The move takes aim at a major issue for media companies as viewers abandon cable and prices soar for broadcast rights to sporting events.
For years, the rising price of sports rights has been a major headache for media executives, who have watched viewers abandon traditional TV for streaming services even as their companies continue to pay up to broadcast games.
On Tuesday, Disney, Fox and Warner Bros. Discovery proposed a new offering that could keep them in business with some of those customers. The companies announced a streaming service that will feature games from the major professional leagues and college conferences, which they hope will attract sports fans who have abandoned cable.
The service will offer streaming subscribers all the channels owned by those companies that show sports, like ESPN, TNT and FS1, but also ABC and Fox. In addition to sports content, subscribers will be able to watch nonsports shows like “The Simpsons” and “The Bachelor” that are available on the channels. Subscribers will have access to 14 channels in total, as well as ESPN’s existing streaming service, ESPN+.
The price, name and executive team behind the service have not yet been determined. It is scheduled to launch in the fall.
Sports and live events, like award shows, have long been seen as a bulwark against cord cutting. Rich Greenfield, a media analyst at LightShed Partners, said in an interview that he was encouraged by the new service, which is likely to satisfy some sports viewers who are fed up with paying for traditional TV channels they don’t want. But he said the absence of companies like Paramount meant that die-hard fans still wouldn’t have access to a complete array of live sports.
“It’s a step in the right direction,” Mr. Greenfield said. “The question is: Is it enough?”
In some ways, this bundle of channels is an evolution, not a revolution. The companies already sell their channels to traditional cable distributors like Comcast and Charter, and to digital distributors, like Sling and YouTube TV. The new service is essentially just another distributor to sell channels to, though the companies collectively own it and the grouping of channels being offered to subscribers is novel.
Sports fans will find games and matches from almost every major league on the app. In addition to National Football League and National Basketball Association games, the service will offer action from Major League Baseball, the National Hockey League, the PGA Tour, Gran
Network contracts with leagues are usually specific about where games can be shown, and most leagues have been hesitant about allowing too many games to move off broadcast and cable channels and making a full transition to streaming. By structuring the new app in such a way that everything on the channels — sports and nonsports contend Slam tennis, professional soccer, major college conferences and the Ultimate Fighting Championship.
While this service goes a long way toward allowing sports fans to watch a significant number of games in a single app, it does not bundle all sports together. NBC, CBS and Amazon, in particular, have major rights — like many N.F.L. games, major golf tournaments and the Olympics — that will not be a part of the service. Regional sports networks, where most fans still watch their local baseball, basketball and hockey teams, are also not included.
Live sports have been moving to streaming services already. Deep-pocketed tech companies like Apple, Netflix and Amazon have paid handsomely for sports rights, and the N.F.L. just had its first streaming-only playoff game on NBCUniversal’s Peacock. But with this new service, the traditional media partners will have an additional way to reach cable-averse sports fans.
The service, which will also be supported by advertising, will be distinct from the companies’ other streaming services. Viewers will be offered the opportunity to bundle the new app with their existing subscriptions to services like Disney’s ESPN+ and Warner Bros. Discovery’s Max.
Disney, Fox and Warner Bros. Discovery will each own a one-third stake of the new service and have equal board representation. They will license their sports content to the joint venture on a nonexclusive basis, allowing them to show games elsewhere, like on their linear networks.
For ESPN, this service is just one step in its transformation away from traditional television. Disney’s chief executive, Robert A. Iger, announced last year that the company planned to offer the flagship ESPN network as a stand-alone streaming offering by 2025. Disney is also having conversations with sports leagues about selling an equity stake in the network, and ESPN struck a $2 billion deal with Penn Entertainment last year to create ESPN Bet, an online sports betting brand.
Each company trumpeted the new service in a joint news release. Mr. Iger called it “an important step forward for the media business.” Lachlan Murdoch, the chief executive of Fox Corporation, said the service was “a new and exciting platform.” David Zaslav, the chief executive of Warner Bros. Discovery, hailed the service’s “unparalleled combination of marquee sports rights.”
This is not the first time media companies have joined together on a venture to deal with the rise of streaming. In 2007, Fox and NBCUniversal teamed up to start Hulu, a streaming service that included shows from both companies. Hulu’s ownership structure has changed over the years, including the additions of Time Warner, Disney and, when it bought NBCUniversal, Comcast. Disney is now poised to buy out Comcast’s share of Hulu and own the entirety of the service, which has more than 48 million subscribers.
https://www.nytimes.com/2024/02/06/business/espn-fox-warner-sports-streaming.html