The shot clock is ticking down on Warner Bros. Discovery in its effort to land a new media rights deal for the NBA.
Warner Bros. Discovery Chief Executive David Zaslav said Thursday the company continues negotiating with the league to retain its package of NBA contests, a marquee attraction for its TNT cable channel, but offered no clue on where the discussions would end up.
“We’re hopeful that we’ll be able to reach an agreement that makes sense for both sides,” Zaslav told Wall Street analysts on the company’s first-quarter earnings call. “We have had a lot of time to prepare for this negotiation and we have strategies in place for various potential outcomes.”
Zaslav added that the company has the rights to match offers from other companies. But the executive took no questions about what could be a game-changing deal.
Comcast reportedly has a $2.5-billion offer in with the NBA for a package of games to air on its Peacock streaming service and its broadcast network NBC. Amazon’s Prime Video is said to have a deal for exclusive NBA games as well, adding to the streaming service’s growing portfolio of sports properties.
With Disney’s package for ESPN and ABC expected to remain in place, the focus has been on whether anything will be left on the table for Warner Bros. Discovery. There has been speculation that the company could end up with fewer games under a new arrangement that takes effect after the 2024-25 season.
Losing the package would bring long-term ramifications for Warner Bros. Discovery’s carriage arrangements with cable and satellite operators, who pay fees to carry its channels. The company would have to negotiate
its next round of deals for TNT and other channels without offering the NBA, at a time when such talks are increasingly contentious.
Despite strong continued growth for its direct-to-consumer streaming business, the first-quarter earnings picture for Warner Bros. Discovery was mixed. The company missed Wall Street’s expectations on revenue, which declined year-to-year by 7% to $9.96 billion. Analysts expected $10.2 billion.
The company posted a net loss of 40 cents a share, compared with 24 cents a year ago.
The direct-to-consumer business added 2 million subscribers in the third quarter. Streaming ad revenue grew 70%.
Sales for its linear TV networks, which include TNT, CNN and Discovery, fell 8% to $5.13 billion. Soft demand for TV commercials pushed ad revenue down by 11%.
The company’s studio division saw a 13% year-to-year drop in revenue to $2.82 billion. Zaslav cited the delay in the movie pipeline because of last year’s work stoppages by writers and actors. The unit was also hurt by the poor box office performance of “Suicide Squad.”
Zaslav said the company is dedicated to improving the studio’s performance by taking advantage of its existing film franchises such as “Harry Potter.” He said the studio has begun script development on a new “Lord of the Rings” film, produced by Peter Jackson.
Warner Bros. Discovery announced Wednesday that it will offer consumers its Max streaming service in a bundle with Disney’s Hulu and Disney+. The package will be available in the U.S. starting this summer and can be purchased through any of the three streaming platforms’ websites.
Zaslav said the new offering will increase retention of subscribers. Pricing has not been disclosed.
Warner Bros. Discovery’s stock traded slightly higher Thursday morning at $8.02 a share.
