{"id":24209,"date":"2025-07-20T17:15:14","date_gmt":"2025-07-20T17:15:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/24209\/"},"modified":"2025-07-20T17:15:14","modified_gmt":"2025-07-20T17:15:14","slug":"warner-bros-discovery-seeks-dismissal-of-investor-suit-over-nba-deal","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/24209\/","title":{"rendered":"Warner Bros. Discovery Seeks Dismissal of Investor Suit Over NBA Deal"},"content":{"rendered":"

\n\tWarner Bros. Discovery<\/a> CEO David Zaslav<\/a> and CFO Gunnar Wiedenfels argue in a recent court filing that a federal securities class action brought by purchasers of WBD stock is without merit. The plaintiffs say they were misled by WBD\u2019s statements and omissions about negotiations for a new NBA<\/a> TV deal last year.<\/p>\n

\n\tJonathan D. Polkes and other White & Case attorneys representing WBD, Zaslav and Widenfels insist the lawsuit is undercut by \u201cwall-to-wall media coverage of the negotiations\u201d between WBD and the NBA over media rights<\/a>, talks that spiraled into their own legal controversy.\u00a0<\/p>\n

\n\tAfter WBD and the NBA, who had been in a 40-year partnership, failed to reach a deal during an exclusive negotiation period, the NBA weighed outside bids and accepted ones from NBCUniversal and Amazon. WBD then invoked a matching provision, but the league rejected it. The NBA argued it was not a \u201cmatch\u201d in a technical sense since it came with revisions to Amazon\u2019s offer, and there was disagreement about whether WBD could distribute NBA games through streaming in the same manner as Amazon. WBD\u00a0sued the NBA last July<\/a>\u00a0for alleged breach of its matching right. The parties settled last November and\u00a0agreed to a new partnership<\/a>.\u00a0<\/p>\n

\n\tThat same month, Richard Collura and other investors filed a complaint in the Southern District of New York for violations of the Securities Exchange Act of 1934. The complaint portrays WBD officials as misleading investors as to its ability to employ the matching clause and \u201comitting the significant financial impact WBD would face if it lost NBA rights.\u201d\u00a0<\/p>\n

\n\tTo that end, the complaint references comments from Zaslav, including from 2022 when he told journalists, \u201cwe don\u2019t have to have the NBA.\u201d The complaint also cites comments by Zaslav in 2024 when he referenced \u201cconstructive and productive\u201d negotiations with the league and when he stated, \u201cwe have matching rights that allow us to match third-party offers before the NBA enters into an agreement with them.\u201d<\/p>\n

\n\tIn addition, the complaint details stock price fluctuations that appeared to be connected to public perceptions about the WBD-NBA negotiations and subsequent fallout. Along those lines, the complaint points out that a \u201cmain driver\u201d for WBD and similar broadcast companies is live sports.<\/p>\n

\n\t\u201cThe NBA generated hundreds of millions of dollars annually in advertising revenue, supported WBD\u2019s other sports-related shows, and allowed WBD to charge high carriage rates to cable and satellite providers,\u201d the complaint asserts. It also contends that \u201cthe NBA provided WBD with a \u2018halo effect\u2019 that boosted all of WBD\u2019s other properties, as well as contributed towards WBD\u2019s non-tangible assets like goodwill.\u201d<\/p>\n

\n\tWBD\u2019s memorandum of law in support of the motion to dismiss contends the case is flawed for several reasons.<\/p>\n

\n\tFor starters, the WBD-NBA negotiations were extremely public in ways that investors and prospective investors of publicly traded companies are normally denied.<\/p>\n

\n\t\u201cIt was impossible to read the sports pages or watch ESPN,\u201d the memorandum notes, \u201cwithout knowing about the ongoing NBA negotiations, that the negotiations were being monitored obsessively by the media, the industry, and the public, that the outcome was uncertain, and that the outcome would have a financial impact on both WBD and the NBA.\u201d<\/p>\n

\n\tNumerous news and analysis stories about the negotiations are cited to show investors were exposed to high levels of information about the negotiations.<\/p>\n

\n\tThe memorandum also points out investors and prospective investors could have availed themselves of \u201cthe steady drumbeat of disclosures in WBD\u2019s public filings and statements specifically discussing these facts.\u201d Those disclosures, including SEC filings, \u201cexpressly warned of the risks\u201d for WBD in losing the NBA deal, including with respect to revenue and goodwill and the importance of maintaining sports content licenses.<\/p>\n

\n\tFurther, the memorandum draws attention to numerous comments by Zaslav saying negotiations with the NBA were important. The fact that he declined to share all the specifics about the negotiations was to be expected, the memorandum suggests, since business leaders in private negotiations with other companies\u2019 leaders could betray confidences and undermine their bargaining position by revealing too much detail.<\/p>\n

\n\tFrom this lens, it wasn\u2019t problematic that Zaslav said during an earnings call in May 2024\u2014a couple of months before a matching period would begin\u2014it was \u201cnot the time to discuss\u201d details in the NBA negotiations. During that call he also addressed related topics that were not as sensitive, including \u201ccosts, churn and [WBD\u2019s] initiatives on bundles.\u201d\u00a0<\/p>\n

\n\tWBD also points out that statements made by Zaslav and Wiedenfels were accurate and true. The two men noted that matching rights existed, which was undisputed, without assuring they would be able to exercise those rights without objection by the NBA.\u00a0<\/p>\n

\n\t\u201cIn fact, the speculation about whether WBD could effectively exercise those rights was also widely discussed in the media,\u201d the memorandum observes. To that point,\u00a0Sportico\u00a0and other media\u00a0detailed dueling arguments<\/a>\u00a0as to whether matching rights could apply to the structure of Amazon\u2019s deal, a topic that became the source of a lawsuit before it was resolved via settlement.<\/p>\n

\n\tStill another alleged flaw with the complaint, WBD argues, is that the company knew it would fail to keep the NBA but nonetheless acted as if the negotiations were legitimate.\u00a0<\/p>\n

\n\tThe complaint argues that the \u201cquick resolution of WBD\u2019s lawsuit against the NBA\u201d is evidence to that effect. The complaint notes that the parties settled \u201cless than four months after WBD filed its lawsuit\u201d and \u201cbefore any discovery had been completed.\u201d <\/p>\n

\n\tAs the plaintiffs see it, the lawsuit-settlement sequence \u201cdemonstrated that, far from believing in their ability to enforce the Matching Clause, Defendants knew that they could not and did not use the Matching Clause to retain the NBA Rights, and instead filed their lawsuit as a face-saving measure and negotiation tactic that WBD quickly abandoned.\u201d<\/p>\n

\n\tWBD suggests that a theory positing, as WBD puts it, \u201cDefendants knew all along that they would lose the NBA contract and that the months of negotiations were a sham\u201d is illogical and belied by facts.\u00a0<\/p>\n

\n\t\u201cGlaringly absent,\u201d WBD writes, \u201care any particularized allegations to support this argument of fraud-by-clairvoyance.\u201d The company instead cites a more \u201cstraightforward inference\u201d that \u201cWBD was engaged in tough negotiations with the NBA and hoped it would secure the NBA rights, but, ultimately, the NBA chose competing offers.\u201d<\/p>\n

\n\tThe plaintiffs will have the chance to argue against the motion to dismiss. The case is before U.S. District Judge Katherine Polk Failla.<\/p>\n","protected":false},"excerpt":{"rendered":"Warner Bros. Discovery CEO David Zaslav and CFO Gunnar Wiedenfels argue in a recent court filing that a…\n","protected":false},"author":2,"featured_media":24210,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[64],"tags":[7687,2304,21556,355,99,10343],"class_list":{"0":"post-24209","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-nba","8":"tag-david-zaslav","9":"tag-federal-courts","10":"tag-media-rights","11":"tag-nba","12":"tag-sports","13":"tag-warner-bros-discovery"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/24209","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=24209"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/24209\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/24210"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=24209"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=24209"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=24209"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}