You should probably forget the idea of a separate fourth NBA media rights package for Warner Bros. Discovery.
According to sports media insider John Ourand of Puck, sources close to the negotiations say the likelihood of this happening is practically zero – “about as dead as it can be,” Ourand wrote in his Thursday newsletter.
This new development became apparent after the New York Times reported that WBD is “likely” to attempt to exercise its matching rights on Amazon’s portion of the deal. That seemingly put to rest the idea of a fourth package, which has been floated recently, but Ourand’s reporting has likely placed the nail in the coffin.
The concept of a fourth package was intended to let WBD retain some NBA rights without needing to match bids from media conglomerates like Comcast or Amazon. However, with the NYT reporting that Warner Bros. is “likely” to match Amazon’s package, that slim possibility became even slimmer. And now, “about as dead it can be,” with Ourand’s reporting coming into focus.
According to Ourand, creating a fourth package would have likely triggered a downward bidding war for the NBA. Other companies involved, like ESPN and NBC, might have come back with lower offers to compete with this new package, which could have hurt the overall value of the NBA’s media rights deals. Basically, any extra money the league might have earned from a fourth package would likely have been negated by these renegotiations.
Here’s more details from Ourand on that:
Executives from Amazon, Disney, and NBC haven’t heard anything about a fourth package, virtually confirming the notion. The current offers are all based on three packages, and all three companies would have to scramble if the NBA decided to add a fourth, regardless of where those games came from. Their position, of course, is that a fourth package sold to a big media company would dilute the value of the eventual deal. It’s unlikely any of the companies would walk, but they would definitely negotiate for lower prices.
But even if WBD matches Amazon’s offer using its matching rights, it could still lead to renegotiations from other bidders, similar to the concerns about a fourth package.
And with the potential for renegotiations and a diminished overall deal value, a fourth NBA media rights package seems like a non-starter for both WBD and the NBA.
