Warner Bros. Discovery executives thought they had given the National Basketball Association a proposal it would accept.
In April, after months of negotiations, the company made an offer to pay billions of dollars to the league for the rights to continue showing its games on TNT, as well as its Max streaming service. TNT has shown N.B.A. games since the 1980s, and its “Inside the NBA” is widely considered one of the best-ever sports studio shows.
But with the end of Warner Bros. Discovery’s exclusive negotiating window looming, the N.B.A. insisted on changing the package of games the company would receive, according to two people familiar with the negotiations, who spoke on condition of anonymity to discuss the private dealings. Warner Bros. Discovery balked, and while the two sides have continued negotiating, the company now it finds itself on the verge of losing the rights to televise the sport with which it has become inextricably linked. And on Friday night, the beating heart of “Inside the NBA,” the Hall of Famer Charles Barkley, said he would be retiring from TV after next season.
“The first thing anybody thinks about when you say TNT is the N.B.A.,” said John Skipper, the former president of ESPN.
Media companies, including Warner Bros. Discovery, were prepared for bruising negotiations with the N.B.A. Sports rights remain an extremely valuable commodity for traditional TV networks, and companies increasingly also see them as a way to attract more subscribers to their streaming services.
The league made clear it wanted a sizable increase on the roughly $2.66 billion in total it receives annually, on average, from Warner Bros. Discovery and ESPN under its current rights agreements, which went into effect in 2016. Executives at those companies knew if they wanted to retain N.B.A. rights they would have to pay more for fewer games so that the N.B.A. could create a third package of games to sell.
Disney, ESPN’s parent company, exited its exclusive negotiating period with a handshake agreement to continue showing N.B.A. games. NBC and Amazon, meanwhile, quickly swooped in, and both are negotiating with the N.B.A. for packages made up of the games that currently belong to Warner Bros. Discovery as well as additional assets, according to three people familiar with the negotiations. This month, The Wall Street Journal said the league was closing in on deals with ESPN, NBC and Amazon that would account for about $76 billion in revenue over 11 years.
That leaves Warner Bros. Discovery on the outside looking in, generating no shortage of tension within the company.
The public face of that rancor has been Barkley, whose wit and candor have made him a driving force behind TNT’s critically acclaimed coverage over the past two decades.
Barkley has publicly excoriated the leadership of Warner Bros. Discovery for its handling of the media rights negotiations. He has supported the rank-and-file employees at the network, done interviews the network would have preferred he didn’t and, after Friday night’s N.B.A. finals game, announced that he planned to retire after next season, the last year of Warner Bros. Discovery’s current deal.
“No matter what happens, next year is going to be my last year on television,” Barkley said. “I just want to say thank you to my N.B.A. family. You guys have been great to me. My heart is full of joy and gratitude. But I’m going to pass the baton at the end of next year.”
Barkley’s surprise announcement was the latest twist in a saga that began in 2022 when Discovery purchased WarnerMedia — whose assets included channels like HBO, TNT and TBS — and Warner Bros. Discovery was formed.
Many, though not all, of the longtime executives who had worked on the N.B.A. for WarnerMedia have left the company since Discovery’s purchase. That meant many of the people with whom the N.B.A. had longstanding relationships were gone. David Zaslav, who had run Discovery and is now the chief executive and president of Warner Bros. Discovery, hired Luis Silberwasser, a Univision executive, to run TNT Sports.
The business relationship got off to a bad start following comments Zaslav made at an investor conference in 2022. He noted that he enjoyed the N.B.A. and had known Adam Silver, the league’s commissioner, for 20 years. But as a business matter, Zaslav said, “We don’t have to have the N.B.A.”
Those comments worried Warner Bros. Discovery employees focused on its N.B.A. assets, and, when combined with reports of financial tightening at the company, raised questions in the league office about the company’s commitment to the N.B.A., according to people familiar with the reaction who spoke on the condition of anonymity because of the sensitive nature of the situation. In a radio interview with “The Dan Patrick Show” last month, Barkley said he thought Zaslav’s comments probably upset Silver.
Warner Bros. Discovery has the contractual right to match third-party offers. It is likely to try to match Amazon’s offer, according to a person familiar with the company’s thinking.
But the N.B.A.’s lawyers are still trying to determine how the contract defines Warner Bros. Discovery’s matching rights, according to two people familiar with the negotiations, given that the company would want to show many of the games on TNT and Amazon would stream them on Prime Video. It is an issue complicated by the fact that when these contracts were written in 2014, the streaming of sports was in its infancy.
Losing the N.B.A. would sting for Warner Bros. Discovery because much of TNT’s advertising revenue and a large portion of its viewership are driven by N.B.A. games. But it would save over $2 billion annually, money it could use to purchase other sports rights. In recent years it has added rights to the National Hockey League, NASCAR, the United States men’s and women’s soccer teams, All Elite Wrestling, and the college football playoffs.
Warner Bros. Discovery is trying to keep enough high-quality programming on its cable channels to earn large distribution fees and advertising dollars, while also shifting exclusive programming to streaming to build its Max service.
“The streaming industry is in the middle of an evolution,” said Frank Albarella, a media and telecommunications executive at the accounting firm KPMG. “Everybody’s trying to differentiate themselves. All the old norms are being challenged. I do think this move to live sports can be a game changer for the sector and the industry.”
For the N.B.A., cable channels like TNT have lost their luster. Broadcast channels like NBC and ABC — which reach more households than cable channels — are back in vogue, and streaming has the potential to reach larger audiences around the world than television ever could. NBC would also use its streaming platform, Peacock, to show N.B.A. games.
Silver said during a news conference on June 6, before Game 1 of the N.B.A. finals, that streaming “allows for tremendous additional functionality when it comes to watching games, personalization, customization of games, multiple feeds, multiple dialects, multiple languages, different camera angles. It really gives the fan enormous additional choice that you don’t have through traditional television.”
He declined to provide an update on the negotiations at that time, but he did address the employees of the company he said he still called “Turner Sports.”
“I apologize that this has been a prolonged process, because I know they’re committed to their jobs,” Silver said. “I know people who work in this industry, it’s a large part of their identity and their family’s identity, and no one likes this uncertainty. I think it’s on the league office to bring these negotiations to a head and conclude them as quickly as we can.”
Source link
