Warner Bros. Discovery (WBD) lost a key media rights deal with the National Basketball Association (NBA), the league confirmed in a statement on Wednesday. The news sent shares of the company down more than 2% in after hours trading.

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 like "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 monthslong negotiating period that expired on April 22. That set off an arms 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 a 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 has 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.

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's (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."

Bank of America analyst Jessica Reif Ehrlich previously described the NBA rights renewal as "critical" to Warner Bros.' future given that TNT boasts the highest carriage fees, or fees pay-TV providers pay to network owners to carry their channels, out of all of the company's cable networks at an estimated $3 per subscriber.

"Should they lose these rights, there is a real risk WBD will not be able to maintain these affiliate fees in upcoming negotiations," she said at the time.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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