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Monday, February 12, 2024

ESPN, Fox, WBD Throw Hail Mary With New Streaming Service


Disney's ESPN and Fox two of the league’s biggest media partners, announced last week that alongside Warner Bros. Discovery they would create a new streaming service to offer all their live-sports programming. The NFL, a titan that’s used to having a seat at the table in any discussion affecting its future and content, was out of the loop. Executives including Commissioner Roger Goodell and media chief Brian Rolapp were caught off guard by the news.

That the media behemoths were willing to risk the ire of the NFL shows the sense of urgency—even desperation—they feel about solving what is arguably the biggest riddle in their industry: finding a business model that can work in the streaming economy. 

To do that, The Wall Street Journal reports they made a profound shift without consulting powerful partners. They’re taking the chance that, by joining forces with big rivals, they won’t draw antitrust scrutiny. And they’re doing it with a product that consumers might not even want—in part because the new service won’t deliver anything close to the entire landscape of sports programming.\


Sports have been the linchpin of the hugely profitable cable-TV industry for decades. But as consumers cut the cord in droves, pushing that business to the brink, making the transition to streaming has been rocky. 

It’s been hard enough to port entertainment programming to streaming, with services such as Disney+, Peacock and Paramount+ struggling to show investors profits. But sports are even trickier, because of the staggeringly high costs for the content.

Media companies collectively pay billions of dollars annually to the NFL and NBA alone. Cable makes the math work because of its inherent subsidy—even households who don’t watch channels like ESPN pay for them on their monthly bill, meaning the high rights costs are spread among higher numbers of subscribers. 

What ESPN, Fox and Warner settled on was to create a slimmed-down version of a cable bundle in streaming form that is focused on sports. The as-yet-unnamed service, expected to launch this fall, will carry 14 networks, including Disney’s ESPN channels and its ABC network, Warner’s TNT and TBS, and Fox’s broadcast network and sports cable channel. The service will feature sports including the NFL, NBA, Major League Baseball, college football and basketball, golf and Nascar.

By packaging together all the content, the companies are hoping they can bring in enough sports-first customers to make the economics work. The companies are discussing a price that could approach $50 a month, people familiar with the situation said. 

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