Call it a Woesome Wednesday for broadcast television companies with publicly traded shares on the NYSE and Nasdaq markets. Upon learning of a joint venture proposal struck between The Walt Disney Co. owner ESPN, FOX Corporation and Warner Bros. Discovery to create a sports-focused subscription video-on-demand platform with a reported $40 per month fee, stock prices for some of the biggest over-the-air TV station ownership groups plummeted. Also impacted was the nation’s “sports first” virtual MVPD platform, FUBO.
Once the dust settled, FUBO and Gray Television released official statements designed to both calm shareholders and express their thoughts on the planned OTT platform. The two companies couldn’t be more divergent in their responses.
Perhaps that worked. Or, bargain hunters have swooped in to acquire FUBO shares at a discount. With Thursday’s Opening Bell on Wall Street, FUBO quickly began to recover from February 7’s devastating trading session, rising 3.1% to $2 within the first two minutes of trading on the NYSE. That gain fizzled, however, with FUBO dipping back to $1.94 in immediate after-hours trading on Thursday.
That said, FUBO’s gains seen since late June 2023 on Wall Street have all been wiped out, with FUBO stock down from $3.36 in mid-December 2023. With Q4 and full-year 2023 earnings scheduled for a March 1 pre-market release, FUBO late Wednesday issued a statement that all but dismissed the ESPN/FOX/WBD joint venture. Noting it “has undoubtedly captured our attention,” the company that sees former financial analyst John Janedis as its Chief Financial Officer and David Gandler as its CEO admitted that it isn’t surprised that more sports streaming options are becoming available. However, Fubo said, “We have already seen that a consortium born of historical competitors is a difficult undertaking, and streaming joint ventures rarely work.”
Fubo also shared something it may know all too well: “sports-only programming is highly challenged.” Fubo started out as a sports-only venture, only to evolve into “an aggregated sports, news and entertainment package.”
There’s just one key difference between what ESPN, FOX and WBD are proposing to launch in the fourth quarter of 2024 and what Gandler and Janedis oversee: FUBO controls no sports rights. In contrast, ESPN, FOX and WBD own the rights to a plethora of sports leagues in the U.S.
And, that is what may be the bigger issue of concern for FUBO, and for others in the cable and broadcast TV universes. “The underlying motives and implication of this joint venture also command our scrutiny,” FUBO said. “Every consumer in America should be concerned about the intent behind this joint venture and its impact on fair market competition. This joint venture spotlights a concerning trend where an alliance with significant market share, reportedly controlling 60%-85% of all sports content, could dictate market terms in a manner that may not serve the broader interests of consumers.”
While FUBO concluded its statement with marketing language promoting its “robust programming and quality product experience,” which can’t be duplicated, it says, by the ESPN/FOX/WBD joint venture, the voice of small and independently owned MVPDs in the U.S. was equally skeptical of how their plan will pass muster with federal regulators.
“Allowing the biggest media players to join forces—while locking out traditional linear cable providers from offering the same package at the same price—only gives even more power and leverage to the Goliaths to extract more money from customers of ACA Connects Members,” said ACA Connects President/CEO Grant Spellmeyer. “This clearly isn’t a functioning free market. With customers facing higher prices and fewer affordable choices, there needs to be a level playing field.”
A POTENTIAL BENEFIT FOR BROADCASTERS
While FUBO and ACA Connects members could be highly impacted by the “Hulu for Sports” plan, Gray Television late Wednesday said in a statement that it “welcomes any venture that expands the reach of local broadcasting stations, which in turn supports the ability of local stations to maintain trusted local news operations that benefit everyone.”
Why would it support an ESPN/FOX/WBD SVOD platform?
In its statement released Wednesday, Gray said the potential launch of a new live streaming service from Disney, Fox, and WBD that would include the live signals of the local affiliates of the ABC and Fox broadcast networks owned by local broadcasters such as Gray “could be a significant opportunity to expand the pay-TV ecosystem.”
Because Gray’s ABC and FOX affiliates would be included as part of the offerings available to those paying to use the forthcoming fee-based service, it is seen as a potential revenue builder for the company that’s busily ramping up its Atlanta-area Assembly production facility.
“Local affiliates and their audiences could also benefit if the venture provides additional resources and scale that enables the venture to compete successfully and expand the sports programming available on the ABC and Fox broadcast networks and the affiliates of those networks,” Gray added.
That’s key for companies like Gray, which is building out the “Peachtree Sports Network” across Georgia. While WANF-46 in Atlanta and WTOC-11 in Savannah are CBS affiliates, Gray’s WTVM-9 in Columbus, Ga., is an ABC affiliate. The company’s very first station, WALB-10 in Albany, Ga., airs ABC programming on its DT2 signal.
Gray shares finished Thursday’s trading with a 3.62% jump to $7.73. With a $9.97 closing price on January 25, NYSE-traded “GTN” had been performing strongly until Wednesday, climbing from the low $6 range in late October 2023.
Other companies that experienced sharp declines in Wednesday’s trading were also in rebound mode one day later. As of 10am Eastern, The E.W. Scripps Co. saw its shares up by 3 cents to $5.66. Sinclair Broadcast Group stock was up by 7%, to $14.02. Nexstar Media Group was in the green and up by 2.1%, to $160.88.
CBS News & Stations owner Paramount, off by 6 cents in morning trading, finished with a gain of 1.25% to $13.01.
