Warner Bros. Discovery is looking for the dismissal of the cause for investors for NBA agreement

The CEO of Warner Bros. Discovery David Zaslav and the CFO Gunnar Wiedenfels support in a recent presentation of the court that a federal class action of securities started by WBD actions buyers is without merit. The lawsuit claim to have been deceived by WBD’s declarations and omissions on negotiations for a new NBA TV agreement last year.

Jonathan D. Polkes and other lawyers of White & Houses representing WBD, Zaslav and Widenfels insist that the cause is underestimated by the “media coverage from the wall wall of the negotiations” between WBD and the NBA on the rights of the media, speaks that it has risen in the spiral in its legal dispute.

After WBD and the NBA, which had been in a 40 -year -old partnership, were unable to reach an agreement during an exclusive negotiation period, the NBA weighed the external offers accepted by Nbuniversal and Amazon. WBD then invoked a corresponding arrangement, but the League rejected it. The NBA claimed that it was not a “game” in a technical sense since it came with the revisions of Amazon’s offer, and there was no disagreement that WBD could distribute NBA games through streaming in the same way as Amazon. WBD sued the NBA last July for the alleged violation of its right right. The parties settled last November and accepted a new partnership.

In the same month, Richard Collura and other investors filed a complaint in the southern district of New York for the violations of the 1934 Securities Exchange Act. The report portrays WBD officials as misleading investors on its ability to use the combination clause and “omit the significant financial impact that WBD should face if it has lost the rights of the NBA”.

To this end, the complaint refers to Zaslav’s comments, included since 2022 when he told journalists: “We must not have the NBA”. The complaint also cites Zaslav’s comments in 2024 when he referred to “constructive and productive” negotiations with the League and when he declared: “We have combination rights that allow us to combine third parties offers before the NBA enters into an agreement with them”.

In addition, the complaint detailed the fluctuations of the price of actions that seemed to be connected to public perceptions on WBD-NBA negotiations and subsequent obtains. In this sense, the complaint underlines that a “main pilot” for WBD and similar transmission companies are live sports.

“The NBA generated hundreds of millions of dollars a year in advertising revenues, supported the other WBD shows and allowed the WBD to charge high transport rates to cables and satellite suppliers,” says the complaint. It also claims that “the NBA has provided WBD with a” halo effect “that has increased all the other properties of the WBD, as well as contributing to the non -tangible activities of WBD such as Goodwill”.

WBD’s Memorandum by law in support of the dismissal motion claims that the case is imperfect for several reasons.

For beginners, WBD-NBA negotiations were extremely public in ways that investors and potential investors of companies listed on the stock exchange are normally denied.

“It was impossible to read the sports pages or watch Espn”, observes the Memorandum, “without knowing the current NBA negotiations, that negotiations were obsessively monitored by the media, industry and public, that the result was uncertain and that the result would have had a financial impact both on the WBD and the NBA.”

Numerous stories of news and analysis on negotiations are mentioned to show that investors have been exposed to high levels of information on negotiations.

The Memorandum also stresses that investors and potential investors could have benefited from the “constant drumbeat of dissemination in WBD’s declarations and public declarations that specifically discuss these facts”. These dissemination, including the documents of the century, “expressly warned of the risks” for the WBD in the loss of the NBA agreement, also as regards the revenue and the good will and the importance of maintaining the sports content licenses.

In addition, the Memorandum attracts attention to numerous Zaslav comments by saying that negotiations with the NBA were important. The fact that he refused to share all the details on the negotiations was expected, suggests the Memorandum, since company leaders in private negotiations with leaders of other companies could betray confidences and undermines their bargaining position by revealing too many details.

From this goal, it was not problematic that Zaslav said during a call on profits in May 2024 – a couple of months before the start of a combination period – it was not “the time to discuss” the details in the NBA negotiations. During that call, he also dealt with related topics that were not so sensitive, including “costs, deployment and [WBD’s] initiatives on packages. ”

WBD also stresses that the declarations made by Zaslav and Wiedenfels were accurate and true. The two men noticed that there were rights of correspondence, which was undisputed, without ensuring that they would be able to exercise these rights without objections from the NBA.

“In fact, speculation on the fact that the WBD could effectively exercise these rights has been widely discussed in the media,” observes the Memorandum. At that point, Sporty And other media have detailed duel topics on the fact that the correspondence rights could apply to the structure of the Amazon agreement, a topic that has become the source of a cause before it was resolved through an agreement.

Another alleged defect with the complaint, says WBD, is that the company knew that he would not keep the NBA, but he still acted as if the negotiations were legitimate.

The complaint claims that the “rapid resolution of the cause of WBD against the NBA” is a proof in this sense. The complaint notes that the parties have settled “less than four months after WBD intended for” and “before any discovery had been completed”.

As the complaints see, the sequence of setting as a cause “has shown that, far from believing in their ability to apply the combined clause, the defendants knew they could not and did not use the corresponding clause to preserve the rights of the NBA and instead intended a cause as a face measurement and a negotiation tactic that WBD abandoned quickly.”

WBD suggests that a theory that poses, as WBD says, “the defendants always knew that they would lose the NBA contract and that the months of the negotiations were a fiction” is illogical and denied by the facts.

“Obviously absent”, WBD writes, “are any accusations particularly in support of this topic of fraud for clarification”. The company instead cites a “simple inference” that “WBD was engaged in difficult negotiations with the NBA and hoped that it would ensure the rights of the NBA, but, ultimately, the NBA chose competition offers”.

The complaints will have the opportunity to discuss against the dismissal motion. The case is before the judge of the US district Katherine Polk Failla.