The Dan Le Batard Show with Stugotz - The Sporting Class: Decoding the NBA’s Billion-Dollar Legal Fight with Warner Bros. Discovery

Episode Date: August 2, 2024

Welcome to The Sporting Class! Meadowlark Media CEO John Skipper and Nothing Personal's David Samson are back with another episode with host of Pablo Torre Finds Out ... Pablo Torre! The NBA media rights deal saga is not over just yet. Warner Bros. Discovery is not going away quietly as they have now sued the NBA. What exactly does David Zaslav want from this? NBA games? Money? Both? What’s the deal with Charles Barkley? Is he going to stay with TNT? He said he was going to retire after the 2025 season, but now it doesn’t look likely. Let’s take a look at the judge in this case of WBD v. NBA. The judge hearing the case was a part of the Spirits of St. Louis and its lawsuit against the NBA. Should this knowledge from the judge matter? Comcast is one of the largest distributors in the country. What is TNT worth to Comcast if it loses the NBA? Let’s explain what these carriage fees are and the leverage Comcast has over the new fees. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Welcome to Pablo Torre Finds Out. I am Pablo Torre, and today we're going to find out what this sound is. I've been called Dwarfy and never Humpy. Right after this ad. You're listening to Giraffe King's Network. Bumble knows it's hard to start conversations. Hey. No, too basic. Hi there.

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David has announced that he is hangry, John. I'm just grumpy, not hangry. I'm downright grumpy. Humpy. I'm sneezy. You are sick. I'm downright grumpy. Humpy. I'm sneezy. You are sick. It's just been one of those days. Have you ever had one of those days?

We have too much to get to for me to get into it, but I'm not having a great day. Because you didn't get to eat your... My timing was all off today because of technical issues with the show I did. And when I agreed to do a show, I agree at a certain time to do the show. It's live. You're supposed to do it then. When technical issues move it, that throws off my entire plan and I did not get to eat.

What time do we agree to do the show today? The same time we always do. Right now. Right now. Right now is the end of Grumpy. We'll be happy because we're getting ready to have fun discussing the business of sports. That's right. The sporting class. The sporting class.

A place where we talk about other people feeling grumpy, but we ourselves are thrilled to talk about how grumpy everybody else is. Our group chat has been, I think, something that our listeners would love to be inside of. I want to recreate just the flurry of updates that we've been sending each other, the theories, the conspiracies perhaps, that have been circulating, All because now we have an update to the story we have covered more thoroughly and more rigorously I believe with more personal insight from John Skipper, former president of ESPN, the man who negotiated the last NBA rights deal, and David Sampson, the hangry slash Humphrey,

former president of the Marlins, who is as plugged into this story and sports business generally in ways that I don't think people realize. Humphrey, that's a whole different, very quiet. That's a whole different seven dwarves than grumpy. I've been called Dwarfie and never Humpty. That's a Cinemax version of that fairy tale. But speaking of prestige cable television, what is happening with WBD in this lawsuit is why we are gathering and starting with all of this grumpiness.

And I want to give you the quote, John and David. TNT has sued the NBA, WBD, their parent company, and they say this, quote, Given the NBA's unjustified rejection of our matching of a third party offer, we have taken legal action to enforce our rights. We strongly believe this is not just our contractual right, but also in the best interest of fans. Want to keep watching our industry-leading NBA content with the choice and flexibility we offer them through our widely distributed WBD video first distribution platforms, including TNT and Max." And you guys are kind of smiling thinly at the very premise of what I just read. Strongly.

I always love that in the statement. I assume that's from a PR firm. Do we think they paid a lot? What do you think they paid? Crisis PR, 20 grand a month, they can do it, you can do that. They hired a very prestigious firm, Edelman, which gets to charge prestigious prices.

So yes, they charge at least $20,000 a month. Which is great that they strongly believe. That's always very important to me to put inside a PR statement. Because we don't want the audience to think that we only partially believe or we strongly believe. That's always very important to me to put inside a PR statement. Because we don't want the audience to think that we only partially believe or we weakly believe. So anytime you write we strongly believe, it's as though we're convincing ourselves of our position.

And WBD to me has no position. And then you bring in the fans, and I'm not exactly pro fan and I acknowledge that fact. Great, aggregate that clip please. But to say that the fans are deleteriously impacted because they have to go to Amazon instead of TNT, that's really gonna hold a lot of water with the judge. Or NBC, I mean, it's not.

The packages aren't exactly identical to the ones they have now. I find it the first part of the statement to be what you'd expect. We strongly believe that we have this right. We're asserting it. Of course they do. They're going to go to court. The second one amuses me that they believe they want to bring in the power of the fans, which we've established on this show. What the fans want very seldom affects what teams, leagues, networks end up doing. They may please their fans by broadcasting the games in a pleasant and efficient way

and thorough way, but I don't think anybody spends a lot of time when selling rights or buying rights thinking that it has to do with what the fans want. It's become a mess. Can we give the state of play David so for people who were hibernating over the last month the NBA has officially well I guess pending litigation now. No it's pretty official Amazon has the whole thing up already you can go on Amazon right now and see they're promoting NBA 2025, the whole package. So it's very clear that Adam Silver, as commissioner of the NBA, had a plan.

And his plan was to get a triple of his media rights deals. And his plan was to not do a deal with TNT and Warner Brothers Discovery. Rumors are that he's upset with David Zasloff because he said we don't need the NBA in an earnings call. Adam Silver may be that spiteful, but I don't think that that's good business to be spiteful in general. I actually, I disagree with the first thing you said, which is he started with the premise

that he did not want to do a deal with TNT. I believe he started with the premise that he would renew his two deals and he would add a third player and Probably thought maybe a digital service would be a good Third player the emergence of NBC probably changed all that calculus But I do believe that he did make an offer to WBD, yes, you can renew what you have now or most of what you have now for the following number.

And it's been reported that that number was around 2.3 billion. So I think he pivoted when they said no. And again, it's been reported they thought that 2.1 billion was the most they would pay. So for the won't of a nail, the horse was you know lost and here for the won't of 200 million dollars the NBA was lost.

As a country lawyer, David. I hear audience just disappearing. Have you ever heard that for the won't of a... There's something about noses and faces and cutting off things despite other things. I would say that there was an exclusive period, who I love. There was an exclusive negotiating period. And I would like to just inform you

that the NBA was not exclusively negotiating with TNT. They're gonna tell you they were because that is what they have to do under their agreements. But anytime there's the right of first refusal or an exclusive period, there's so much going on on the side, quietly in the hallways where people aren't paying attention. So I don't believe that Adam Silver went through

that exclusive negotiating window with TNT with the view that there was gonna be a deal with TNT and had nothing ready to go. Because the pivot that you're describing, those don't happen like in 10 seconds. So I believe that there was plenty of groundwork laid and that Adam knew exactly where this was going. And that has manifested itself in Adam's statements,

his lack of real worry over this lawsuit, his ability to go in front of the world in a microphone and say, we've got, it's complicated, but we've got three partners and we're announcing it with press releases and quotes? Well, I don't think that contradicts what I said. I believe that the NBA put in front of WBD. So how do you answer the question of,

if WBD had said yes, they would have a deal. For 2.3. For 2.3. For 2.3. So I would tell you that he put in front, have you ever made an offer to someone that you know they can't accept or they won't accept? Sometimes it's a low ball, sometimes it's that you're making them do something you know they can't do,

and that's the whole case we're in right now. Well of course, there is no way we can know that. It is my belief, based not upon first hand knowledge, but about knowing the parties involved a bit and how these things work. I do believe they made a good faith offer that WBD could have accepted and if they had, they would have the NBA rights. I don't think it was a trick. And by the way, again, I don't have- There's a lot of between a trick and a good faith offer. I like that David is positing the opposite of a Godfather offer. It is an

offer you must refuse. It's an offer that you can't not refuse. Exactly. And I love what you're saying because you use the words good faith and that's part of the lawsuit. Good faith is, we know that that's a legal term, it's not just between friends at a dinner. It is a legal term, but as you know, a very difficult term to adjudicate on. Which is why I don't think WBD can prevail here, but I understand why you have to say

that the NBA did all this in good faith, because that is one of the basic tenets of the lawsuit. However, to not give NBA credit, and I think it's insulting to the NBA to say that they did not have an alternate plan. Well, no, no, they always had, and I've said this repeatedly, they always had, all you have to have is one more bidder

than you have packages. They knew they had more than three bidders at some point. I don't think that led them to go, well, we want to cut TNT out. I genuinely believe that at the start of the negotiation, they would have been quite happy if TNT and ESPN had renewed. They took some content from both parties,

took some content that was formerly regional. That's why Mr. Dolan has protested, and made a third package. And they would have been happy if that third package was Amazon, because they did want a digital partner. They would have also have listened, however, to NBC. And if ESPN, as reported, paid 2.6,

and NBC paid 2.5, they would have been happy with a 2.6, 2.5, 2.3 that would have given them more money I think they would have settled for NBC, WBD and ESPN they were in the proverbial catbird seat. That wasn't the third package, the 2.3. No I'm suggesting that- There would have been more assets. That wasn't the third package, the 2-3. No, I'm suggesting that if... There would have been more assets. I'm suggesting that they could have, if WBD had said,

yes, we'll do 2-3, ESPN said, yes, we'll do 2-6, you still have a very hungry NBC, which could have paid two points something, and they could have actually ended up with even more money with those three parties had that happened. Now I'm not suggesting that was ever the contemplated endgame here. They might have decided that being on a streaming service was worth taking a little bit less money in order to be own the kind of service that in the future will be almost exclusively the

parties that are carrying sports. So I want to give an update here. Andrew Marshand at The Athletic provides a quote interesting nugget that's his own phrasing here. Amazon joined the exclusive negotiating period after the NBA secured permission from TNT and ESPN to bring them in. On this note I am told TNT Sports initiated the idea of bringing Amazon in. TNT declined comment." So, that's when you partner up with someone who has something to bring to the table that you don't have.

Where the NBA wanted the reach of an Amazon and of their streaming platform and TNT couldn't match it with Macs because not as many subs and it's just it doesn't have the reach or the power. So, when you don't think that you can answer an RFP, whether it's a request for proposal, whether it's to build a building or whether it's to do a TV deal, you often do a joint venture, you partner.

That's what mergers are basically. So is there a world where TNT and Amazon would have made a joint bid in theory for an MBA package? It would not have been the C package. It would have been a joint bid for theory for an MBA package. It would not have been the C package. It would have been a joint bid for an A slash B package. Yeah. I think the answer is mostly yes. We're clearly in very speculative territory.

So I know, have no knowledge that this could have happened. But WBD could have been thinking, gee, maybe the MBA will be satisfied with our two one1 instead of 2-3 if Amazon comes up with a billion and a half, a billion eight, two billion, and they'll be fine. That's kind of not the way it works. You don't, it would have satisfied them had NBC not clearly been, the NBC was very public. I would disagree that there were negotiations with NBC.

The reason NBC was very public with it was to make sure Adam understood, if for some reason WBD doesn't step up to what you want, we're here, come see us as soon as you have gotten through your exclusive negotiating period. I got it, people have lunches, people talk. Your theory is that they did it through the media? And NBC let Adam Silver know,

God, I hope he buys the post today. I gotta say, I did a lot of negotiations with leagues, including baseball, and I never tried to negotiate for somebody else's content before they got through their exclusive negotiating period. I often told people, get through your period and we'll talk about it. We didn't know.

What's that? Well, that's not negotiating. That is simply letting them know you're there as a partner. We don't think that impacts how we would act during an exclusive negotiating period if you know that there's someone waiting for you on the other side with an open wallet and a big hug that it makes you play hardball during that exclusive period. Of course. But I also was on the other side of that, meaning I often had the exclusive negotiating period and I believed my job was never to get out of that so that they could go talk to them. And I do believe in my negotiations with MLB,

and with NFL, and NHL, and in NHL I could never get them out of the exclusive negotiating period with other people in most cases. They ended up doing the deal before I got a chance to put an offer on the table. So I do think the leagues are very careful not to do anything that gives anyone the right to dispute that their exclusive negotiating period was violated.

John. Exclusive negotiating period doesn't mean that you can't talk to somebody and say, I'll be here for you. But if you think I ever that I'm kidding about ever sitting in a room with a league and going here's what I'll do for you If they don't pay you I never did that So let me let me make sure I for the youtube and drafting's audience is almost seizureing No, i'm i'm just I you're saying something that is it struck a chord and I want to make sure i'm I I heard it right The nhl let's talk about the past of the nhl and their fees and their rights deals. Do we agree that they were not getting a lot of money for

their TV? Are you willing to at least acknowledge that? What do you mean by a lot of money? They were not getting as much money as the other leagues because they had a very hard time getting a TV deal. No, they didn't have a hard time getting a TV deal. They always, they had an easy time getting a TV deal. They had a hard time getting the amount of money they wanted to get from TV deals. Thank you. I'm very sorry. And so when you say that they did not take advantage of your willingness to do a deal

because you never got them out of their exclusive negotiating period, did you say that exactly? Yeah, I can't have the exact recollection because I tried to get an NHL package at least two cycles and did not succeed. I do not believe they ever came out, and at least one of those, I do not believe they ever came out of their negotiating window.

I don't think I ever got to negotiate when they were out of their exclusive window. Fair, but when you saw the deal that was done, did you say to your people at ESPN, wow, we would have done twice that? No, never twice that, but would I have beat? Would I have paid more money? Probably the answer is probably yes. And so there was no way for you to get that information to anyone. No, because the rules of engagement are,

they can't call me legally. They cannot call me and say, oh, by the way, John, I'm gonna get 200 million. Would you pay 225? I've been in some bad rooms, I think, because I understand you're saying legally and you're right, but what blows me away is that if ESPN or anybody, it's like when you're selling a house,

it's when you're doing anything. If you know that the market is there to get more for your asset, you're gonna do whatever you have to do to maximize the value of your asset. And the NHL was desperate to get better TV deals. This is an ad by BetterHelp. What are your self-care non-negotiables? It's hard to make time for the things that keep you healthy, but being consistent with

self-care is like working a muscle. And when life gets crazy, that muscle keeps you strong. Therapy is the ultimate self-care, and BetterHelp makes it easy to get started, with affordable online sessions you can do from anywhere. I want to move for a second though, from the deposition that David has been conducting of John Skipper to the legal question at the heart of TNT's objection here, which is that we matched. We had a right to match. Amazon provided X. We're also ready to provide X.

And the NBA, now this is their quote from their spokesman, Mike Bass, shout out to Mike Bass, devoted listener, the public Torrey finds out. Quote. Because he asked it. Yeah, for better and for worse. This is his quote to the Washington Post. He may be listening just to make sure you don't say anything

that will make them unhappy. Mike and I. But he probably is a fan, Mike is a good guy. Mike and I go way back. Quote, Warner Brothers Discovery's claims are without merit and our lawyers will address them. It's such an F-U statement when I saw it. It's outstanding. So the correlation WBD statement,

what Edelman put together, it took up like a whole page and an NBA's response was one, barely a sentence with all the right parts of speech. It was just... Did it say strongly in it? Without merit would be the phrase that... Wait, could we read that? Could we hear? Go ahead and read it one more time. Let's hear it one more time.

Oh, sure, sure. Warner Brothers Discoveries claims are without merit and our lawyers will address them, period. End quote. It's so and quote it's so good and they say $20,000 I like how this is also the show where we become aroused by press releases it's not ideal but I get hands for press releases right but you see the difference I want to point out to the audience it is it's incredible indicates a confidence and I believe that it's also to WBD, it reeks of an arrogance. But I wonder how justified truly like my understanding is and I want you guys to corroborate this or refute it is that the clause in the contract, the matching clause was not so specific given that it was written at the time that John and TNT at the time negotiated.

It was not so narrowly defined about streaming or anything else. But there is this implication that Amazon is a company that cannot be matched by its very nature by TNT and WBD. It's a very interesting legal question because the matching provisions are always very hazy Because as we said on a previous episode here It's not that you write down ten points and that one company agrees to them And then the other company just has to agree to those ten points, and then it's a full match It's a very complicated deal that you negotiate right remember that would have been done back in

2013 or 2014 so you couldn't have known how many 2013 or 2014. So you couldn't have known how many subscribers Amazon was going to have. You couldn't have known how many countries they were going to be in or how many people watched them. So you couldn't write in there, oh gee, if Amazon had a 200 million subscribers around the world, you have to match that. So probably I have the feeling, and I think you'll agree, David, that the NBA here has the stronger legal case.

I don't think for a moment that they would release that statement unless they had talked to their lawyers. They have very good lawyers internally and externally, and they've told them, you have nothing to worry about should this come to a quick resolution in a court of law? Now you get to a more interesting question,

which is, it doesn't mean even though the NBA may be right about that, that WBD cannot create consternation spilkes for the NBA. You agree with that, David? I do, but I think I'd like you to go then back to my original statement which is the NBA got its confidence and it got the ability to release a one phrase statement because they had lawyer this deal with Amazon so thoroughly with the matching provision in mind. Remember the lawyers for the NBA know the matching provision, they were there, and Adam Silver's no dummy. You know that, and he doesn't suffer fools gladly.

When he's doing Amazon, he's telling Amazon, we're not using you as a stalking horse. Trust me, Warner Brothers cannot match this. You keep going with us, you are gonna be our partner. I believe that that's how it went down. He followed it step by step. He said there's five days. You have five days to show you can match. WBD did on the fifth day and I believe the next day or the day after.

It was the next day. I can't remember. The next day they released a statement that said this match is, this is not a match. Yeah. they released a statement that said this match, this is not a match. No match. And then they announced, so what Adam Silver did even more as an up FU to WBD, they did a press release, a far bigger one than that one sentence, when they announced their deal with Amazon, with NBC, and with ESPN, with full quotes

from all the principles of those companies, including the NBA. So, while Adam can call a press conference and say, listen, it's complicated, I don't wanna get too far into it, the fact is he's all in, that he is gonna win this case. Well, I'm just saying Amazon is not going to do the negotiation unless, as you pointed out,

they're convinced that there is no way to match. They're not gonna put their names on a press release, which was probably done before the fifth day was over. They did take a look at what WBD sent them. They're like, oh, just as we thought, they cannot match. But so Amazon has satisfied themselves they're in a good legal position. NBC has satisfied themselves

that they're in a good legal position. Cause remember, theoretically, WBD didn't they suggest they could match either one? So the case is actually would like an injunction what they're actually asking for is to get rid of all three. They're asking the court to say that we're gonna stop the NBA from doing a deal with anybody while we figure this out. That's what WBD wants but they're not gonna get that injunction, but that's what they've asked for. So what is the end game here, right?

So now I just wanna recap what WBD has been doing. They hired this press release, this fancy press firm to release all of these things into the world. They're working journalists, talking heads, people behind the scenes. Charles Barkley is talking about how, again, we started with a two-part statement from TNT. The first part about the legal case, the second part about the fans.

And Charles Barkley, the most famous broadcaster, the greatest broadcaster in the history of NBA broadcasting, you might argue, has said the same thing. He's echoed this. So they're working the PR side, the public relations side, the civic unrest side. So what is the end game here? So they have these two tracks. They're suing for either specific performance, which means they want the judge to say,

all right, you matched it, you get to do NBA games. Or in the alternative, if you're not gonna grant me the right to broadcast NBA games, then pay me. Those are the two things they want. I wanna get to that here, John, because we're in agreement that it's unlikely that this judge will rule in favor of WBD and say, actually, yeah, they matched.

Sorry, Amazon. So what is happening here in terms of what WBD is going for? Well, the judge won't have that right. It'll be a jury trial. It'll be an actual court case where the judge will oversee it. What I think we're saying is

that the judge is unlikely to grant an injunction. And that I agree with you because there's a year left on the deal and there's no way that Warner Brothers is walking into court and saying, we are so damaged by what's happening that if you don't, that's what injunction is, if you don't stop it right this second every

Minute is like multiple damages. That's hard to convince the court when it comes to this deal with the NBA But if the injunction is not granted which I don't think it will be and there's no settlement Then you proceed toward a trial a case. It seems hard to me that WB I don't know this but it seems hard to me that WB, I don't know this, but it seems hard to me that WBD thinks they're going to prevail in a court case. Either get an injunction or actually go to trial and see a verdict that says, well, actually you're right

and you're going to get the NBA. So that means they must think they're gonna get something else and the only thing I can think of is they think they're going to create enough consternation that they're going to put lawyers in a room and say, what would you settle for? And my guess is what they would settle for is money. At one point it occurred to me that what they might like is actually to be relieved of their obligation to pay 1. something, 1.2, 1.3 billion dollars in the upcoming season and let Amazon or NBC start early. And that way Mr. Zazov could say to his board, not only did I not overpay

for 11 years of the NBA, but I'm going to get out of, I'm going to save a billion, a billion and a half dollars. Now that creates all sorts of problems. I don't think NBC busy with the Olympics suddenly wants to turn around and do another season of the NBA right away or start in the NBA right away. Amazon doesn't have the production capabilities to do that. They can take Turner's people. Well, exactly, and then maybe Turner could save

even more money by charging Amazon to do the production. Take Barkley. Yeah, take Barkley. Take off Willie. And pay for that, so I can only think that they're expecting somehow to save some money out of this. That's an interesting theory,

because what you're saying is that the end game for WBD would be forget the fact that we want the extra deal. We don't even want this current deal. It was an overpay what we're doing now. Yeah, not the way they put it, of course. They'd put it that you're causing us by refusing our matching right, you're damaging us. We're gonna continue with our suit,

but if you would like to make us a financial office offer, we will go away, we'll save some money, my board maybe will be happy, and you start with your new partners. I don't know that the word- Did you budget nuisance fees with the SPN? We used to budget them with our team. Okay, so-

Nuisance is when someone sues you, and you just don't feel like dealing with it. So you pay them. Whether it's a foul ball, whether it's someone... Is that a legal term, nuisance fee? That's just what I would call it. It's like, don't bother me. It's like a gnat. Like, I'm not gonna...

It's not worth it to have my lawyer spend one hour talking to you. Every big company settles suits that they believe are more of a nuisance than the money involved is worth doing. Right? It's sort of funny because people always assume, well, if you settle, you must be guilty. It's not true. Always.

It may be true sometimes, but sometimes it's just, oh, it's going to cost me $10,000 to make this person go away. It's going to cost me $100,000 to adjudicate it. And in time. I'll just pay the 10 because we can afford to. It's not an admission of guilt. So the NBA, they could have in their mind a number. And that's how settlements happen,

where the NBA would say, you know what? This just is not worth it to me anymore. We will pay you, David Zazlov, to disappear. What's it like to trade crypto on Kraken? Let's say I'm in a state-of-the-art gym surrounded by powerful-looking machines. Do I head straight for the squat rack? I could, but this gym has options, like trainers, fitness pros, fighters to back me up. That's crypto on Kraken, powerful crypto tools backed by 24 seven support and multi-layered security.

Go to kraken.com and see what crypto can be. Not investment advice, crypto trading involves risk of loss. See kraken.com slash legal slash ca dash pru dash disclaimer for info on Kraken's undertaking to register in Canada. for the Packins Undertaking to register in Canada. Now, the Barkley part of this, right? So part of the deliciousness of getting to watch the last season of Inside the NBA and TNT Broadcasting Basketball is that it is a lame duck year in which you get all of these outspoken people

who have now been riled up by a PR firm, let alone their own personal feelings, they've been empowered by their bosses on some level to make a mess, to object and protest on behalf of fans. That part of this, how would that fit into the cost benefit of avoiding that nuisance? If I'm Tien, if you're running a network, you say to your talent, listen, we, this is our year we're doing the games. People don't want to hear you complain about David Zaslav, complain about TNT not matching an offer, complain about the fact that you're losing the rights. On the last day, we'll say a tearful goodbye.

We'll do a clips package showing all the great moments from inside the NBA and we'll leave it at that. That would be my opinion. And that's what they would do. There are also non-dispersion clauses. They're not going to get away with going on the air and complaining. The NBA also has recourse, right? They give them the schedule.

And there are some things that are required in the schedule, but there's a lot of leeway. They could give them a lot of games between teams that would not draw to good ratings. There's no good business for anybody. And the public doesn't want to see anybody particularly misbehave. It's not good for your brand. It's not good for your company. I mean, you know, on your side of the desk, maybe you don't want to see that. On this side, I'm like, wait a minute, Charles Barkley has never met a non-disparagement

clause that he didn't want to find some way to defy. Like, whether it's, I guess my question is okay We're taking off the table the idea that he's gonna start a broadcast by saying you National basketball association he's not gonna do that, but the ability to generate some sort of again PR headache You're saying that that is actually corralled by a non-dispersion Clause that is enforceable and would happen in a way that would be... Hey, they're hard to enforce. It's resolved by non-disparagement clause and the fact that nobody getting into a

public fight is not good for your business. It's not going to do anybody any good. Ultimately, I don't believe I do think if this quickly got resolved, let's say the judge issues a what would we call it, summary judgment? No, there's no case here. I'm throwing this out. You have no case. Then TNT will behave graciously on the air. They might be mad. They might say things at a dinner party. They're not gonna have a public fight with the NBA. Fans are not gonna like it, and they're making way too much of Inside the NBA. It is by far the best NBA studio show ever, perhaps the best among the best studio shows ever. Also yeah. Fans move on in a hurry and

don't care. They'd like to see that show but when the games move over the audiences are not gonna go down. Audiences on Sunday night on NBC are going to be higher than TNT. Whatever their studio show is. The handoff of football. Please don't sully Jane Kennedy, Phyllis George, Irv Kross, and Jimmy the Greek. And Brent Mosburger. I will not stand for that. I just won't.

That was a great booth. It was fantastic. And people loved it, but they tuned in to see the game. And this is part of it, right? So it's a depressing, this is a depressing reality that you keep on reiterating, which is that you could have, you could knock whatever studio programming content out of the park. And yet when it comes to using that as a lever upon the actual reality of your business, it means virtually nothing even as Charles Barkley is now saying,

and this is unshocking to any of us, I believe we talked about this even in France. I don't know if we actually made it onto our episode saying it, but Charles Barkley is now not retiring. He'll talk to other suitors. He's on, he revealed this, a 10-year, $210 million deal. He said he's an out if WBDTNT loses the NBA, He revealed this, a 10 year, $210 million deal. He said he's an out if WBDTNT loses the NBA, but reportedly also contrary to that, he doesn't.

That's also out there in the world. And Zazlav, according to John O'Rand of Puck, is saying that, yeah, he would like to keep Barkley around. I would just also point out that Barkley also said, and I was fuming on behalf of WBD, and I may have misheard it, so you'll correct me, that he's already listened to Disney and Amazon and NBC. He's under contract with WBD,

getting paid 21 million a year. You're not allowed to do that. I assume he's gotten on competes. I assume that he is under exclusive contract. I would be looking at his termination for cause provisions if I were on the board of WBD trying to get rid of him because not only is he a nuisance but 21 million dollars which of course cuts against our theory that pre-game shows don't matter since they're paying the people on that desk collectively more than any of the announcers by a factor of 10.

So it's an interesting thing that why would you pay so much to something that doesn't matter? Well, I think there are many things you could do with Charles Barkley that would financially benefit your company and while I said it doesn't matter in terms of the ratings, they're running ads in that pregame show which pay for those salaries. So it's not like they're running ads in that pregame show which pay for those salaries. So it's not like they're throwing money out the door.

If I would keep Charles Barkley, I'd put him in a situation comedy. I would put him, I would do what NBC is doing with Snoop Dogg on the Olympics, which has worked. Charles Barkley is the most entertaining commentator. If I was NBC, I would absolutely love to have him on my Sunday night NBA and I would take him to the next Olympics where he would be a smash. You know the entertainment world is littered with people who view themselves as the ability to be diversified across entertainment

platforms. People try to do talk shows when they are sports people. Yeah, Barclay did a CNN show with Dale King, which did not last. That's not what I would do with him. A very different content strategy. You said sitcom, you said have him do all these things. His appeal is the NBA. And if he's doing no NBA, you're trying to create him as this personality for 21 million a year? That's a big chance. I would let him go to Amazon or NBC or Disney.

I'd keep him. I think there's something you could do with him. Again, if Snoop Dogg becomes the star, which he has, he's been terrific and has made a difference, I think, in the ratings on the Olympics. And if Charles Barkley would just smoke a little more marijuana, he would probably be just as- That's what what I really found out today is that Charles Barkley needs to smoke weed. A lot of weed. More weed. More weed presumably.

God you don't run a network anymore. Oh wait a minute. So I want to get to another thing that John had some perspective on which is that the judge assigned to the case has a background with the NBA. He was representing the spirits of St. Louis, a now defunct ABA team in litigation against the NBA. A fact that the judge who was assigned to this case, Joel M. Cohen, had to disclose because this is what you do when you're now presiding over a case involving someone that you were in litigation against. And so, John, can you explain the spirits of St. Louis case with the NBA because this is one of the great sports business stories of all time, it sounds like. This is one of the most profitable settlements, negotiations any sports entity has ever done. So when the NBA and the ABA merged, they made an agreement that the NBA would accept four

new teams. I believe that was Pacers, Spurs, Nets, and Nuggets. But everybody, all the teams in the ABA got paid something. There was something paid that the team split for the teams kept participating. Every team in the ABA agreed with that other than the spirits of St. Louis, uh, who said, we refuse to accept this. So it was decided that everybody else would move on. The spirits of St. Louis would then get a cut of the NBA media rights deals into perpetuity.

They refused to go away and they got a share of what was then not what it is now. And I believe, though I can't be certain that these numbers are right, that in the next couple of deals, they did participate and aggregated about $300 million, and then were paid about $500 million in 2013, 2014, to basically go away. We're gonna get ready to do new deals,

we're tired of dealing with this, and we're gonna pay you a big old lump sum of money to go away. Before the new deal. Before the the new deal got done that was baked into the settlement This this people with the spirits knew that the deals were going up. Yeah, it was more like a pay now You know when you buy something you can pay now and it's a little bit cheaper like with a lottery ticket If you take a current payment today you get less but you get you get it all now, like a bulk payment versus a stream. What this deal was, was they had a stream, but the people who did the deal,

everyone's getting older, people are dying, there's a state planning to think about. For the NBA, I don't agree that it was such a big deal. When they make distributions, there's 30, instead of 30 teams, there's 31 teams. So it was not a clerical, like, oh my God, this is impossible. It was just annoying to owners who were giving it up. They're going to get expansion

So they're trying to get to 32 and they're trying to expand to get to 32 teams So that'll be a further split in their TV rights And and when this deal was approved by the NBA owners the current one and the last one What owners do is they do the math. Like, all right, how much am I getting of this? Right, and they just wanted that out. I just want to, one, admire that the spirits of St. Louis managed to get $800 million for folding their team.

Nobody in sports, it's a very profitable enterprise to get paid for not having a team. I assume the margins were very close to 100%. It's, there's, yes, some clerical bills, I'm sure. But we say the same thing when someone, wow, I can't believe you were smart enough to buy a Picasso right when he was alive. Like who would have, and not sell it,

and now it's worth $80 million. Or buy a house in a bad neighborhood, and of a sudden Wow, this became a good neighborhood So there are examples, but certainly this is from a sports business standpoint It was very smart of them to keep the tail Because you just didn't know what was gonna happen with media and clearly thanks to you mostly It's blown up in a way that that became worth a lot of money, right? eviction Thanks to you mostly, it's blown up in a way that that became worth a lot of money. Right. Eviction. For their eviction, they got $800 million drinking from the fountain that, yeah, John helped fund.

But remember, teams right now that operate are worth $4 billion or $6 billion. Right. So we say that what a great deal for them. They would much rather have been included and been in the NBA. As opposed to being paid to go away, even though they got, again, almost a billion. They were smarter than others, but in reality, the nets and nuggets and pacers and spurs are worth a hell of a lot more than the TV money that the guys were getting. That's absolutely true.

Now the judge, to go back to just what this means for this pending litigation, is there any concern from either party here that the judge was the guy who represented the spirits of St. Louis in that deal we just described? He was in a law firm called Davis Polk. It's a big law firm, and so he was one of the lawyers on the case, and this is standard that judges do this,

because many judges were lawyers in their last life, and they know they have a list of all the cases they worked on, whether they remember them or not, whether they worked on them or not, actually, and you just send a little note to both parties, saying, by the way, this may interest you, let me know. But in real life, no one cares, because the two parties, they could say,

hey, you know, we're not that comfortable. And then there'd be a hearing about this. But the hearing would be in front of the judge himself who would decide whether he wants to recuse himself. I don't think either party will object or even will respond to that letter. I agree. I mean, the fact that he did disclose, I think is a sign that this is a reputable lawyer and probably now a very reputable judge. And there's no very little reason for anybody to create a problem

here. You know what's great about ambition? You can't see it. Some things look ambitious, but looks can be deceiving. For example, a runner could be training for a marathon, or they could be late for the bus. You never know. Ambition is on the inside. So that thing you love? Keep doing it. Drive your Amb ambition. Mitsubishi Motors. I would like to create a problem, hypothetically, for WBD looking ahead now. Right? So I'm trying to get a sense of the weapons left on the table, the moves, the punishing nature of what it means to be in negotiations

against not just a media company, but in Comcast, something that is doing deals with media companies like WBD, right? The difference between being, give me the term of art, John, between being a a media company like TNT versus a cable company. Now more than that in Comcast. Well, what's interesting of course is it's already been speculated that NBC may have included in their calculations for doing an NBA deal,

the fact that they would be taking it from a company that's going to be asking them for distribution fees was reported this week, I believe by John Arand, that the deal, that last deal that Turner did, not WBD, but TNT, TBS, True TV, perhaps among other channels, ends deliciously December 31st, 2025, which will be about two months into the new NBA deal that NBC holds. They're holding, their larger company Comcast will have the opportunity to renegotiate the fees that they pay.

Um, true TV, TBS, TNT at that point. Right. It was, it has been reported that TBS TNT, I'm sorry, gets $3. TBS probably gets something not too far from that. True TV gets something very far from that. Out of the monthly cable bill. Out of the monthly. What's not a monthly,. Out of the monthly cable bill. Out of the monthly, well it's not a monthly, out of the monthly cable bill, not directly.

The distributor pays for the content, they then put it in a bundle of content, they mark it up an appropriate amount, or an inappropriate, depending on what you think, amount, and that's what they charge the consumer. The consumer has no idea what they're paying for, TV, ST&T, and True TV. But this deal will come up, interestingly enough,

at the end of 25. Let's say that they're getting approximately somewhere between five and seven dollars. That means if they don't renew the deal, and let's say they have 12 million subscribers at the time, that's somewhere between 60 and million and $84 million a month. They did just buy at one of the networks, TNT or TBS, two college football games, one of which may be on the first day they'd be off the air.

That holds some power. I don't think it has enough power to prevent Comcast from saying, we're not gonna pay you $9 next year, nor eight, nor seven, we'd like to pay you less. And just as Comcast just took Diamond off for what, about three months? Regional sports network, yeah.

They'll take these channels off the air and they can take that money theoretically off of the price they paid for the NBA. Oh, we paid two five, yeah, but we'll save about $75 million every month they're not on the air. I do not believe all that matters then is whether some of their 12 million or so subscribers at the time decide, oh, I want to see that college game bad enough that I'm going to switch to somebody else, YouTube TV

or the new, deliciously the new cable bundle that will feature all the sports channels which includes True TV, TBS. And so there'll be a big fight here. And I do believe that this will cost WBD some money because they're either gonna get lower distribution fees or they're going off the air for some period of time in January 2026.

Yeah. I just wanted to simplify two things that were said there. I'm trying to follow, and I did, but I just wanna say, make sure I have this right. When you can do a deal where you make yourself stronger, but you also make your opponent weaker, that increases the breadth of the victory that you have by doing a deal.

Is there a world where Comcast and NBC got together and said, if we get the NBA and TNT doesn't, not only do we have the NBA and TNT doesn't, not only do we have the NBA and TNT doesn't, but also we have as part of our world a cable company called Comcast, where people pay us every month to get cable channels. One of the cable channels we get that we give our customers is TNT.

But now who wants TNT? It's a bunch of SVU and law and order. There's gonna be no basketball, maybe a football game once in a while. Maybe some tennis. The TBS is gonna have some college football games. They'll have the French Open, they've got stuff. But without the NBA, people are really not going

to want TNT the way they did. Therefore, we're not gonna pay TNT for its content the way we did. Therefore, we're gonna save money, and therefore we can take some of that savings and apply it to what we spent to ruin them by getting the NBA. Boy, that is Machiavellian.

And it's not impossible that that's part of the calculation, but that really is something else. And you're either gonna be right or wrong, because if there's a carriage dispute at the end of 25, that does save Comcast 60, $70 million a month. That's significant. It is significant. And look, if another party, if TNT had actually kept the NBA, or lost, it doesn't matter.

They would have the cable dispute. And I don't think it was Machiavellian. That's smart. You're going to look at everything. You're going to look at the promotional power of the NBA to drive your other sports, right? During the Olympic year, they can take the NBA and all those ratings and drive Olympics ratings up.

They will save money. Comcast will save money from fees they don't have to pay TNT. Sure, they figured all that out. I don't believe, it's funny that we disagree on the sort of negotiating during a exclusive negotiating window, but I don't see anything wrong with NBC having done all that. They're not violating anything to look at all the benefits they'll receive from paying for a new NBA deal. It might

help them launch broadcast shows on NBC. I mean all those things are calculated. Yeah. In a situation comedy. But I am marveling at, again, just the basic terms that we keep on learning here. Like a distributor, a cable distributor is a buyer and a seller. WBD is trying to sell. I mean it's just funny that as much as we are looking ahead to Amazon and the tech future that has been now the NBA's goal in that C tier, third tier package, we're also watching the, yeah, the backroom knifing that goes on. That's why our Justice Department is so busy. With cable television networks and distributors

I don't see what they have to deal with here These companies compete they are competing fairly not in this case. I saw what the mergers happen To quote Shakespeare at the end of our show here now exit pursued by a bear Wait to see wait to to see. John David, thank you. This has been Pablo Torre Finds Out, a Meadowlark Media production. next time.