WBD, on behalf of its subsidiary TBS, seeks to enforce what it claims are its contractual rights to distribute NBA games through the 2035-2036 season. As an “incumbent” party, under the language of the current contract between TBS and the NBA, TBS claims it has the right to match any third-party offer to broadcast any future NBA telecasts. Furthermore, TBS claims that it exercised its right to match in a timely manner, but the NBA refused to honor the agreement.[2] The NBA claims that TBS did not have the right to match every third-party offer and that even if TBS did have that right, they did not match all the material terms and conditions of the third-party offer.[3]
The key issues in the suit are a) how the “matching rights” provision should be interpreted and b) whether TBS properly matched the proposal offered to the NBA by Amazon, the third party in question in the suit. On July 17, 2024, per their duties under the existing contract, the NBA sent the Amazon offer to TBS, and five (5) days later, TBS responded with their intention to match the deal and all material terms and conditions.[4]
The NBA claims the matching rights provision gives TBS the right to match any third party offers relating to NBA game distribution rights that TBS “currently enjoy[s]” under the current contract.[5] The current agreement between TBS and the NBA runs from the 2013-2014 season to the 2024-2025 season and gave TBS the rights to distribute at least sixty-four (64) regular season games and at least thirty (30) playoff games.[6] The NBA contends that Amazon’s offer, which proposes distribution of NBA games on a “disaggregated, standalone basis” via a subscription-based video on demand service (SVOD) streamed over the Internet, is not of the same type as the current TBS deal and therefore TBS does not have the right to match.[7]
While some NBA games are currently shown on Max, an SVOD service that WBD owns, the NBA claims the rights to those games come from an agreement between NBA Media Ventures, LLC, and a different WBD subsidiary, Bleacher Report, Inc., not the contract between TBS and the NBA, and therefore the matching rights provision does not apply. The NBA claims that TBS’ counteroffer changed the essential nature of distribution in Amazon’s offer and, furthermore, that TBS made substantive revisions to eight (8) of the twenty-seven (27) sections in the Amazon offer. TBS allegedly revised twenty-two (22) different subsections, changed the definition of eleven (11) terms that are collectively used roughly hundred (100) separate times in the contract, struck almost three hundred (300) words, and added over two hundred and seventy (270) new words, which the NBA contends substantially alters the parties’ rights and obligations.[8]
The NBA’s Memorandum in Support of their Motion to Dismiss, filed on August 23, 2024, details four main arguments the league asserts are grounds for dismissal: 1) TBS did not have the right to match Amazon’s offer; 2) TBS changed the offer’s core distribution rights; 3) TBS failed to match numerous other terms beyond distribution type; 4) WBD failed to state a claim because it is not a party to the current contract.[9] At the heart of the conflict is the NBA’s clear desire to show its games on streaming services. The NBA states that if TBS wanted to show games on cable television, it had an opportunity to match a more costly offer presented by NBC Universal Media LLC, but instead opted to match Amazon’s offer to save money.[10] However, TBS claims that the NBA desire for a streaming deal has caused it to refuse to negotiate a new deal in good faith.[11]
The lawsuit over these distribution rights is likely to last through a majority of the upcoming NBA season, with a potential trial to be held in April of 2025.[12] While it may seem a remote issue to fans, the television rights deal directly affected the collective bargaining agreement between the NBA and the player union which was signed in 2023. Thus, the result of this suit will have an impact on the mindset and decision-making of league hierarchy in the future. Additionally, because the current agreement is set to expire at the end of the season, the Emmy-award winning studio show Inside the NBA will also be ending, a decision that has many fans in an uproar.[13]
[1] https://www.courthousenews.com/wp-content/uploads/2024/07/tbs-warner-bros-nba-lawsuit-amazon-1.pdf
[2] Id.
[3] https://deadline.com/wp-content/uploads/2024/08/nba-wbd-response-nysc.pdf
[4] Id.
[5] Id.
[6] https://www.courthousenews.com/wp-content/uploads/2024/07/tbs-warner-bros-nba-lawsuit-amazon-1.pdf
[7] https://deadline.com/wp-content/uploads/2024/08/nba-wbd-response-nysc.pdf
[8] Id.
[9] Id.
[10] Id.
[11] https://www.courthousenews.com/wp-content/uploads/2024/07/tbs-warner-bros-nba-lawsuit-amazon-1.pdf
[12] https://www.sportico.com/law/analysis/2024/tbs-wbd-nba-motion-dismiss-1234798247/
[13] https://sports.yahoo.com/inside-the-nba-host-charles-barkley-responds-to-nba-media-deal-im-not-sure-tnt-ever-had-a-chance-145140188.html
