On Tuesday evening, a potential game-changing initiative was announced by three longtime providers of play-by-play sports. It involves streaming, and a new joint venture that Madison and Wall’s Brian Wieser calls “Hulu for Sports.”
What does the creation of this service mean for the future of sports rights, and the potential growth of broadcast television as a home for live game-day coverage?
“On its surface, this looks like a sports-centric version of Hulu,” Wieser said in an investor note distributed early Wednesday, noting that this is “potentially very big news for the U.S. (and thus global media industry).”
But, there are differences between Hulu and this forthcoming joint venture product linking The Walt Disney Company’s ESPN with FOX Sports and Warner Bros. Discovery. The biggest is that streaming is now mainstream, and “cord-cutting” from MVPDs has increased the desire of such executives as WBD head David Zaslav to create new bundles for OTT platforms.
With a “real interest in driving consumers toward streaming services,” the joint venture between the three companies devoted to sports could have legs. Yet, what sort of sports content will fuel this platform at its onset? Will there be exclusive content, or duplicative offerings to that seen on broadcast or cable TV?
Those are questions many may be asking themselves, in particular after a Peacock-only airing of a NFL Wild Card playoff game between the Kansas City Chiefs and Miami Dolphins raised the ire of fans outside of each of the team’s main DMAs.
For Wieser, “It has appeared increasingly likely that consumers who are willing to pay for and watch sports probably want all (or at least most) sports, which means that so long as some of the major sports rights exist on linear TV, there might only be limited uptake of streaming sports offerings.”
In the long-term, Wieser also wonders what the consequences for advertising could be, with “the only genre of programming really holding up the U.S. national television ad market’s reach potential” being sports.
A ‘SKINNY SPORTS BUNDLE WE’VE BEEN WAITING FOR’
For MoffettNathanson Senior Analysts Robert Fishman and Michael Nathanson, the news that ESPN, FOX and Warner Bros. Discovery have reached an understanding on principal terms to form a new Joint Venture to build what they call “an innovative new platform to house a compelling streaming sports service” is highly welcomed.
It will be available as a standalone app and comes with the bundling capability of linking Max, Hulu and Disney+ subscribers. Each of the companies will own one-third of the forthcoming sports-focused OTT.
While entities such as Fubo may be biting their nails as MVPDs including Charter Communications-owned Spectrum and Comcast‘s Xfinity could be wondering what this means for their consumer growth in cable TV services, Disney, FOX and WBD made it clear that the new OTT platform will include ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, FS1, FS2, BTN, TNT, TBS, truTV, as well as ESPN+.
Fubo shares were trading down by more than 27% in Wednesday morning trading on the NYSE, sending it down to $1.8250 in heavy trading.
For broadcast TV station owners, in particular those in difficult negotiations with cable TV service providers, the retransmission consent game just entered a new, cloudy arena, as the forthcoming app will include ABC and FOX broadcast networks.
Does this mean that O&Os will only be included on the app? Will certain affiliates be added to the app? In RBR+TVBR‘s home market of West Palm Beach, WPEC-12, owned by Sinclair Broadcast Group, can be viewed as a default CBS network station on Paramount+.
For Nathanson and Fishman, many questions remain, including pricing of the forthcoming OTT service. However, what seems clear is that sports rights aren’t in play — yet. Rather, the new platform brings together the companies’ portfolios of sports networks, certain direct-to-consumer sports services and sports rights as they exist today.
And, they say, “The formation of the pay service is subject to the negotiation of definitive agreements amongst the parties.”
The offering is scheduled to launch in the fall of 2024.
Therefore, the Scripps Sports initiative and plans at Gray Television to build out local broadcast arrangements aren’t in the crosshairs of ESPN, FOX and WBD. Instead, they are liking look for a way to maximize distribution of programming seen on the multitude of basic and expanded-tier cable channels that continue to attract fewer viewers.
“Our initial first take is to view this announcement by Disney, Fox and Warner Bros. Discovery as the ultimate play to take ownership of their own sports destinies, foregoing their reliance on the current distribution system,” Fishman and Nathanson write in their own investor note. “If this JV evolves over time into a different form and eventually bids as a combined entity for sports rights, that would clearly limit the number of +1 bidders critical to maintaining the inflation in future negotiations that the entire sports ecosystem is built around.”
And, it would present a strong bidding alternative to Amazon Prime, or perhaps Netflix, as the digital streaming giants posit themselves in a way that’s not so dissimilar to the birth of television networks and affiliates some 75 years ago.
Both Fox Corporation and The Walt Disney Company will be releasing their respective quarterly earnings reports following February 7’s Closing Bell. RBR+TVBR on Twitter will have access to the reports.
