Warner Bros. Discovery Sued for Misleading Investors Regarding NBA Media Rights Loss

Warner Bros. Discovery is facing legal action from shareholders who claim the company misled them about the impact of losing NBA media rights. The lawsuit was filed by shareholder Richard Collura, who is seeking class-action status for others who bought WBD stock between February and August in 2024. This period coincides with a $9.1 billion impairment charge announcement due to declining TV network value as viewers and advertisers move to streaming services. On top of this, $2.1 billion in merger-related costs from WarnerMedia and Discovery added up to an $11.2 billion loss for the company in the second quarter.

The lawsuit alleges that WBD’s CEO, David Zaslav, and CFO, Gunnar Wiedenfels, made misleading statements during this time, failing to disclose how negotiations with the NBA were affecting their business. It also points to Zaslav’s overly optimistic statements during an earnings call about the company being on a solid growth path.

While the NBA recently sealed new broadcast deals with Disney, NBC Universal, and Amazon Prime Video, ending its long partnership with WBD and TNT Sports, WBD pursued a lawsuit claiming the league breached their contract. This legal battle led to a settlement where WBD agreed to license its famous “Inside the NBA” show to ESPN, maintaining ties with the league in other capacities. Despite this resolution, shareholders are still feeling the impact of losing NBA game broadcasts on WBD networks.