After its exercise of matching rights was declined by the NBA, Warner Bros. Discovery (WBD) and its Turner Broadcasting System (TBS) subsidiary sued the league and claimed that it breached its contract. In awarding a package of games to Amazon, the company avers that the league violated a clause in its contract stating that it would not be able to “enter into an agreement or agreements with any third party or parties” without giving TBS a chance to accept it. If accepted, the stipulation reads that it “shall have the right and obligation” to effectuate such NBA distribution rights.
Entities owned by Warner Bros. Discovery have broadcast NBA games for approximately 40 years, beginning with the NBA on TBS during the 1984-85 season. The current media rights agreement between the two entities includes nine annual fees equating to a collective $10.26 billion over nine seasons, the last of which is coming up this year.
The current media rights package provided to the Turner Broadcasting System (TBS) and Warner Bros. Discovery (WBD) includes at least 64 regular-season games, including Thursday night doubleheader games and other matchups on Tuesday nights, along with at least 30 playoff games. This includes one of the two NBA Conference Finals each season, all of which is accompanied by the award-winning Inside the NBA program featuring Ernie Johnson, Charles Barkley, Shaquille O’Neal and Kenny “The Jet” Smith. The lawsuit itself maintains that NBA telecast rights are unique and cannot be replaced, propounding that matchups on the hardwood are distinctive, live sporting events.
“NBA telecast rights provide halo benefits to both TBS and WBD,” the lawsuit reads. “NBA games draw large audiences, many of whom would not otherwise tune in to TNT. This gives TBS a unique opportunity to promote and advertise its other shows and networks on TNT to consumers that it would not otherwise reach.”
Within the lawsuit, Turner Broadcasting System and Warner Bros. Discovery look to attain judicial declaration that TBS matched the Amazon offer in accordance with provisions under its current agreements, including the matching rights exhibit, along with preliminary and permanent injunctive relief to prohibit the NBA from licensing these broadcast rights to any third party. If injunctive or equitable relief is not granted or insufficient, the company seeks remedy in the form of monetary damages.
The judge who has been assigned to the case, Joel M. Cohen, wrote in a court notice that he was a partner at Davis Polk before being appointed to the bench in 2018. Before that time, he served as counsel for the Spirits of St. Louis Basketball, a former basketball team within the American Basketball Association, which dissolved following a four-team merger with the NBA in 1976.
Former owners of the team sued the NBA and the four teams involved in the merger and won their case, attaining 1/7 of NBA national television revenue earned by those teams every year in perpetuity. Another suit was brought in 2009 stating that new sources of NBA media revenue, including NBA TV, should be included in that deal, resulting in an agreement in which the previous owners would receive a one-time payment worth $500 million.
“The case was resolved in 2014,” Cohen wrote. “I do not believe this raises any recusal issues, but wanted to disclose the facts and see if there are any concerns.”
The National Basketball Association was served with a copy of the summons last Friday in New York City, beginning the 20-day timeline to answer the complaint in the action and serve a copy of an answer or notice of appearance. TBS and Warner Bros. Discovery divulged such within an affidavit of service, giving the NBA until Aug. 12 to file answering papers. The lawsuit contends that the definition of “non-broadcast television” encompasses methods of television, video distribution or transmission other than broadcast television “whether now known or hereafter developed.”
As a result, the plaintiffs claim that TBS has the right to match an offer from a third party relating to rights currently held by TBS, ESPN or NBA TV. Moreover, the company cites part of the matching rights exhibit in which it states that TBS has the right to match a third party offer enacting NBA game rights “via any specific form of combined audio and video distribution.” Within the lawsuit, the plaintiffs allege that the NBA delayed sending offers from Amazon and NBCUniversal offers to TBS to attain more time to script provisions intended to prevent the exercise of matching rights.
“Had TBS and the NBA intended to distinguish between the way distributed content was transmitted (such as through a specific medium like a cable wire) as opposed to the way in which distributed content was viewed by the end consumer, they could have distinguished between ‘cable television,’ ‘internet television,’ and ‘satellite television’ in the [matching rights exhibit]. But they did not because that was not what was intended,” the lawsuit stated. “‘Television’ is ubiquitous with content consumers [who] watch on a television at home, in a sports bar, or virtually anywhere else, and that is how both TBS and Amazon would distribute games.”
