WBD faces class-action lawsuit from investors over ‘misleading’ NBA rights claims
Warner Bros Discovery (WBD) has been hit with a class-action lawsuit by investors claiming, among other things, that the media company made misleading statements about the true impact that losing NBA rights would have on its business.
David Zaslav
The proposed class action, filed in New York on Tuesday, alleges WBD made “false and/or misleading statements” between February 23 and August 7 of this year when it failed to disclose that losing the rights would cause it to “significantly reevaluate its business and goodwill.”
After its cablenet TNT lost the rights to a package of NBA games it had carried for over 30 years, WBD took a US$9.1bn write-down on the value of its linear TV networks.
The lawsuit claims WBD played down the uncertainty surrounding its affiliate and sports rights renewals, as well as the continued softness in the US ad market, at the same time as overstating its “overall business and financial prospects.”
As a result, WBD’s “public statements were materially false and misleading at all relevant times,” read the lawsuit.
WBD, led by president and CEO David Zaslav, has experienced a rough year in the stock market, although its share price has shown signs of modest recovery over the past month.
After starting the year at US$10.78 per share, its value dropped to less than US$9 during the spring before sinking below US$7 in August after its cable TV write-down. Over the past month, the share price has climbed nearly 33% to US$10.11 per share.
This isn’t the only piece of legal action related to WBD losing NBA rights, with the package of games currently held by TNT set to move to Amazon’s Prime Video for the 2025/26 season.
In late July, WBD sued the NBA claiming the basketball league did not adhere to WBD’s right to match any competing offers. However, last week WBD and the NBA settled the dispute and agreed a new multi-faceted deal focused on digital and international markets including the Nordics (Denmark, Finland, Norway and Sweden), Poland and Latin America (excluding Brazil and Mexico).
