Warner Bros. Discovery (WBD) is approaching a critical deadline today to match competing bids for the NBA media rights from Amazon and NBCUniversal. The decision will determine whether WBD continues its long-standing partnership with the NBA, which has spanned four decades through Turner Sports.

Competitive Bids and Strategic Moves

Sources close to WBD indicated that the company initially planned to leverage its streaming service, Max, to match Amazon’s annual bid of $1.95 billion, which also includes the WNBA. However, a report by Bill Simmons from The Ringer revealed that Amazon’s bid includes a significant “poison pill” — a guaranteed three-year upfront payment of approximately $5.85 billion. This move is perceived as a strategy to deter WBD from matching the offer.

Further complicating the situation, there are speculations that Amazon’s proposal includes additional terms, such as a commitment to deliver a worldwide streaming audience of 200 million, a benchmark that Max may not be able to achieve. “When you’ve got a $2 trillion company trying to outbid a $20 billion company, it isn’t really a fair fight,” commented a sports industry source, highlighting the financial disparity between Amazon and WBD.

NBCUniversal’s Position and WBD’s Options

NBCUniversal has also submitted a competitive bid of $2.5 billion annually. While WBD has been hesitant to match this higher bid, the company may explore alternative strategies. Potential settlement options could include Turner producing games for Amazon as a vendor, continuing to manage NBA TV, or selling the rights to the popular studio show “Inside the NBA” to Amazon.

Despite these potential negotiations, a lawsuit remains a possible, albeit unlikely, course of action for WBD. “I’m hearing they want to sue and match,” another industry source mentioned, though they acknowledged the drawbacks of such a move. Even if WBD were to win a lawsuit, the strained relationship with the NBA could make the partnership untenable for the long-term.

Financial Implications and Future Prospects

Richard Greenfield, an analyst at LightShed Partners, noted the financial implications for WBD. “We have continually stated our belief that WBD/Turner will not match and that their posturing to-date has been a bluff,” Greenfield wrote. He suggested that Turner has likely already decided to move on from the NBA, evidenced by recent licensing deals for college football playoff content. This shift in focus indicates Turner’s strategy to replace NBA content with other sports programming.

The NBA Board of Governors has already approved new media deals with Disney, NBCUniversal, and Amazon, set to begin in the 2025-26 season. If WBD does not match the bids, Turner’s 17-year tenure as a national broadcaster for the NBA will conclude after the 2024-25 season.

The Stakes for Warner Bros. Discovery

The impending deadline poses a significant decision for Warner Bros. Discovery. Matching Amazon’s bid could strain WBD’s financial resources, especially given the upfront payment requirement. Alternatively, opting not to match could end a longstanding partnership and force WBD to find new content to fill the gap left by the NBA.

WBD’s future involvement with the NBA remains uncertain, with the decision likely to have long-lasting implications for the company’s sports broadcasting strategy. The resolution of this bidding war will shape the landscape of sports media rights and influence the competitive dynamics among major broadcasters.