Losing NBA rights is a 'major blow' for WBD: Analyst

The National Basketball Association (NBA) has officially rejected Warner Bros. Discovery's (WBD) bid to keep streaming NBA games on its TNT platform. Tim Nollen, Macquarie U.S. equity research senior media tech analyst joins Market Domination to shares his thoughts on this development.

Nollen says it's clear that the NBA was "a valuable property for TNT," benefiting both its cable TV ad business and "their ability to secure carriage fees." He notes that the biggest loss is the opportunity to stream games on Max, as "streaming is the present and future of TV." While WBD has a strong content lineup, Nollen points out that "without the NBA, that is their biggest piece... of sports content that which will now be going away." Nollen claims that though the rights are expensive, he views the NBA as "an essential property" for WBD to keep.

"I think the importance of the NBA probably cannot be understated, and therefore it's a major blow, I'd say, to not have the NBA going forward," Nollen told Yahoo Finance, adding that this might affect WBD's subscriber numbers.

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This post was written by Angel Smith

Video Transcript

Starting with the 2025 2026 season.

TNT will be on the bench for NBA games.

It will be the first time since 1989 that the network will not be a part of NBA coverage.

The league rejected Warner Brothers Discovery's efforts to match Amazon's bid for a package of games.

Joining us now is Tim Nolan macquarie us Equity research, senior media tech analyst.

He downgraded the stock to neutral on the news.

It's great to see it's him.

So this is what seems like a big blow for the company, talk to us about what it means financially and how and whether uh WBD is going to be able to make that up.

Sure.

Uh Well, we, we don't know what the real numbers are to work with yet, but I think it's um clear in our minds that the NBA was a valuable property for TNT, both for, you know, the cable network, uh linear TV business, both in terms of advertising that it generates.

Uh and in terms of um their ability to secure um carriage fees with the, with the uh pay TV, distributors whenever those next rounds of deals come up.

Um But actually more importantly in our minds is the opportunity cost to the max streaming service because streaming is the present and future of TV.

Um Warner Brothers Discovery has in my opinion, an excellent lineup of deep quality, you know, Warner Brothers studio HBO Discovery, you know, all sorts of, of programming content and sports.

But without the NBA, that is their biggest piece, the most valuable piece of sports content, which will now be going away after this coming NBA season.

So without that, I think it makes it harder for Mac to generate subscribers and potentially to uh to retain subscribers.

So, um it's expensive content and, you know, maybe it would even be a loss leader to have it.

I don't know if they, how much profit they would make from it.

But to me, it was an essential property to retain, to keep to go or for the next 11 years and not having it is a major blow, I'd say to advertising and the subscription fees and, and Tim, I'm just curious, I take your argument but, you know, you look at this stock, Tim and it is already, it's taken such a hit, it's down about 30% already this year, Tim.

So I'm just curious, you know, you know, given the news and the stock slump even now you look at valuation and, and you, you obviously don't think it still looks attractive, I guess.

Well, uh believe me, I spent a lot of time thinking and worrying about this year today as I've seen the stock going down with a buy rating on it.

And so to sort of throw in the towel here, you know, already at $8 is not easy to do.

Um, but in my opinion, um, the, uh, the stock is just less interesting here.

Now, what could make it interesting?

There, there has been, um, some, uh, reputable press talking about a potential breakup of the company.

Um, the, the stock is arguably very cheap.

We might, and in our note, it's trading at six times forward e to e but, uh, the peer group is more like eight times.

Some stocks are higher than that.

I'm just talking to direct peers like Disney, like war, um, like Fox, like Paramount.

So it, it is arguably very cheap and we've said that for a long time, I just think that the importance of the NBA, uh, probably cannot be, uh, understated and therefore it's, uh, it's a major blow, I'd say to not have the NBA going forward.