NBA rejects Warner Bros. Discovery offer for game rights

Shares of Warner Bros. Discovery (WBD) are falling after the NBA rejected its matching offer to maintain the rights to broadcast and stream games after next season. The NBA said the offer "did not match the terms" of Amazon's (AMZN) proposal.

Jared Blikre and Seana Smith report more on the story and what the loss means for the outlook of Warner Bros. Discovery.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Melanie Riehl

Video Transcript

Let's take a look at shares of Warner Brothers Discovery falling after the NBA rejected its matching offer to maintain the rights for games after next season, the league saying the offer quote did not match the terms of Amazon's proposal as a result.

We're seeing Warner Brothers Discovery off just about 5.5% and Jared or calling it was a big loss.

Our colleague, Ali Canal has been covering this very closely and we're seeing the concern not only in real time in the share move to the downside, but also just in what analysts are saying out this morning saying that losing these key rights now means that the company loses core content, not only for their linear networks for Mac streaming, not exactly something that Warner Brothers can afford right now.

No, but here's the flip side.

They, they, their expenses are way down here.

Here's also the same analyst I believe over at R BC, the long term case for stocks looks more precarious but it is arguably very cheap.

It will save a lot of money by not having to pay the and by pay for the NBA and the company may now accelerate possible breakup plans, price target lowered 2 $9 from 13.

Um So, and by the way, that was mcquary, by the way.

Uh so I don't know if you're, if you're in strategy, if you're an analyst saying that you're looking to possible break up plans, I mean, I think that kind of speaks for itself.

Yeah.

And I think that also goes to the fact as to what we've been talking about a lot here, just, just what is likely to play out within the media space specifically with so many of these streamers.

And especially when you take a look at the streaming giants, there has been lots of talk, I almost feel like it's been forever that we've been talking about anticipated consolidation.

What going to see?

Yes, we did get the paramount news just a few of that last week or a few weeks ago.

But again, I think the question remains how quickly we are going to see consolidation?

It sounds like it's inevitable, you know, but you got to think there's something coming, yeah, we're talking media and the M and A goes in a what 10 year 20 year cycle?

We're somewhere right in here.

We are.

And I think that that's also why you're seeing more bundling.

So many of these companies are doing whatever they can in order to boost their streaming businesses in order to boost the number of streamers that are coming to their platform.

So again, some of those efforts have paid off others.

Not so much.

That's why we've seen this kind of this bifurcation in terms of our performance.

And I think a lot of them are just trying to figure out how they are in any world going to compete with the leader of the pack.

And that is Netflix and once again, Netflix posting strong results again, uh earlier this earnings season.

So we'll hear from a number of these media companies here over the next several weeks, but this is going to be top of mind for so many analysts out there.