The fallout over Warner Bros. Discovery’s failure to retain its NBA broadcast rights has led to more litigation.
An investor lawsuit seeking class action status was filed in a New York federal court Monday, alleging WBD “made public misrepresentations or failed to disclose” the economic fallout of the NBA negotiations. WBD took a $9.1 billion write-down in value for TNT and other WBD cable channels after Amazon secured the “C” NBA package, leaving TNT without regular or postseason broadcast rights for the first time since the 1988–1989 season.
Los Angeles–based attorney Brian Schall wrote in the complaint that WBD’s “boilerplate risk warnings” were “not tailored to WBD’s actual known risks” of losing the NBA in violation of federal securities laws.
“As a result of defendants’ wrongful acts and omissions, and the precipitous decline
in the market value of the company’s securities, plaintiff and other class members have suffered
significant losses and damages,” Schall wrote in the complaint. As of now, the lone plaintiff is Richard Collura. In addition to Warner Bros. Discovery, CEO David Zaslav and CFO Gunnar Wiedenfels are named as defendants.
If class action certification is granted, the lawsuit would cover investors who “purchased or otherwise acquired WBD securities” between Feb. 23 and Aug. 7 of this year. WBD stock slipped 11% during that period to $7.71. WBD stock has since recovered and traded above $10 over the last week.
A WBD spokesperson referred a Front Office Sports inquiry to the company’s sports division. WBD Sports has not responded to a request for comment on the lawsuit.
The NBA’s new 11-year, $77 billion domestic broadcast and streaming pact that begins next season was agreed to over the summer. Amazon will pay $1.8 billion per year for the “C” package. (WBD paid $1.2 billion annually under its current deal.) Disney’s ESPN secured the “A” package for $2.6 billion per year, and NBCUniversal is on the hook for $2.45 billion annually for the “B” package.
After WBD failed to retain broadcast rights for the NBA, the company sued the NBA in July. In the breach-of-contract lawsuit, WBD alleged the league didn’t provide it with a chance to match Amazon’s offer in violation of the current rights agreement between WBD and the NBA.
That lawsuit was settled earlier this month. As part of the settlement, WBD will have rights to NBA highlights as well as the ability to broadcast some NBA games internationally.
Separately, WBD and ESPN agreed on a deal to license TNT’s Inside the NBA. The popular show featuring Charles Barkley, Shaquille O’Neal, Kenny Smith, and Ernie Johnson will air regularly on ESPN and ABC starting next season.
