Legal precedent seems to favor, perhaps heavily, the NBA as it defends itself against Warner Bros. Discovery in a battle over TV rights.
Also read: Warner and Turner Sue the NBA Over Failed Renewal Deal
On Tuesday, LightShed Partners analyst Richard Greenfield unearthed a lawsuit filed in Delaware in 2000 by USA Networks, controlled by Barry Diller at the time prior to being sold to NBCUniversal in 2004. The suit was filed against Vince MacMahon's erstwhile World Wrestling Federation.
We also found the case text here.
Like WBD and its Turner Networks division, Diller and USA Networks had been spurned from renewing, after a 17-year partnership, TV rights for a popular live TV asset, WWF pro wrestling. MacMahon and the WWF rejected their assertion that they matched a third-party offer from the newly merged CBS and Viacom, under the control of Mel Karmazin at the time.
Also basing its decision on New York law, the Delaware court confirmed a lower court ruling that "to conclude an agreement, the acceptance must meet and correspond with the offer in every respect, neither falling short of nor going beyond the terms proposed, but meeting them exactly at all points and closing them just as they stand.”
Put simply, despite USA Networks' claims, the court found that it didn't match CBS "exactly at all points." Perhaps it was MacMahon noting that he preferred Karmazin's offer because Diller made him feel like a "used car salesman."
Beyond decided advantages in both domestic and international streaming reach, the NBA will undoubtedly contend that its new TV partner, Amazon, can provide benefits like marketing on shipped retail packages and promoting the NBA during NFL Thursday Night Football live streams, elements not found in WBD's "matching" offer.
Greenfield also noted that WBD didn't offer to pay three years upfront, as Amazon did. At about $1.8 billion a season, that came to $5.4 billion.
"While lawsuits are rarely cut and dry and there is plenty of room for interpretation of Turner’s original contract and matching rights, New York State case law that will likely be the lens used to analyze the case puts high odds of success for the NBA," the analyst added.
