Warner Bros. Discovery (WBD) filed a lawsuit against the NBA on Friday over what it said was the league's "unjustified rejection" of the company's matching rights proposal earlier in the week.

The suit, filed under seal in New York County Supreme Court by WBD and its subsidiary TBS and obtained by Yahoo Finance, states the NBA "has refused to honor TBS’s match. Not only that, despite TBS’s clear match, the NBA has purported to grant the rights to Amazon in direct breach of the agreement."

Warner Bros. reportedly shells out $1.2 billion annually for the rights, which expire at the end of next season. Under the terms of the 2024-2025 season, the company maintains a rights package that includes at least 64 regular-season games and at least 30 playoff games.

"TBS has a vested interest in maintaining these distribution rights and its carefully developed 40-year brand," the complaint read. "On top of the billions of dollars it pays the NBA for the distribution rights, TBS has invested hundreds of millions of dollars in production and talent, including its award-winning 'Inside the NBA' program."

In response to the lawsuit, NBA spokesperson Mike Bass told Yahoo Finance, "Warner Bros. Discovery's claims are without merit and our lawyers will address them."

Warner Bros. shares closed about 4% down on Friday following the development.

The news comes less than two days after the NBA officially approved a media rights package that excluded WBD, one of the league's current partners, in favor of two newcomers: tech giant Amazon (AMZN) and Comcast's NBCUniversal (CMCSA). It was able to strike a new agreement with its other current media partner, Disney (DIS).

“Warner Bros. Discovery’s most recent proposal did not match the terms of Amazon Prime Video’s offer and, therefore, we have entered into a long-term arrangement with Amazon," the NBA said at the time.

Wall Street analysts have said litigation might not go far for the legacy media giant, which has aired NBA games through TNT since 1989.

"Even if WBD were to win, the costs may be prohibitive," Macquarie analyst Tim Nollen wrote in a note to clients on Thursday.

The analyst later told Yahoo Finance it's clear the NBA was "a valuable property for TNT," benefiting both its linear TV advertising business and its "ability to secure carriage fees," or the fees pay-TV providers pay to network owners to carry their channels.

"But more importantly in our minds is the opportunity cost to the Max streaming service because streaming is the present and future of TV," he said, adding it will be harder for Max to generate new subscribers and retain existing ones without the NBA.

"It's expensive content and maybe it would even be a loss leader to have it. ... But to me, it was an essential property to retain. Not having it is a major blow to advertising and the subscription fees."

The loss of the rights will also impact TNT's NBA-adjacent content, such as "Inside the NBA," the acclaimed show hosted by retired players Shaquille O'Neal, Charles Barkley, and Kenny Smith.

A report from Front Office Sports said ESPN and Amazon are both interested in keeping the show's cast intact, although Barkley has said he plans to retire after next season, which will also be the end of the current media deal.

“Clearly the NBA has wanted to break up with us from the beginning,” Barkley wrote in a statement Friday posted on Instagram. “I’m not sure TNT ever had a chance. TNT matched the money, but the league knows Amazon and these tech companies are the only ones willing to pay for the rights when they double in the future."

"It's a sad day when owners and commissioners choose money over the fans," he continued. "It just sucks."

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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