Warner Bros. Discovery endures several hits to business amid NBA fallout

The GIST: It’s been a tough few weeks for Warner Bros. Discovery (WBD), the global multimedia brand that has endured everything from being shut out of the NBA’s media rights renewal to losing billions in its linear TV business. In recent days, WBD’s stock has plummeted and was down 40% YTD prior to yesterday’s opening bell. Let’s dive in on the reasons why.

💰 WBD overvalued its linear networks by $9.1B. Last month, ownership considered stripping the conglomerate for parts, essentially admitting the 2022 merger between WarnerMedia and Discovery was a failure. It gets worse: WBD concluded that its TV assets were likely overvalued in previous estimates by $9.1B, especially since it was recently boxed out of an NBA deal.

🏀 WBD lost its NBA media rights. This summer, the NBA (and WNBA) were embroiled in billion-dollar negotiations as the leagues revisited their media rights. WBD held out and ultimately airballed, failing to ink a deal for NBA rights and instead deciding to match Amazon’s $1.8B yearly media package. The NBA rejected WBD’s bid, a decision the company is contesting in court.

• Notably, veteran Inside the NBA host Charles Barkley remains committed to WBD. The network plans to “reimagine” the show’s entire framework with or without NBA access, although the media rights loss is clearly making investors nervous.

🏛️ WBD, along with Disney and Fox, is being sued by FuboTV. A federal court in Manhattan is hearing an antitrust lawsuit this week filed by the streamer against Venu Sports, the sports streaming brainchild of Disney, WBD, and Fox. The proposed app would make the market impossibly competitive — FuboTV could lose more than 300K of its 1.4M subscribers as a result.

• U.S. senators Elizabeth Warren and Bernie Sanders also expressed “serious concerns” about the monopolistic nature of the app, which could control over 80% of nationally broadcast sports and over half of national sports content. (Anti) trust issues.