Warner Bros. Discovery (NASDAQ:WBD) Secures Early Renewal Deal with Charter Communications

In a significant move for its distribution strategy, Warner Bros. Discovery (NASDAQ:WBD) has renewed its multiyear distribution agreement with Charter Communications, the largest pay-TV provider in the U.S. The deal, forged a year ahead of schedule, comes as the media company prepares for life without NBA broadcasts on its TNT network. As part of the new agreement, Charter will increase its payments for Warner Bros. Discovery’s channels, including CNN, Food Network, and TBS.

Streaming Services Added to Charter Bundles

A key component of the deal is the inclusion of Warner’s streaming platforms, Max and Discovery+, which will now be available to a large portion of Charter’s 13.3 million video subscribers at no additional cost. Charter will also partner with Warner Bros. Discovery to market and distribute these services, sharing revenue from any new customers they attract. This addition is expected to strengthen Charter’s bundle offerings, providing around $60 a month in retail streaming value when combined with other services such as Disney+.

TNT’s NBA Loss and Fee Stability

Despite the likely departure of the NBA from TNT after the 2024-25 season, the network’s carriage fees will remain unchanged—a notable victory for Warner Bros. Discovery, given the speculation that these fees could drop following the NBA’s recent $77 billion media rights deal with Disney’s ESPN, Amazon, and NBCUniversal. TNT is expected to lose the NBA but has bolstered its sports content lineup with rights to NCAA March Madness, Nascar, Major League Baseball, the National Hockey League, and additional programming such as the French Open and Big East college football.

A Win for Both Companies

Warner Bros. Discovery Chief Executive David Zaslav lauded the deal at a Goldman Sachs investor conference, calling it “a terrific deal for us.” The media giant’s stock surged 8.4% following the announcement, while Charter shares rose 3.3%. This renewal is seen as a major win for both companies, allowing Warner Bros. Discovery to secure better terms for future negotiations with Comcast and DirecTV, and providing Charter with stability in its programming offerings.

Timing Reflects Industry Urgency Amid Cord-Cutting

The deal comes as the entertainment industry faces increasing urgency to lock in distribution agreements amidst a rapid shift toward cord-cutting. For pay-TV and broadband providers like Charter, adding streaming services to their bundles helps offset rising costs to distribute traditional TV channels as viewership continues to decline. Meanwhile, entertainment companies like Warner Bros. Discovery are aiming to maximize revenue from their declining linear TV business while transitioning toward a streaming-dominant future.

Leveraging the Deal for Future Negotiations

Warner Bros. Discovery’s early renewal with Charter is expected to give the media company leverage in its upcoming carriage negotiations with Comcast and satellite broadcaster DirecTV. Analysts believe the terms set with Charter, the country’s largest pay-TV provider, will serve as a foundation for future deals. As the company braces for the loss of the NBA, the renewal provides a buffer, ensuring a steady flow of revenue from its TNT network while it focuses on expanding sports programming and original content.