ESPN, Fox, and Warner Bros. Discovery’s new streamer would including NBA games and other sports.
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A new streamer from ESPN, Fox, and Warner Bros. Discovery could change how we watch sports.It’ll bring many cable sports to streaming, but a lot is still unknown — including the price.Here are six big questions swirling around the service.
ESPN, Fox, and Warner Bros. Discovery are set to upend the way we watch sports.
The three giants in sports broadcasting announced on Tuesday a new streaming service coming this fall that would bring together many of their major live sports rights into one super app.
The platform is supposed to offer all their linear sports channels, including ABC and Fox; cable networks ESPN, FS1, TNT, TBS, and their sister channels; as well as streamer ESPN+. That’d include a bevy of games from the Big Four US sports — NFL, NBA, NHL, and MLB — as well as a selection of college sports, tennis, golf, racing sports, and more.
Set up like Hulu for sports, the streamer would be part of a joint venture owned equally by ESPN, Fox, and Warner Bros. Discovery. (Comcast and Paramount weren’t asked to join the service, CNBC reported.)
That’s about all we know for now.
“At this point, there are more questions than answers but this is definitely a step towards providing a compelling consumer choice to access sports,” Bernstein analysts wrote in a note on Tuesday.
ESPN parent Disney and Fox report earnings on Wednesday, and more answers could be on the way.
Here are six of the biggest questions coming out of the new announcement:
How much will it cost? And what will sports fans be willing to pay? No price has been set yet, but CNBC reported around $50 a month could be a “logical starting point” for the service, citing a source familiar with the matter. That’d compare to the roughly $70 a month YouTube TV charges for about 100 live channels including major sports networks and some locals depending on the market. But, keep in mind, while the new sports streamer will have most sports, it won’t be a one-stop shop. Games on NBC and Paramount’s channels and streamers — including some NFL matchups and leagues like the English Premier League — will be missing, as will the local channels where viewers watch their regional teams outside the national broadcasts.
“So far, media conglomerates have had a rough time making the streaming model work, especially for the exorbitantly priced sports properties Disney, Fox, and WBD plan to carry,” said Paul Verna at Insider Intelligence, which is owned by Business Insider’s parent company. “Joining forces might give them scale, but it won’t solve the riddle of how to monetize this content.”
How will the cable companies react? This new streamer could be the thing that finally kills cable TV. Are the cable giants ready to walk away from that business? And are ESPN et al really ready to say goodbye to the high-margin, albeit shrinking revenue they get from the cable carriage fees? Some cable operators, including Charter, have indicated they’re willing to move on as they focus on their more profitable internet businesses, even shifting subscribers to virtual pay-TV services like YouTube TV. If the cable companies get on board, the programmers could enlist them to shift subscribers to their new sports streamer. Or the operators could balk at an open attack on their legacy models.
Why would this joint venture be any better than Hulu’s? Hulu launched around the same time as Netflix did in streaming but fell behind in part because of its ownership structure, which was initially a JV between Disney, Fox’s former owner, and NBC. “Because it was a JV, it was difficult for Hulu to maximize the opportunity in front of it,” Brian Weiser wrote in his Madison and Wall newsletter on Tuesday. The new sports streamer will be run by an independent team like Hulu was at launch. And ESPN, Fox, and WBD will each have a one-third equity interest, have equal board representation, and license their sports content to the service non-exclusively (which would account for the fact that ESPN, for instance, has more sports rights than the other two and its own sports streamer). But there’s still a lot to figure out — and three very powerful figures looking out for their own interests in Disney’s Bob Iger, Fox’s Lachlan Murdoch, and WBD’s David Zaslav.
What will the leagues think? The key to getting the major sports leagues on board will be convincing them that this new streamer could bring in new audiences rather than shift the eyeballs they already have from cable TV. If they believe it has promise, could it give ESPN, Fox, and WBD more bargaining power in sports-right negotiations and greater ability to shoulder the sky-high costs? NBA rights negotiations are right around the corner and may be the first indicator of how this new streamer could serve as a bargaining chip.
On the subject of sports rights, will the service look to acquire its own programming? Scroll through any of your favorite streaming apps, and “exclusive” or “original” programming seems like a foregone conclusion. Will this new streamer come to the negotiating table for more sports rights to pad out its offering? One opportunity could be around local sports rights, which are in upheaval over the collapse of regional-sports networks and in which rival Amazon has staked a claim.
Last but not least, what is going on inside Comcast and Paramount right now? Given the report that they weren’t even approached to be part of this new streaming service, could this pour fuel on the fire for a potential merger between the two or push them to partner on their own super streamer? Both companies have already been pretty proactive about carving out sports rights for their own streaming services, Peacock and Paramount+.