On Monday, Warner Bros. Discovery formally notified the National Basketball Association (NBA) of its intention to exercise its matching rights concerning a package of NBA games that had been earmarked for another company, with reports indicating that the target is the deal between the NBA and Amazon Prime Video. This development is a crucial turn in the ongoing negotiations regarding NBA media rights and underscores Warner Bros. Discovery's strategic efforts to preserve its longstanding partnership with the league.

In its official statement, Warner Bros. Discovery highlighted its commitment to continuing its relationship with the NBA, asserting, “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.” This statement underscores the critical role of the matching rights provision, which allows Warner Bros. Discovery to match any competing offers for the NBA games currently broadcast on TNT under its existing contract.

Further elaborating, Warner Bros. Discovery noted, “We have reviewed the offers and matched one of them. This will allow fans to continue 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 confirmed that it had submitted the required paperwork to the NBA and expressed eagerness for the league to formalize the new contract.

The existing deal between Warner Bros. Discovery and the NBA is scheduled to expire at the end of the upcoming season. As part of this agreement, Warner Bros. Discovery secured matching rights, which grant it the ability to match the financial terms of any competing offers for the broadcast rights of NBA games aired on TNT.

A significant issue in this negotiation is whether the matching rights extend to an all-streaming package, as reportedly proposed for Amazon Prime Video. Warner Bros. Discovery, which owns the streaming service Max, could potentially use this platform to broadcast NBA games. However, Amazon Prime Video’s extensive global customer base—exceeding 200 million subscribers compared to Max’s approximate 100 million—might offer a more appealing platform for the NBA. The streaming rights are global, though Warner Bros. Discovery is currently focusing on U.S. rights.

Amazon’s market capitalization, approaching $2 trillion, establishes it as a formidable contender in this space. In contrast, Warner Bros. Discovery’s market valuation has dropped to about $20 billion. CEO David Zaslav has frequently expressed interest in mergers or partnerships, introducing an element of uncertainty regarding the company’s future stability. This dynamic could be a consideration for the NBA, which seeks stability in its broadcast partnerships. The NBA has also secured agreements with Disney and Comcast’s NBCUniversal for two other game packages, with both Disney and Comcast holding market valuations exceeding $150 billion.

Should the NBA reject Warner Bros. Discovery’s matching rights for the Amazon package, several potential outcomes could arise. Warner Bros. Discovery might pursue legal action against the NBA, or the parties could reach a settlement. Additionally, there is the possibility that the NBA could negotiate a higher bid from Amazon for its package.

The creation of a fourth package of games, though previously considered, appears unlikely. Discussions about this option faltered as agreements with Disney, Comcast, and Amazon were already in place, with these partners reportedly unwilling to relinquish any inventory. Disney’s package is valued at approximately $2.6 billion annually, NBCUniversal’s at around $2.5 billion annually, and Amazon’s at $1.8 billion annually. Warner Bros. Discovery’s focus on the less expensive Amazon package aligns with its strategy to effectively utilize its matching rights.

Furthermore, the NBA has been cautious about segmenting too many game packages to avoid consumer confusion and minimize the number of subscriptions required for fans. While Amazon plans to include NBA games with its Prime subscription at no additional cost, Max’s sports strategy involves a separate $9.99 monthly fee for access to live games, in addition to a basic Max membership. Warner Bros. Discovery has yet to decide whether NBA games will be included in its basic or sports tier.

Overall, this situation highlights a complex negotiation landscape involving major media and streaming companies, each competing for valuable NBA broadcast rights while navigating issues of market positioning, subscriber bases, and contractual obligations.