Shares of Warner Bros. Discovery sank in Tuesday trading following a report that the entertainment conglomerate may be set to lose its lucrative deal to air NBA games.
The stock was off 73 cents, or 9%, to $7.41 in midday trading after earlier dropping to its lowest point in a year, $7.39. Trading volume of nearly 36 million shares surpassed average daily trading volume of about 29 million shares less than two hours into the session.
The slump followed news that Comcast’s NBCUniversal is ready to pay about $2.5 billion a year to wrest a deal with the NBA from Warner Bros. Discovery’s TNT network. The Wall Street Journal reported that CEO David Zaslav’s team is making “last-ditch efforts” to keep the rights for the games.
The “NBA on TNT” has aired since 1989, making the network one of the league’s oldest broadcast partners. Games also air on Warner Bros. Discovery’s Max streaming service.
WBD has been paying an average fee of $1.2 billion under its current deal, The Journal reported. It was unable to reach a new agreement with the NBA before its exclusive negotiating period expired last week, opening the door for NBCU to make a bid, per the report.
The new deal would include playoff and regular season games that would air on NBC and Comcast’s Peacock streaming service. The network has dangled airing two primetime games each week, an offer Warner Bros. Discovery cannot match because it doesn’t own a broadcast network, the report further noted.
TNT’s airing of the Sunday playoff game between the Minnesota Timberwolves and Phoenix Suns drew 3.62 million viewers, according to Sports Media Watch. While that was up 14% from last year’s comparable playoff game, it was far short of the 5.56 million viewers who watched a game earlier Sunday between the Los Angeles Clippers and Dallas Mavericks broadcast on ABC. However, both games topped the average 3.17 million viewers for the playoffs so far.
ABC and ESPN owner Disney is the NBA’s other major TV partner, and is expected to pay about $2.6 billion a year to renew its deal, The Journal added. That would be up from about $1.5 billion a year for the current season.
All of the new deals would trim the number of games aired on television, the report noted. Amazon Prime and Google’s YouTube are also reportedly in talks for some games.
The league’s discussions for a new round of media rights deals for the 2024-25 season starting in October are in “the advanced stages,” but “fluid,” The Journal reported, adding, “The parties are still haggling over who gets rights to air the most high-profile games and series.”
Losing the rights to the games could also impact Warner Bros. Discovery’s role in the sports-streaming venture it is planning with Disney and Fox. NBA games would be a key feature in that standalone app.
