Warner Bros. Discovery (WBD) lost a key media rights deal with the NBA, the league confirmed in a statement on Wednesday. The news sent shares of the company down more than 5% on Thursday.

It's a gut punch for the legacy media giant, which has aired NBA games through its TNT network since 1989. It reportedly shells out $1.2 billion annually for the rights, which expire at the end of next season.

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.

Ultimately, Warner Bros. was unable to secure a new deal during a months-long negotiating period that expired on April 22. That set off a race to secure the media rights to air NBA games, which ended up ballooning their value even more.

On Monday, Warner Bros. revealed it had matched Amazon’s media rights bid to continue airing NBA games, a move which was widely viewed as a last-ditch effort to secure the games. But the league confirmed Wednesday that it had denied the offer.

“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 in its statement.

Warner Bros. fought back with a statement of its own, writing, “We have matched the Amazon offer, as we have a contractual right to do, and do not believe the NBA can reject it.”

“We think they have grossly misinterpreted our contractual rights with respect to the 2025-26 season and beyond, and we will take appropriate action,” the company warned.

CNBC reported Thursday the company plans to sue the NBA. Neither entity immediately responded to Yahoo Finance's request for comment.

But Wall Street analysts say any potential litigation might not go far for the company.

Macquarie analyst Tim Nollen, who downgraded shares of WBD to Neutral from Outperform over the loss of the rights, wrote on Thursday: "WBD evidently intends to litigate the NBA's decision, which it may be entitled to do, but it's hard to see an amicable endgame. Even if WBD were to win, the costs may be prohibitive."

In total, the NBA secured a media rights package worth around $77 billion over 11 years with new partners that include tech giant Amazon (AMZN) and Comcast's NBCUniversal (CMCSA). It was also able to strike a new agreement with its other current media partner, Disney (DIS).

“Our new global media agreements with Disney, NBCUniversal and Amazon will maximize the reach and accessibility of NBA games for fans in the United States and around the world,” NBA Commissioner Adam Silver said in a statement. “These partners will distribute our content across a wide range of platforms and help transform the fan experience over the next decade.”

Amazon, NBCU, Disney: The NBA's $77 billion deal

Amazon (AMZN) struck a streaming rights package through its Prime Video service for a reported $1.9 billion, according to the Wall Street Journal. The NBA said the package includes both regular-season and playoff games, plus the play-in tournament and a share of conference finals, which would rotate between the media partners.

Comcast's NBCUniversal (CMCSA) submitted a reported bid worth $2.5 billion. The network will show about 100 games per season, with half airing exclusively on its streaming service Peacock.

Disney (DIS), the NBA's other current major broadcast partner, will retain its share of the league's media rights after reportedly agreeing to increase its payment of $1.5 billion a year to $2.6 billion in order to renew the deal, per the Journal.

The company will carry fewer games compared to its current package, although ABC will remain the exclusive home of the NBA Finals, which it has broadcast since 2003, the league said. It will also have one of the conference finals for 10 of the 11 years of the deal.

Sports rights have become increasingly important for legacy media giants as more consumers cut the cord. The content is viewed as "sticky," meaning loyal audiences are more willing to fork over their monthly cable package or streaming service fee to access sports over other types of content.

But the field has become more competitive, with tech giants like Amazon, Apple (AAPL), and YouTube (GOOG, GOOGL) committing heavily to sports streaming deals over the past year. That's inflated the overall costs of sports as traditional media giants struggle to keep up amid steep streaming losses and major declines in linear advertising revenue.

"There are more choices than there ever have been in the media landscape," Mark Tatum, deputy commissioner of the NBA, told Yahoo Finance in June, prior to the deal's confirmation. "So that requires going out and having partnerships with many more people in that space, whether it's social and digital media partners, streaming partners, and traditional media partners as well."

Macquarie's Nollen, who also cut his price target on shares to $9 from $13, said the loss will impact the future success of its streaming service Max and will likely "hasten" the demise of its linear networks.

"We have held onto our WBD rating in hopes that it would retain the NBA; losing these key rights means it now loses a core content asset for both its linear networks and its Max streaming service," he said. "The former is bad enough — ad revenues will now drop sharply starting in Q4 2025, and bargaining leverage on cable affiliate renewals now falls."

"But it’s the lost opportunity for the Max streaming service that worries us the most over time. We have viewed Max as a broad and deep streaming service with content spanning the Warner Bros. studio, HBO, and Discovery’s lifestyle networks, plus children’s shows and sports — but Max’s sports offering will now be weaker without the NBA."

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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