Warner Bros. Discovery says it will match Amazon – MASHAHER

Warner Bros. Discovery said Monday it has informed the National Basketball Association that it intends to use its matching rights for a package of games earmarked for another company. Warner Bros. Discovery is targeting the deal between the NBC and Amazon Prime Video, according to a person familiar with the matter.

“In an effort to continue our long-standing partnership, during both exclusive and non-exclusive negotiation periods, we acted in good faith to present strong bids that were fair to both parties. Regrettably, the league notified us of its intention to accept other offers for the games in our current rights package, leaving us to proceed under the matching rights provision, which is an integral part of our current agreement and the rights we have paid for under it,” Warner Bros Discovery said in a statement.  

“We have reviewed the offers and matched one of them. This will allow fans to keep enjoying our unparalleled coverage, including the best live game productions in the industry and our iconic studio shows and talent, while building on our proven 40-year commitment for many more years,” the company said. “Our matching paperwork was submitted to the league today. We look forward to the NBA executing our new contract.”

Warner Bros. Discovery acquired matching rights as part of its previous deal with the league, which expires at the end of next season. Those rights allow the company to match payment for any of the games that aired on TNT in the current deal.

The question for both the NBA and Warner Bros. Discovery is if the rights extend to an all-streaming package, as has been carved out for Amazon. Warner Bros. Discovery also owns a streaming service, Max, which it could use to air games.

Still, Amazon Prime Video has more than twice as many global customers — more than 200 million to Max’s roughly 100 million — which may make the service a more appealing platform for the league. The streaming rights are global, according to people familiar with the language in the contract.

Amazon is also on firmer footing as a standalone company, with a market capitalization of nearly $2 trillion. Warner Bros. Discovery’s market valuation has fallen to about $20 billion, and CEO David Zaslav has repeatedly discussed his interest in more mergers or partnerships, putting the future of the company into question. That’s an added potential headache for the league, which wants stability in its broadcast partners. The league has also inked deals with Disney and Comcast’s NBCUniversal for two other packages of games. Both Disney and Comcast have market valuations of more than $150 billion.

If the NBA rejects Warner Bros. Discovery’s right to match the Amazon package, what happens next remains unclear. It’s possible Warner Bros. Discovery could sue the NBA. It’s also possible the league could work out a settlement with the company. It’s unclear if the NBA would ask Amazon to pay more money for its package.

One possibility that isn’t likely is crafting a fourth package of games, according to people familiar with the matter. In the past two months, the NBA has entertained putting together a fourth package, but those talks fizzled because deals were already in place with Disney, Comcast and Amazon, and those partners didn’t want to give away inventory, said the people. All three partners plan to pay more money for fewer games than the league is currently getting from either Disney or Warner Bros. Discovery in its current deal.

Disney will pay about $2.6 billion per year for its package, and NBCUniversal around $2.5 billion per year, CNBC has previously reported. Amazon’s deal is worth $1.8 billion per year. The less expensive price tag is why Warner Bros. Discovery has targeted that package of games for its matching rights, according to people familiar with the matter.

The NBA also hasn’t wanted to carve out too many packages because it’s sensitive to consumer confusion and limiting the number of services for which fans need to subscribe, the people said. While Amazon plans to include NBA games with its Prime subscribers at no extra charge, Max’s sports strategy includes an additional $9.99-per-month fee for access to live games on top of a basic Max membership.

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.