Shares of Warner Bros. Discovery (WBD -0.99%) were heading lower today on reports that its TNT cable network was expected to lose the rights to air the NBA in the latest auction.
Separately, the stock also seemed to be declining in response to Paramount Global's slide after its rival reported disappointing earnings and took a step closer to a merger, seemingly putting a nail in the coffin of a once-rumored merger with Warner Bros. Discovery.
As of 1:26 p.m. ET, Warner Bros. Discovery stock was down 9% on the news.
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WBD goes from bad to worse
Just when you think things can't get worse for Warner Bros. Discovery, the stock finds a way to plumb new depths.
Investors seemed disappointed in the news that the network was likely to lose NBA rights to Comcast, whose NBC subsidiary was set to pay $2.5 billion a year for them, about double the average of what TNT has paid in its current deal. According to The Wall Street Journal, WBD is eager to keep those rights, but may not be able to match NBC's offer.
Losing the NBA would not only be a setback for TNT and the Max streaming service, but could jeopardize the company's position in the announced sports streaming joint venture with Walt Disney and Fox, as it would clearly give it less to contribute.
Additionally, Paramount's post-earnings slide today seemed to weigh on Warner Bros. Discovery stock. The WBD rival let go of CEO Bob Bakish in anticipation of a deal with Skydance and reported improved results in the streaming division.
Can WBD bounce back?
Warner Bros. Discovery has some of the most attractive properties in the entertainment industry, including HBO, the Warner Bros. studio, and the Turner networks, including CNN. However, the company is also saddled with debt from its series of mergers, and CEO David Zaslav has been more focused on cost-cutting than building a growing business.
With today's sell-off, investors seem to be signaling that the entertainment stock is going to be punished for continuing to retreat rather than spending on valuable content.
We'll learn more when the company reports first-quarter earnings on May 9. Investors expect revenue to fall 4.4% to $10.2 billion, and for its per-share loss to improve from $0.44 to $0.22. If there's a silver lining, it's that that should be a low bar for the company to overcome.
