A shareholder has filed a federal lawsuit against Warner Bros Discovery (WBD) after the entertainment giant failed to secure a new agreement with the National Basketball Association (NBA) for television rights beyond this current season.
In New York federal court this week, Richard Collura said he purchased stock in WBD between late February and early August of this year, the time when WBD was reportedly negotiating with the NBA on a new TV rights deal that ultimately went to Comcast’s NBC Universal and Amazon’s Prime Video.
On August 7, WBD took a $9.1 billion write-down, attributed to the likely loss of the TV deal. It sued the NBA, accusing the league of failing to give equal weight to its offer to keep games on TNT Sports instead of moving the package to Prime Video. The NBA said Amazon’s offer was more-lucrative. Both sides settled the case earlier this month, with an agreement that gives WBD the right to distribute some games in international markets, but which also moves forward with plans to shift domestic TV rights from TNT Sports to Prime Video.
According to Collura, WBD “made materially false and misleading statements regarding the company’s business, operations, and prospects” between February and August — the period when he bought and held WBD stock — and “failed to disclose that WBD’s sports rights negotiations with the NBA were causing, or were likely to cause, the company to significantly reevaluate its business and goodwill.”
Collura also accused WBD CEO David Zaslav of misleading investors on a conference call that the company was “now on solid footing with a clear pathway to growth” and had the ability “to drive sustained operating momentum and enhanced shareholder value.”
By losing NBA rights to Prime Video, Collura and others “have suffered significant losses and damages.” While WBD did disclose some likely financial impacts of losing basketball rights to Amazon, Collura said executives downplayed the impact too much, while concealing the actual likely risk of losing the premium sports package.
Collura’s lawsuit seeks class action status, and at least two law firms are soliciting interest from other shareholders in joining the case, according to press releases sent to The Desk this week.
WBD has not commented on the matter.
