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Warner Bros. Discovery Stock Plunges on Potential Loss of NBA Rights

Warner Bros. Discovery (WBD) - ★★ - Ranked #81 in our Q2 2024 SMID Equity Rankings

Shares of Warner Bros. Discovery (WBD) plummeted 9% to $7.40 on Tuesday after reports that the media giant could lose the broadcast rights for National Basketball Association (NBA) games to rival Comcast's (CMCSA) NBCUniversal.

The steep stock decline marked Warner Bros. Discovery's worst single-day performance in over two months. The sell-off drove the company's shares to lows not seen since 2009 as investors feared the loss of a key sports programming asset.

According to The Wall Street Journal, NBCUniversal is planning to pay around $2.5 billion per year on average to secure the NBA's broadcast rights. Warner Bros.' TNT network currently pays $1.2 billion annually under its existing deal.

However, the company was unable to reach a new agreement with the NBA before an exclusive negotiating window expired last week, leaving the door open for NBCUniversal to swoop in with a richer offer.

The potential loss of NBA games would deal a major blow to Warner Bros. Discovery's sports offerings at a time when the company is struggling with a heavy debt load following the merger of Discovery and AT&T's WarnerMedia unit. Live sports programming is highly coveted by media companies and advertisers due to its ability to draw live viewers.

Warner Bros. Discovery shares have now plunged roughly 35% year-to-date amid broader economic pressures and concerns about the company's debt burden. The loss of NBA rights could exacerbate those challenges for the media conglomerate.

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