Warner Bros. Discovery Sued For Misleading Investors On NBA Before Losing It

Core Viewpoint - A shareholder has filed a lawsuit against Warner Bros. Discovery (WBD) for allegedly misleading investors regarding the impact of losing its NBA broadcasting rights, which has led to significant financial repercussions for the company [1][5]. Financial Impact - WBD took a substantial $9.1 billion write-down in its networks segment, attributed in part to the loss of the NBA on TNT, during the period from February 23 to August 7, 2024 [2]. - The company's stock price experienced a decline of 69 cents, approximately 9$7.02 per share, although it has since recovered to $10.11 [5]. Media Rights Negotiations - Under the previous deal established in 2014, TNT paid an average annual fee of$1.2 billion for NBA rights. However, WBD failed to secure a new deal before its exclusive negotiating window expired in April 2024 [4]. - The NBA is currently in discussions for new media rights deals, with offers from NBC at an average annual fee of $2.5 billion and Amazon at$1.8 billion [4]. Allegations of Misleading Statements - The lawsuit claims that WBD executives, including CEO David Zaslav and CFO Gunnar Wiedenfels, made materially false statements about the company's business prospects and failed to disclose the risks associated with the NBA negotiations [5][6]. - The suit argues that the defendants overstated WBD's financial health, with Zaslav claiming the company was on "solid footing" and confident in its growth trajectory [5]. Legal Proceedings and Settlements - WBD previously sued the NBA over the awarding of its broadcasting package to Amazon, stating that the loss would be devastating. A settlement was later reached, allowing NBA games to be available on Max in certain international markets [7]. - The lawsuit seeks damages for the significant losses suffered by shareholders due to the alleged fraudulent practices and misleading statements by WBD executives [6][7].