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The impact of the loss of the NBA on TNT Sports parent company Warner Bros. Discovery is now in full view.
An earnings report released early Thursday for WBD’s fiscal second quarter said that revenue fell 11% to $8.7 billion, below Wall Street expectations, while net income plummeted 91% to $149 million. The springtime period for the second quarter coincides with the NBA playoffs, something that TNT Sports didn’t have this year as the NBA began new rights deals with Amazon, ESPN, and NBC Sports.
WBD said the absence of the NBA cut heavily into advertising revenue across multiple platforms. In particular, the company pointed to a 22% drop in linear advertising, with the loss of live NBA content responsible for nearly all of that drop.
“[The NBA] has been obviously a negative driver on ad revenues, a positive driver on profits in the second quarter, as much or more so even than in the first quarter,” WBD CFO Gunnar Wiedenfels said on the earnings call with analysts.
To his point, WBD’s operating expenses for its linear networks improved by 30% year over year because of the removal of fees for NBA live rights.
Two years ago, the NBA struck its new national rights deals, and following an extended legal battle, created a new contract with WBD based on highlights and other intellectual property instead of live game rights. That pact has been part of a new-look TNT Sports as it began embracing other content such as French Open tennis, college sports, and existing rights for top-tier events including March Madness, and playoffs in MLB and the NHL.
In many respects, that shift has been successful, and WBD leaned heavily into that during May’s upfront presentation, which has since produced a strong run of sales for the forthcoming television year. But the absence of a behemoth like the NBA—and the ad dollars it brings— is hard to ignore.
Merger Talk
WBD, meanwhile, has been in a holding pattern on its long-term future as the $110 billion takeover by CBS Sports parent company Paramount is still uncertain. A group of 12 states are legally challenging the merger on antitrust grounds, and a trial is set for March 2027.
Like Paramount, however, WBD said it remains fully confident that the deal will go through, even on this new timetable.
“We have every expectation that the transaction will close and that the company will be performing even better than the plan that we presented to [Paramount] when we did our deal,” said WBD president and CEO David Zaslav.
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