NBA picks Amazon for media rights over Warner Bros. Discovery

The National Basketball Association has rebuffed longtime media partner Warner Bros. Discovery‘s bid to keep airing games after next season.

The NBA told the media company it doesn’t believe it holds legal matching rights for the league’s new media deal. It instead plans to move ahead with Amazon as its third partner, along with ESPN and NBCUniversal, in its 11-year deal worth about $77 billion.

 “Warner Bros. Discovery’s most recent proposal did not match the terms of Amazon Prime Video’s offer and, therefore, we have entered into a long-term arrangement with Amazon,” the NBA said in a statement Wednesday.

Warner Bros. Discovery acquired matching rights as part of its current media rights deal with the league, which expires at the end of next season. That provision allows the company to match payment for any of the games that air on TNT.

The NBA doesn’t believe Warner Bros. Discovery’s rights extend to an all-streaming package, which was carved out for Amazon. Warner Bros. Discovery also owns a streaming service, Max, which it could use to air games, but the company has told the NBA it plans to simulcast TNT games on Max rather than only putting them on Max.

The NBA sent a letter Wednesday to Warner Bros. Discovery explaining why it can’t match Amazon’s package, citing language from the original matching provision, according to people familiar with the matter. CNBC obtained a portion of that letter, addressed to Luis Silberwasser, chairman and CEO of TNT Sports.

The NBA cited a provision that says the existing media partner can exercise matching rights “only via the specific form of combined audio and video distribution (e.g. if the specific form of combined audio and video distribution is internet distribution, a matching incumbent may not exercise such games rights via television distribution).”

In its statement, the NBA said that “throughout these negotiations, our primary objective has been to maximize the reach and accessibility of our games for our fans. Our new arrangement with Amazon supports this goal by complementing the broadcast, cable and streaming packages that are already part of our new Disney and NBCUniversal arrangements.”

“All three partners have also committed substantial resources to promote the league and enhance the fan experience,” the league added. “We are grateful to Turner Sports for its award-winning coverage of the NBA and look forward to another season of the NBA on TNT.”

Warner Bros. Discovery said Monday it matched one of the NBA’s three media rights packages, which people familiar with the matter identified as the $1.93 billion per-year deal earmarked for Amazon Prime Video. Disney and Comcast‘s NBCUniversal signed deals for the other two packages, part of the league’s $77 billion media rights renewal over 11 years.

“In an effort to continue our long-standing partnership, during both exclusive and non-exclusive negotiation periods, we acted in good faith to present strong bids that were fair to both parties. Regrettably, the league notified us of its intention to accept other offers for the games in our current rights package, leaving us to proceed under the matching rights provision, which is an integral part of our current agreement and the rights we have paid for under it,” Warner Bros. Discovery said in a statement on Monday.  ”This will allow fans to keep enjoying our unparalleled coverage, including the best live game productions in the industry and our iconic studio shows and talent, while building on our proven 40-year commitment for many more years.”

Warner Bros. Discovery’s Turner Sports has carried live NBA games for nearly 40 years. The cable network TNT is home to “Inside the NBA,” the popular studio show starring Ernie Johnson, Charles Barkley, Kenny Smith and Shaquille O’Neal. The future of the show is in doubt if the NBA doesn’t strike a deal with Warner Bros. Discovery.

The league also wants its streaming partner to have maximum reach. Amazon Prime Video has more than twice as many global customers — more than 200 million to Max’s roughly 100 million — which may make the service a more appealing platform for the league. The streaming rights are global, even though Warner Bros. Discovery is only bidding on U.S. rights, according to people familiar with the language in the contract.

Warner Bros. Discovery may need to sue the NBA to claim its matching rights. Lawyers for the company and the NBA have been poring over contractual language for the past several months, according to people familiar with the matter.