Amazon, not NBC, could face competition from Warner Bros. Discovery for NBA rights.

• Sources reveal that Warner Bros. Discovery has been concentrating on finding a suitable match for a collection of games intended for Amazon.
• Sources reported that David Zaslav, CEO of Warner Bros. Discovery, believes NBCUniversal is paying too much for the NBA if it signs a $2.5 billion per year deal.
• No communication has been established between the NBA and Warner Bros. Discovery regarding their plans, as the league has not yet signed any media deals that would activate Warner Bros. Discovery's matching rights.

The league is considering a potential media rights package rather than games slated for NBCUniversal, according to people familiar with the matter.

Nearly 40 years, NBA games have been carried by Turner Sports, one of the two incumbent holders of NBA rights, along with Warner Bros. Discovery.

The NBA is in talks with Warner Bros. Discovery about potential partnerships for broadcasting games, according to sources who requested anonymity due to the confidential nature of the discussions.

Without a side agreement with Warner Bros. Discovery, its CEO, David Zaslav, will have the opportunity to utilize matching rights that were acquired and paid for in the league's previous deal with the company.

According to the agreement, Warner Bros. Discovery has the option to match any competing bid for the NBA games it currently licenses after the 2024-25 season. However, the company has not yet seen the three potential packages as the league has not yet signed agreements with any of its potential media partners. Additionally, Warner Bros. Discovery has not communicated any plans on whether they will match or not match with the league, sources said.

If the league divides Warner Bros. Discovery's current package into separate deals for NBCUniversal and Amazon, the company is still working with its lawyers to determine how matching would work.

According to sources, Amazon has offered $1.8 billion annually for a collection of games, while NBCUniversal has offered approximately $2.5 billion per year. Although the league has established frameworks for both deals, no formal paperwork has been signed yet. Once it is, Warner Bros. Discovery will have five days to respond, as stipulated in the contracts.

The NBA is uncertain if Warner Bros. Discovery will agree to any of the proposed packages or if they will negotiate a separate deal with the league for a settlement or a smaller fourth package of games.

Neither the NBA, Warner Bros. Discovery, NBCUniversal, nor Amazon responded to requests for comment.

Matching Amazon

According to sources, Warner Bros. Discovery has the right to match any of the NBA games aired on TNT that are split into multiple packages, or at least the parts that include the current TNT games.

"Zaslav stated during the Warner Bros. Discovery quarterly earnings conference call that the team has been well-prepared for the negotiation and has devised strategies for different possible outcomes. Additionally, the team possesses matching rights that enable them to match any third-party offers before the NBA reaches an agreement with them."

The NBA deal with either NBCUniversal or Amazon could be hindered by a potential lawsuit between Warner Bros. Discovery and the league if the league rejects Warner Bros. Discovery's matching rights and chooses a different partner.

Given its gross debt of approximately $42 billion, which is more than double its current market capitalization of about $20 billion, Warner Bros. Discovery is considering a more affordable package of games. The likely package for Amazon includes All-Star games and conference finals games, which have previously aired on TNT, according to a source.

The NBA aims to expand its product's reach beyond cable TV by offering a streaming package. Warner Bros. Discovery, which owns TNT and Max, has announced a five-year deal with ESPN to sublicense College Football Playoff games for both TNT and Max.

Unlike Amazon's Prime Video streaming service, Max plans to charge customers more for its sports offerings, potentially reducing reach and not being preferred by the NBA.

Zaslav's emphasis on Amazon may be a strategic move to secure a settlement from the league by targeting a package tailored for a prominent tech streamer.

According to sources, Zaslav is willing to relinquish the NBA if Warner Bros. Discovery deems the cost too high, given his recent deals for the College Football Playoffs and NASCAR races starting in 2025.

According to a source, Zaslav has informed his colleagues that he believes NBCUniversal is spending too much on the NBA, based on his company's research on ratings and potential subscriber value for a streaming service.

The NBA's previous asking price of $1.2 billion would be more than doubled by an offer of $2.5 billion or more, but the new package would have fewer games due to the addition of a third media partner.

Warner Bros. Discovery could allocate the funds saved from not investing in the NBA towards other sports, such as UFC, which is expected to sign a new rights deal next year.

The NBA on NBC

NBCUniversal is viewed as a direct competitor by Zaslav in the battle for survival among legacy media companies, according to sources. If NBCUniversal overpays for the NBA, it will give Warner Bros. Discovery a competitive edge, they added.

If Warner Bros. Discovery decides to either match Amazon's potential package or withdraw completely, it will pave the way for the NBA to resume its partnership with NBCUniversal, which lost league rights in 2002.

The NBCUniversal music licensing team has contacted John Tesh, the owner of "Roundball Rock," the old "NBA on NBC" theme song, to express interest in using the jingle on NBC if the company secures the media rights, according to a source.

Neither Amazon nor Warner Bros. Discovery possesses a free over-the-air broadcast network, unlike Disney, which owns ABC and NBC.

Peacock, NBCUniversal's domestic-only streaming service, could also serve as a platform for NBA games.

Disclosure: NBCUniversal is the parent company of CNBC.