Warner Bros Discovery will sue the National Basketball Association in New York after the league rejected its matching bid for TV broadcasting rights, reports Reuters citing a source familiar with the matter.
The NBA on Wednesday rejected an offer from Warner's TNT sports division — ending four decades of partnership — and announced new agreements with Walt Disney's ESPN, Comcast-owned NBCUniversal and Amazon.com in an 11-year deal worth $77 billion.
Shares fell more than 5% and the company that was formed in 2022 when WarnerMedia and Discovery merged was set to lose over $1 billion in market value, if losses hold.
After the loss of NBA rights, Macquarie Equity Research downgraded the stock to "neutral". "NBA rights were important in our view to the future success of the Max streaming service," its analysts said, adding the loss may hasten the downturn in linear networks too.
Some analysts said suing the NBA could hurt the company's competitiveness in the long run.
"When other leagues have rights come up, they will keep in mind how tumultuous the NBA and WBD relationship became when they accept WBD's bids," said Ross Benes, television and streaming analyst at eMarketer.
"WBD is desperate so they will pursue all possibilities to retain the NBA. A lawsuit would make the end of the partnership shift from awkward to hostile."
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