Warner Bros Discovery’s (WBD) shares took a hit recently, falling over 7% in early trading after the company failed to renew its broadcasting rights for NBA games. This marks the end of a four-decade partnership between Warner’s TNT sports division and the National Basketball Association. The NBA has instead signed an 11-year, $77 billion deal with Walt Disney’s ESPN (DIS), Comcast’s NBCUniversal (CMCSA), and Amazon (AMZN), leaving Warner in the dust. Warner Bros is now suing the NBA, according to CNBC.
What’s at Stake for Warner Bros Discovery?
The loss of NBA broadcasting rights is a significant blow for Warner Bros Discovery, particularly for its Max streaming service. Analysts at Macquarie Equity Research noted that the NBA rights were crucial for Max’s future success. “NBA rights were important in our view to the future success of the Max streaming service,” they said. The company’s stock has already plummeted over 65% since the merger of WarnerMedia and Discovery in 2022.
Warner Bros Discovery Is Suing the NBA
In response to the NBA’s decision, Warner Bros Discovery is suing the NBA, as reported by CNBC. The company is exercising its matching rights in an attempt to regain broadcasting rights. While this legal action could save Warner’s TNT sports division over $1 billion in rights fees, it might also harm the company’s reputation. “If Warner sues the NBA, it could hurt the company’s competitiveness in the long run,” warned Barton Crockett, a Rosenblatt analyst.
Is WBD a Good Buy?
Analysts remain fairly bullish about WBD stock, with a Moderate Buy consensus rating based on 10 Buys, six Holds and one Sell. Over the past year, WBD has plunged by more than 30%. The average WBD price target of $12.50 implies an upside potential of around 57.63% from current levels.
