WSJ: How You Stream Sports Is About to Be Transformed by a Blockbuster Media Deal
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How You Stream Sports Is About to Be Transformed by a Blockbuster Media Deal
New venture from ESPN, Fox and Warner will combine their sports content, but won’t have all the games fans want. Here’s what you need to know.
By Isabella Simonetti Follow and Amol SharmaFollow Updated Feb. 7, 2024 12:25 pm ET
It’s one small step for sports kind.
Disney’s ESPN, Fox FOXA -5.60%decrease; red down pointing triangle and Warner Bros. Discovery WBD -2.68%decrease; red down pointing triangle on Tuesday announced a new sports-streaming venture that promises to make life easier for consumers who are frustrated with all the platforms they have to sign up for to watch their favorite teams play.
The as-yet-unnamed service will bring together in one streaming package all the content those companies offer—from the NFL, NBA, NHL and MLB to college basketball and football. Plenty of consumers will find that appealing. But before you get too excited, there is some fine print to be aware of, from pricing to availability of the content you love.
The implications for the future of the media business are huge. This could be a tipping point that dooms cable TV. It will reshape deals between networks and leagues for years to come, and will go a long way toward determining the legacies of some big-name CEOs.
Here are some key takeaways on what the new service, which is slated to launch later this year, means for consumers and the sports-media industrial complex:
Is this the one-stop shop for sports I’ve been waiting for?
Not exactly, but it is a start. Subscribers will have access to all the networks from the three companies that show sports. That includes Disney’s ESPN’s, ESPN2, ESPNU, ESPNNews and ABC; Fox’s broadcast network and Fox sports cable networks; and Warner’s TNT, TBS and truTV.
These networks have contracts for some of the highest-profile sporting content, including games from professional football, basketball and hockey, as well as from college sports. Citi analysts expect the new service to encompass about 55% of U.S. sports rights.
So what’s missing?
The service doesn’t include content from Paramount’s CBS, Comcast’s NBC and streaming services like Amazon’s Prime and Apple TV+.
If you’re, say, a really big NFL fan, this new service would give you only a portion of the games you may want to see. You would also need Amazon for football on Thursdays, Paramount+ for access to CBS’s Sunday afternoon games and NBCUniversal’s Peacock for Sunday Night Football.
You would also miss out on certain college football and basketball programming, prominent golf events like the Masters and British Open, and content from the Olympics, Major League Soccer and the English Premier League. Also, this service doesn’t include local telecasts of pro teams.
What will it cost?
No price has been announced. It will definitely be cheaper than the typical $100 monthly cable bill, but don’t expect it to land in the Netflix zone either, partly because sports-rights are so expensive.
Wells Fargo analyst Steven Cahall projected, based on various assumptions, that the service could break even if around six million subscribers paid $40 a month. Other media insiders and analysts said the cost would likely have to be in the $50 range or higher. There are so many variables: how many people sign up, how much sports-rights costs grow. So it’s hard to predict.
What impact will this have on cable TV and the media business?
This is very bad for the future of cable TV. Sports has been one of the main attractions of the cable bundle. Consolidating so many valuable sports assets in one streaming platform will give people another reason to cut the cord.
The biggest draw for the big cable bundle now for many households will be news channels like Fox News, MSNBC and CNN. Entertainment channels—think AMC, A&E, Bravo, Comedy Central—are at most risk of being left behind by this shift.
Sports streaming already was growing. Nearly 50 million Americans had subscriptions to a streaming service offering weekly games as of August, compared with fewer than 25 million two years earlier, according to Antenna. Expect this new venture to supercharge that trend and lead to more “skinny” sports bundles.
Fox CEO Lachlan Murdoch said Wednesday that the new platform is aimed at “cord-nevers”—younger people who have never signed up for a traditional cable bundle. But it could very well also appeal to a lot of people who have paid for cable for a long time.
This service will be jointly owned by three companies. What could go wrong?
It turns out that we’ve seen a very similar movie already.
Hulu was founded by News Corp (parent of The Wall Street Journal) and NBC, and then later added Disney/ABC as a shareholder. For years critics said media companies weren’t up to the task of running a tech-oriented platform and that Hulu’s convoluted structure wasn’t helping. Media and ad analyst Brian Wieser notes that “it was difficult for Hulu to maximize the opportunity in front of it,” which is why some people called it “Clown Co.”
That said, over time Hulu did get its act together and managed to become a standout in streaming. And now, Disney is likely to become the sole owner, once it buys out NBC parent Comcast.
This new venture is coming at a different moment—the companies are all much, much more committed to streaming than they were 10 years ago—so the story could very well play out differently.
Was there an alternative path for the companies to take?
Yes, maybe. What ESPN, Fox and Warner are essentially doing is creating something akin to a slimmed-down cable package. One insider wondered: Why do media companies need to be operating such a thing, and take on all the risks and headaches involved? Why not just allow YouTube TV to offer a sports-only tier? Or even old-school cable providers like Charter? One executive close to the new venture said ownership of the platform will let them collect more ad revenue. Also, the media companies will have a more direct relationship with their customers.
What impact will this have on the sports leagues?
While the new platform could be a major draw for sports lovers across the country, it also raises questions about how it will affect bidding for valuable sports-media rights. Will this trio be allowed to bid collectively for digital rights? If so, that could put a damper on the bargaining power of leagues, which have been demanding big increases in prices for carrying games.
TNT and ESPN are the NBA’s main media partners and are currently negotiating a renewal of their deals. It is still unclear how those negotiations will be affected by the creation of this new venture.
Robert O’Connell contributed to this article.
Write to Isabella Simonetti at isabella.simonetti@wsj.com and Amol Sharma at Amol.Sharma@wsj.com
How You Stream Sports Is About to Be Transformed by a Blockbuster Media Deal
New venture from ESPN, Fox and Warner will combine their sports content, but won’t have all the games fans want. Here’s what you need to know.
By Isabella Simonetti Follow and Amol SharmaFollow Updated Feb. 7, 2024 12:25 pm ET
It’s one small step for sports kind.
Disney’s ESPN, Fox FOXA -5.60%decrease; red down pointing triangle and Warner Bros. Discovery WBD -2.68%decrease; red down pointing triangle on Tuesday announced a new sports-streaming venture that promises to make life easier for consumers who are frustrated with all the platforms they have to sign up for to watch their favorite teams play.
The as-yet-unnamed service will bring together in one streaming package all the content those companies offer—from the NFL, NBA, NHL and MLB to college basketball and football. Plenty of consumers will find that appealing. But before you get too excited, there is some fine print to be aware of, from pricing to availability of the content you love.
The implications for the future of the media business are huge. This could be a tipping point that dooms cable TV. It will reshape deals between networks and leagues for years to come, and will go a long way toward determining the legacies of some big-name CEOs.
Here are some key takeaways on what the new service, which is slated to launch later this year, means for consumers and the sports-media industrial complex:
Is this the one-stop shop for sports I’ve been waiting for?
Not exactly, but it is a start. Subscribers will have access to all the networks from the three companies that show sports. That includes Disney’s ESPN’s, ESPN2, ESPNU, ESPNNews and ABC; Fox’s broadcast network and Fox sports cable networks; and Warner’s TNT, TBS and truTV.
These networks have contracts for some of the highest-profile sporting content, including games from professional football, basketball and hockey, as well as from college sports. Citi analysts expect the new service to encompass about 55% of U.S. sports rights.
So what’s missing?
The service doesn’t include content from Paramount’s CBS, Comcast’s NBC and streaming services like Amazon’s Prime and Apple TV+.
If you’re, say, a really big NFL fan, this new service would give you only a portion of the games you may want to see. You would also need Amazon for football on Thursdays, Paramount+ for access to CBS’s Sunday afternoon games and NBCUniversal’s Peacock for Sunday Night Football.
You would also miss out on certain college football and basketball programming, prominent golf events like the Masters and British Open, and content from the Olympics, Major League Soccer and the English Premier League. Also, this service doesn’t include local telecasts of pro teams.
What will it cost?
No price has been announced. It will definitely be cheaper than the typical $100 monthly cable bill, but don’t expect it to land in the Netflix zone either, partly because sports-rights are so expensive.
Wells Fargo analyst Steven Cahall projected, based on various assumptions, that the service could break even if around six million subscribers paid $40 a month. Other media insiders and analysts said the cost would likely have to be in the $50 range or higher. There are so many variables: how many people sign up, how much sports-rights costs grow. So it’s hard to predict.
What impact will this have on cable TV and the media business?
This is very bad for the future of cable TV. Sports has been one of the main attractions of the cable bundle. Consolidating so many valuable sports assets in one streaming platform will give people another reason to cut the cord.
The biggest draw for the big cable bundle now for many households will be news channels like Fox News, MSNBC and CNN. Entertainment channels—think AMC, A&E, Bravo, Comedy Central—are at most risk of being left behind by this shift.
Sports streaming already was growing. Nearly 50 million Americans had subscriptions to a streaming service offering weekly games as of August, compared with fewer than 25 million two years earlier, according to Antenna. Expect this new venture to supercharge that trend and lead to more “skinny” sports bundles.
Fox CEO Lachlan Murdoch said Wednesday that the new platform is aimed at “cord-nevers”—younger people who have never signed up for a traditional cable bundle. But it could very well also appeal to a lot of people who have paid for cable for a long time.
This service will be jointly owned by three companies. What could go wrong?
It turns out that we’ve seen a very similar movie already.
Hulu was founded by News Corp (parent of The Wall Street Journal) and NBC, and then later added Disney/ABC as a shareholder. For years critics said media companies weren’t up to the task of running a tech-oriented platform and that Hulu’s convoluted structure wasn’t helping. Media and ad analyst Brian Wieser notes that “it was difficult for Hulu to maximize the opportunity in front of it,” which is why some people called it “Clown Co.”
That said, over time Hulu did get its act together and managed to become a standout in streaming. And now, Disney is likely to become the sole owner, once it buys out NBC parent Comcast.
This new venture is coming at a different moment—the companies are all much, much more committed to streaming than they were 10 years ago—so the story could very well play out differently.
Was there an alternative path for the companies to take?
Yes, maybe. What ESPN, Fox and Warner are essentially doing is creating something akin to a slimmed-down cable package. One insider wondered: Why do media companies need to be operating such a thing, and take on all the risks and headaches involved? Why not just allow YouTube TV to offer a sports-only tier? Or even old-school cable providers like Charter? One executive close to the new venture said ownership of the platform will let them collect more ad revenue. Also, the media companies will have a more direct relationship with their customers.
What impact will this have on the sports leagues?
While the new platform could be a major draw for sports lovers across the country, it also raises questions about how it will affect bidding for valuable sports-media rights. Will this trio be allowed to bid collectively for digital rights? If so, that could put a damper on the bargaining power of leagues, which have been demanding big increases in prices for carrying games.
TNT and ESPN are the NBA’s main media partners and are currently negotiating a renewal of their deals. It is still unclear how those negotiations will be affected by the creation of this new venture.
Robert O’Connell contributed to this article.
Write to Isabella Simonetti at isabella.simonetti@wsj.com and Amol Sharma at Amol.Sharma@wsj.com
| Subject | Author | Views | Posted |
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| merlin | 69 | February 07, 2024 09:46AM |
