On Tuesday, Fox Corp, Walt Disney’s ESPN, and Warner Bros Discovery jointly announced that they will launch a sports streaming service later this autumn. The aim is to attract younger viewers who are not watching television.
The media companies will form a joint venture to develop a new service based on their extensive portfolio of professional and collegiate sports rights. This portfolio includes the National Football League, NBA, MLB, FIFA World Cup, and college competitions.
The yet-to-be-named service would offer an all-inclusive programming package, including television channels such as ESPN, TNT, and FS1, along with streaming sports content. Subscribers could access it through a Disney+, Hulu, or Max streaming bundle.
“This means the full suite of ESPN channels will be available to consumers, alongside the sports programming of other leaders,” Disney CEO Bob Iger said in a statement.
Media analyst Michael J. Wolf of Activate Consulting asserts that the venture will appeal to the 40 million households in the United States that pay for high-speed internet. However, these households do not subscribe to pay television. An all-sports digital offering is likely to appeal to Amazon, Apple, and Roku, which aggregate streaming video for millions of customers.
“It’s a smart defensive move with potentially huge upside,” former Disney executive Bernard Gershon stated. The launch will occur at a time when cable television continues to lose subscribers. Live sports continue to attract a large audience, whether on television or online, as NBCUniversal’s Peacock demonstrated last month with its live streaming of the NFL’s AFC wild card playoff game, he said. Nonetheless, that audience comes at a high cost: the NFL’s media rights are reportedly worth $110 billion.
“Let’s figure out a way to split the costs of rights as they go up,” Gershon said, explaining the potential transaction logic. “And let’s create a platform that people will go for a range of sports and capture some of the upside.”
According to two people familiar with the situation, the CEOs have been talking about collaborating for a while. According to sources familiar with the matter, the partners see this sports-focused service as providing consumers with more options. However, it is not intended to replace Disney’s flagship ESPN television network or Fox’s FS1, both of which already reach a large number of sports fans on TV.
“We believe the service will provide passionate fans outside of the traditional bundle an array of amazing sports content all in one place,” Fox CEO Lachlan Murdoch stated.
The three media companies will jointly own the new entity, with equal board representation and an agreement to license their sports content on a non-exclusive basis. The new entity will be run by an independent management team.
The sports-focused service acknowledges that there is a large market for sports outside of traditional television. This platform was created to capitalize on that opportunity. It also provides another avenue for these media companies to monetize their increasingly expensive sports rights.
“This new sports service exemplifies our industry’s ability to drive innovation and provide consumers with more choice, enjoyment, and value,” Warner Bros Discovery CEO David Zaslav said in a statement.
Early last year, Iger stated that Walt Disney intends to keep ESPN and will seek strategic partners and investors as he works to bring the network online.
Last month, media reports indicated that activist investor Nelson Peltz holds the belief that Disney can attain streaming profitability. He suggests achieving this by integrating its ESPN+ online service with a larger sports-focused player.
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