Release time is running out for Warner Bros. Discovery in its effort to secure a new media rights deal for the NBA.
Warner Bros. Discovery CEO David Zaslav said Thursday that the company is continuing to negotiate with the league to retain its NBA competition package, a major draw for its TNT cable channel, but offered no clue as to where. discussions would end.
“We are hopeful that we can reach a deal that makes sense for both sides,” Zaslav told Wall Street analysts on the company's first-quarter earnings conference call. “We have had a lot of time to prepare for this negotiation and have strategies for several potential outcomes.”
Zaslav added that the company has the right to match offers from other companies. But the executive did not answer questions about what could be a revolutionary agreement.
Comcast reportedly has a $2.5 billion bid with the NBA for a package of games that will air on its Peacock streaming service and its NBC streaming network. Amazon's Prime Video also reportedly has a deal for exclusive NBA games, adding to the streaming service's growing portfolio of sports properties.
With Disney's package for ESPN and ABC expected to remain in place, attention has turned to 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 agreement that will take effect after the 2024-25 season.
Losing the package would bring long-term ramifications for Warner Bros. Discovery's streaming deals with cable and satellite operators, which 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 controversial.
Despite continued strong growth in its direct-to-consumer streaming business, the first-quarter earnings outlook for Warner Bros. Discovery was mixed. The company missed Wall Street expectations for revenue, which fell 7% year over year to $9.96 billion. Analysts expected $10.2 billion.
The company posted a net loss of 40 cents per share, compared with 24 cents a year ago.
The direct-to-consumer business added 2 million subscribers in the third quarter. Streaming advertising revenue grew by 70%.
Sales at its linear television networks, which include TNT, CNN and Discovery, fell 8% to $5.13 billion. Weak demand for television commercials caused advertising revenue to fall 11%.
The company's studio division saw a 13% year-over-year drop in revenue to $2.82 billion. Zaslav cited the delay in film production due to last year's work stoppages by writers and actors. The unit was also affected by the poor box office performance of “Suicide Squad.”
Zaslav said the company is dedicated to improving the studio's performance by leveraging its existing film franchises, such as “Harry Potter.” He said the studio has begun developing the script for a new “Lord of the Rings” movie, produced by Peter Jackson.
Warner Bros. Discovery announced Wednesday that it will offer consumers its Max streaming service in a bundle with Hulu and Disney's Disney+. The package will be available in the US starting this summer and can be purchased through any of the three streaming platforms' websites.
Zaslav said the new offering will increase subscriber retention. The price has not been revealed.
Shares of Warner Bros. Discovery traded slightly higher Thursday morning at $8.02 per share.
