Why TNT was always going to lose the NBA to Amazon

Last week, the NBA unveiled its new TV rights deal: an 11-year, $77 billion arrangement that will begin with the 2025-26 season. ESPN/ABC will remain the league’s premier broadcast partner, paying $2.6 billion per year for a package that includes the NBA Finals. NBC, which aired most of Michael Jordan’s ruthless eviscerations of the Utah Jazz before losing game rights in 2002, is back in the fold, paying $2.45 billion for a slightly less lucrative programming bundle. 

Finally, Amazon Prime Video will pay $1.8 billion for the privilege of streaming everything that’s left: some regular season games, a handful of playoff series, a conference finals every other year, and the annual In-Season Tournament. The new three-partner structure basically triples the value of the nine-year, $24 billion deal that the NBA signed with ESPN/ABC and Turner Sports back in 2014—which, incidentally, basically tripled the value of the deal before that.

This high-stakes game of musical chairs leaves Turner, which has been televising NBA games on its TNT network since 1989, without a seat at the table. “Roundball Rock,” the beloved theme to Sunday afternoon NBA on NBC telecasts, will return soon to a screen near you; Inside the NBA, TNT’s award-winning studio show, will kick off its likely final season this fall.

This, at least, is how the NBA and Amazon would like things to go. But in the days before the news broke, Turner, which is owned by Warner Bros. Discovery, announced that it had invoked its contractual right to match Amazon’s offer and keep its rights for another decade. Yet after reviewing the details of Turner’s proposal, the NBA claimed that it wasn’t enough to match Amazon’s offer, and that it would proceed with the streaming giant as planned.

Turner, as you might expect, asserted that the league had “grossly misinterpreted” the contract’s language and promised to take “appropriate action.” Sure enough, last Friday, Turner sued the NBA in New York state court, demanding that the league either honor its obligations or pay up for its failure to do so. (That sound you hear is a small army of BigLaw associates clearing their schedules for the next several months.)  

The smart money is on Amazon and the NBA eventually getting their way, for two reasons. First, courts generally don’t like making parties do business with people they don’t want to do business with. And second, a good rule of thumb is that the biggest and wealthiest corporation in the courtroom is going to win. Amazon, with a market cap of nearly $2 trillion, would qualify as such in just about any head-to-head scenario. Given that Warner Bros. Discovery is still trying to figure out what to do with its $43 billion in debt, the numbers here are not especially close.

Even so, the looming legal fight will be a fascinating glimpse at the future of media rights to live sports, as traditional networks clinging to these valuable assets try to stave off the deep-pocketed streamers who understand that without them, networks are going to be in even more trouble than they’re in already. By one estimate, losing the NBA would lose TNT some $600 million per year in advertising revenue and cable and satellite deals, and in its complaint, Turner frames its rights to “one-of-a-kind” NBA games as integral to the network’s entire business model. “This is not a mere case of losing one valuable sports property,” the complaint says, “but rather a case where the various implications of losing the NBA distribution rights are wide-ranging and not merely difficult, but impossible to fully calculate.”

In a brief statement, the NBA said that Turner’s claims are “without merit,” an assertion it will presumably detail in court. But according to The Athletic, the gist of the NBA’s legal argument is that even if Turner matches the dollar figure of Amazon’s offer, it hasn’t—more importantly, it can’t—match Amazon’s offer in terms of reach. Turner primarily broadcasts games on basic cable, whereas Amazon is an “over the top” distributor that bypasses traditional distribution channels (like cable and satellite providers) and streams directly to consumers. In the NBA’s view, Amazon’s infrastructure makes it simpler for more people to find and consume its product, and thus renders Turner’s bid legally insufficient.

Turner, as you might expect, disagrees on several grounds. First, it contends that the existing deal’s matching provisions already account for streaming rights, and that Turner’s ability to stream NBA games on Max—Warner Bros. Discovery’s streaming service—allows it to mirror Amazon’s bid to stream NBA games on Prime Video. Second, Turner argues that there isn’t a meaningful difference anymore between watching televised games and watching streamed games: After all, consumers can watch Amazon Prime on their TVs as easily as they can stream TNT and Max on their laptops. Fans care about the game playing out on the screen, not the technology they had to use in order to access it.

The real reason the NBA doesn’t find this persuasive, of course, is that the NBA has seen the same astonishing data on cord-cutting as everyone else. Last year, streaming eclipsed cable as the country’s preferred viewing method. Only 58 million households subscribe to traditional pay TV, a number that could fall to 41 million by 2028, and modest projected increases in subscriptions to digital pay-TV providers (like YouTubeTV) are not enough to make up the difference. Meanwhile, Amazon says that already, 200 million people watch Prime Video every month. Even if you factor in Max’s 100 million global subscribers, once again, the numbers aren’t close, and they are probably not going to get closer anytime soon.

The NBA has been publicly chafing about the perceived limitations of its deal with Turner and ESPN/ABC for a while now. In an interview last year, for example, NBA commissioner Adam Silver noted that cable audiences are “older and less diverse,” which he contrasted with the NBA’s “particularly young and diverse audience.” Cord-cutters tend to be younger. When news of the deal broke, Silver’s statement highlighted the potential of Amazon’s “massive subscriber base” to “dramatically expand” the league’s footprint. The NBA knows that there are already more eyeballs on streamers than on traditional networks, and sees no point in waiting any longer to try and reach them.

Perhaps the most interesting section of Turner’s complaint accuses the NBA of negotiating in bad faith, by trying to structure the Amazon deal to make it impossible for Turner to match. Some of the details are redacted from the complaint, but to give a general sense of the sort of thing going on here, The Wall Street Journal previously reported that Amazon was prepared to pay for three years’ worth of fees in cash; TNT, given Warner Bros. Discovery’s financial woes, had to obtain financing first. The dynamic will be familiar to anyone who’s tried buying a house while competing against all-cash offers: Even if the numbers are the same, with so much at stake, sellers are eager to deal with liquid buyers who can simply cut a check.

As is usually the case, an out-of-court resolution is probably in everyone’s best interests. The NBA is eager to get its streaming era underway, and Amazon has 14 months and counting to build a massive coverage infrastructure from scratch. As much as Warner Bros Discovery might want to keep the NBA on TNT, for a company that is eleven figures in debt, a potential hefty cash settlement wouldn’t be a terrible consolation prize. It’s also possible that the NBA could settle this by bringing in Turner as a fourth partner for a token package of games, a move that could also keep Inside the NBA on the air—basically an act of fan service.

But even resolutions like these would be ominous signs for the future of traditional TV networks. Although they’ve ceded ground to the streamers in recent years on live events—the NFL now shows weekly games on Prime Video and YouTube, will show two Christmas Day games on Netflix this year, and airs an honest-to-God NFL playoff game exclusively on freaking Peacock—the networks’ longstanding relationships with major sports leagues remain the biggest reason for fans to keep their cable subscriptions current.

The NBA’s push to partner with Amazon—and its conspicuous efforts to sideline its oldest and perhaps highest-profile partner in the process—suggest that the industry is at its tipping point. As more streamers offer more money to offer more content to their growing subscriber bases, leagues won’t want to deal with anyone but streamers anymore. In its complaint, Turner urges the court to consider the “hundreds of millions of dollars” it has invested in the network’s “carefully developed 40-year brand.” Unfortunately for Turner, in the eyes of the NBA, this legacy is all that Turner has left to offer.

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