NBA TV rights deal hinges on Warner Bros. Discovery Channel | Wilnesh News

Whether it’s two people in a marriage, or a company and a sports league, it’s not easy to end a 40-year relationship.

National Basketball Association and Warner Bros. DiscoveryThe Turner Sports companies have been in business together for nearly four decades.Relations between the two countries are now in danger because ComcastAs CNBC previously reported, NBCUniversal is trying to steal its game package with an offer of $2.5 billion per year.

On April 22, the league ended its exclusive window to renew contracts with its two existing media partners, Disney and Warner Bros. Discovery Channel. Partners and sells its other packages to Warner Bros. Discovery Channel or NBCUniversal, according to people familiar with the matter.The league expects the total value of new contracts to triple from approximately $24 billion $76 billion or more.

Warner Bros. Discovery is still in discussions with the NBA about retaining the rights, according to people familiar with the matter. The league could still decide to renew with its current partners, but that’s unlikely, two people familiar with the matter said.

A more likely path is for the league to sign documents with NBCUniversal to formalize its bid. That would trigger Warner Bros. Discovery’s contract option to match the offer.

This is where things can get tricky.

Both the NBA and Warner Bros. Discovery Channel have begun taking a closer look at the legal language to determine whether the league can reject a potential game, people familiar with the matter said. People familiar with the matter said the contract language was vague and it was unclear whether the NBA would have sufficient discretion to abandon Warner Bros. Discovery if the company met its bid.

If Warner Bros. Discovery decides to match and the NBA opts for NBCUniversal’s offer anyway, the two sides could file a lawsuit. Warner Bros. Discovery believes the contract language protects it well, one of the people said.

However, this remains a hypothesis for now. Warner Bros. Discovery Channel may not match NBCUniversal’s bid, which would avoid a potential conflict.

Some league officials are concerned that Warner Bros. Discovery’s balance sheet cannot sustain the $2.5 billion it spends annually on the NBA, people familiar with the matter said. As of the end of the company’s first fiscal quarter, Warner Bros. Discovery’s market valuation was approximately $20 billion and its enterprise value was approximately $60 billion, with total debt of $43.2 billion. The company’s leverage ratio (net debt to adjusted EBITDA) is 4.1.

Warner Bros. Discovery CEO David Zaslav has publicly and privately preached the importance of financial discipline to the company.

Comcast has a market capitalization of approximately $154 billion and an enterprise value of approximately $244 billion.Comcast’s Leverage Ratio About 2.5.

NBA officials are more reassured that Comcast can pay for plans that are more than twice the previous price. Warner Bros. Discovery Channel pays $1.2 billion annually to broadcast NBA games.The new package also includes fewer games than the current package, as the NBA will likely bring in a third partner — most likely Amazon.

Spokespeople for Warner Bros. Discovery Channel and the NBA declined to comment.

Warner Bros. Discovery Channel, disney and fox announced thursday Plan naming Their new sports streaming platform Venu draws inspiration from live sports events. The new venture, one-third owned by each media company, will offer a range of sports networks and ESPN+ services at a price that is still to be determined, at a price that is less expensive than traditional cable TV. CNBC reported earlier this year that the price could be about $45 to $50 per month. The companies said the service will launch in the fall.

The three companies have not yet formally signed documents for the joint venture and are awaiting regulatory approval. If Warner Bros. Discovery loses the NBA, it would reduce the value of the service to consumers because NBCUniversal and Amazon are not partners in the product.

Warner Bros. Discovery licenses rights to other sports, including Major League Baseball, the National Hockey League and the National Collegiate Athletic Association’s March Madness. Regardless, the company will also own the NBA next year, as the new rights deal won’t take effect until after the 2024-25 season.

There have been no discussions about shutting down Warner Bros. Discovery Channel before the venture is formed if it loses its NBA presence, according to a person familiar with the matter. Still, without the NBA, Disney and Fox would still contribute most of the sports content to the service. Unlike Warner Bros. Discovery Channel, Disney-owned ESPN and Fox have both college football and NFL packages. The three companies plan to divide revenue based on alliance fees associated with their linear networks.

Warner Bros. Discovery Channel could use the money it saves from not acquiring NBA rights to invest in other sports, such as more MLB games or a bid for the UFC, which could begin renewal discussions with media companies in early 2025.

ESPN plans to launch its own “flagship” streaming service in the fall of 2025.

Revealed: Comcast-owned NBCUniversal is the parent company of CNBC.

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