Breakups are always hard. Sometimes they wind up in court.
As Sportico detailed Wednesday, the NBA could soon part ways with TNT as part of a new alignment of TV deals. The league is finalizing a move to grant broadcasting rights to NBC, Amazon Prime Video and ABC/ESPN from the 2025-26 through 2035-36 NBA seasons. In exchange, the NBA would receive about $76 billion, on average around $7 billion a year.
The NBA’s board of governors still must approve the necessary transactions. If that happens, Warner Bros. Discovery (TNT’s parent) would have five days to match one of the non-Disney packages. If WBD, which reportedly clashed with the NBA over price, declines to match, NBA games would no longer appear on TNT after 2024-25 (given no other dealmaking occurs before then).
The prospect of WBD losing NBA games has sparked debate among league fans, many of whom like TNT’s coverage. It has also, more conjecturally, fueled speculation the company might sue the NBA and/or the league’s would-be new partners. There is no shortage of articles theorizing about problematic, even contentious, negotiations between WBD chief executive officer David Zaslav and NBA commissioner Adam Silver in recent months.
The loss of the NBA, an elite pro sports league with a global brand, would diminish TNT’s stature in the broadcasting world. It would also prove costly: According to Bloomberg, most of TNT’s $2.5 billion in fees from pay-tv operators and $700 million in advertising sales stem from its NBA deal.
WBD has economic reasons to legally contest losing the NBA, but whether there are viable legal grounds is another matter. A lawsuit that amounts to disappointment or anger over losing a prized asset, without accompanying assertions that logically explain how a law was broken, wouldn’t go far.
One immediate hurdle for WBD is that, contractually, the company—not the NBA and not a rival broadcasting company—controls its fate. So long as the NBA honors the contractual right of WBD to match, the NBA can argue it has followed procedures the parties accepted.
Another hurdle: There’s no law blocking the NBA from pursuing what Silver and owners deem the optimal deal. To the contrary, Silver has a fiduciary duty as commissioner to maximize his employer’s interests.
Under Article 24 of the NBA constitution, the commissioner is charged with supervising and directing “all business and affairs of the League.” Silver is thus expected to prioritize the NBA’s financial standing in his actions, including with respect to the group of people that hired him—franchise owners—and NBA players, who share in about 50% of TV money through basketball related income as negotiated in Article VII of the CBA. Unless the NBA is contractually required to work with a business partner, the league has no obligation to do so.
Still another hurdle is whether the NBA’s deal with WBD contains language that compels the parties to mediate and/or arbitrate disputes before either can seek redress in the courts. If such language exists, a judge would be inclined to dismiss a lawsuit until the parties have exhausted their dispute resolution procedures. Given that both the NBA, as a closely watched pro sports league, and WBD, as a publicly traded company, have incentives to avoid litigation and the accompanying risk that pretrial discovery could trigger sensitive disclosures, it wouldn’t be surprising if they agreed to not sue one another in the event of disagreement.
Is WBD simply out of luck? Not necessarily. There are a variety of legal claims that could potentially apply.
There are reports suggesting that WBD wouldn’t be capable of matching due to specifics related to the NBC and Amazon platforms and how they deliver content. If that is accurate, WBD might argue the right to match has not been credibly honored, and the NBA is thus in breach of contract. A right to match that is impossible to invoke could be portrayed by WBD as form over substance.
This type of claim would be vulnerable to counterarguments. If WBD can’t deliver content in a way that would-be rightsholders can, that is arguably not a legal problem but rather a technological or business one. Also, unless the right to match explicitly guarantees WBD be able to perform new terms, the NBA is under no obligation to only seek deals that a current rightsholder has the wherewithal to match.
WBD could also explore claims stemming from the negotiation process. The company might assert the bidding process was unfair as a result of purposeful deception, a type of argument captured in a fraudulent misrepresentation claim. A related claim is tortious interference, which might apply if the would-be rightsholders mischaracterized WBD during negotiations with the NBA to unfairly procure an advantage. There is also a favorite sports law argument: antitrust. The would-be rightsholders, which are competitors, could be depicted as conspiring with the NBA to exclude WBD in a way that harms consumers—more specifically, NBA fans.
Those types of claims are vulnerable to rebuttals. Even if the negotiations have been intense and acrimonious, that’s not, in and of itself, evidence of unlawful conduct. This is not a situation of unequal bargaining power or commercial exploitation. All the businesses involved are powerful, sophisticated and affluent. They hire teams of seasoned, high-priced attorneys to negotiate. At the end of the day, there will be winners and losers—and they all know that going into the negotiations. The NBA can also insist that it would only pursue deals that it believes its fans would like. It would be irrational for the league to conspire with other businesses to irritate the very consumers whom the NBA needs.
Other scenarios could complicate the analysis.
One that’s net speculation involves WBD matching and the NBA then rejecting the match, perhaps because it doesn’t believe WBD has the capacity to offer the same services (or offer them as well) as a would-be rightsholder. In that situation, WBD could insist the NBA is in breach of contract, specifically the match provision. The NBA would maintain there is no breach but rather a business judgment regarding WBD’s ability to satisfy a future (not current) contract. WBD in that scenario might expand the litigation to include antitrust and interference claims against other would-be rights holders, but as detailed above, those claims would encounter heavy return fire.
As they say in the TV industry, stay tuned.