Changes In Media Could Be Challenging for Fox Corp

The launch of Venu Sports, a sports streaming joint venture involving Fox Corporation, Disney, and Warner Bros., was likely influenced by the recent clash between Charter Communications and Disney, according to Max Greve at seekingAlpha.com. As Greve sees it..the clash highlighted the need for a backup distribution system in case of contract disputes. 

However, the cost of partners to help defray the service’s expenses led to the exclusion of non-sports channels, writes Greve. While this was secondary for Disney and Warner, it posed a significant problem for Fox. Why? 

Because Fox News and the NFL contract represent the entirety of Fox’s profit. Fox needs both to succeed financially, but they are increasingly at odds with each other. Balancing distribution for the NFL and protecting Fox News may become impossible going forward. Fox Corporation faces a delicate balancing act between sports and news, and Venu Sports is a microcosm of broader industry trends.

The Economics of Venu Sports: Venu Sports is intricate to the point of tediousness for broad-based investors, but it’s fascinating for those who understand the economics of media. The joint venture’s implications for the future of media are multifaceted. It’s not just about what Venu Sports does; it also reflects broader forces shaping the industry. While I could write multiple articles or even a whole book on this topic, let’s focus on the key points:

Distribution Challenges: The clash between sports content and news content creates a dilemma for Fox. Sacrificing one for the other could lead to significant losses. Linear operators may need more flexibility to navigate these challenges.

Venu Sports’ Impact: Venu Sports represents a strategic move by Fox Corporation to secure its position in the evolving media landscape. Streaming services are disrupting traditional broadcasting, and Fox aims to stay relevant.

Media Industry Dynamics: Beyond Venu Sports, the media industry faces seismic shifts. Streaming services, changing viewer habits, and legal battles all play a role. The Paramount-Skydance deal and foreign ownership of media outlets are also critical factors.

Fox Corporation faces a delicate balancing act between sports and news, and Venu Sports is a microcosm of broader industry trends.