ESPN, FOX, Warner Bros. Discovery launching
By Richard Deitsch, Mike Vorkunov, Andrew Marchand and Greg Rosenstein
ESPN, FOX and Warner Bros. Discovery are forming a new joint venture to launch a sports streaming service in fall of 2024, they announced Tuesday. This will include the companies’ portfolios of sports networks, certain direct-to-consumer sports services and sports rights.
Subscribers will have access to linear sports networks including ESPN, ESPN2, ESPNU, SEC Network, ACC Network, ESPNEWS, ABC, FOX, FS1, FS2, BTN, TNT, TBS, truTV and ESPN+. It can also be bundled with Disney+, Hulu and/or Max.
“The launch of this new streaming sports service is a significant moment for Disney and ESPN, a major win for sports fans and an important step forward for the media business,” Bob Iger, the CEO of The Walt Disney Company, said in a statement. “This means the full suite of ESPN channels will be available to consumers alongside the sports programming of other industry leaders as part of a differentiated sports-centric service. I’m grateful to Jimmy Pitaro and the team at ESPN, who are at the forefront of innovating on behalf of consumers to create new offerings with more choice and greater value.”
Added David Zaslav, the CEO of Warner Bros. Discovery: “At WBD, our ambition is always to connect our leading content and brands with as many viewers as possible, and this exciting joint venture and the unparalleled combination of marquee sports rights and access to the greatest sporting events in the world allows us to do just that. This new sports service exemplifies our ability as an industry to drive innovation and provide consumers with more choice, enjoyment and value and we’re thrilled to deliver it to sports fans.”
Pricing will be announced at a later date, the statement said.
What will it mean for consumers?
That’s the biggest question at hand and we’ll learn more about this as more details come out. Among the biggest questions for me is what will the price point be for such a product? In theory, as a practical matter, to give sports fans the opportunity to purchase these significant sports properties directly without having to pay for an entertainment component is a potential game-changer.
On the topic of a price point for the joint sports streaming service, which will be foremost on the mind of consumers, the joint venture has not yet finished its research on where it will land. But for some guidance, based on those briefed on the deal, the likelihood is it will be priced between where a standalone RSN might charge for its monthly offering (think $20-30 monthly depending on where you live) or what you might pay for bundled services (think $75 and up). Could that mean around $50-55? We’ll learn soon.— Richard Deitsch, media reporter
What’s this new venture called?
There is no formal name for the joint venture as of now — they are in the lab formulating names — but that’s going to be something very important when it goes to market. Feel free to send your suggestions in — maybe you’ll get a finder’s fee. — Deitsch
What will it mean for ESPN, FOX and Warner Bros. Discovery?
While the deal between ESPN, Warner Bros. Discovery and Fox Sports is significant, it is not, at least yet, the full solution for sports fans. After a year of discussions between the three entities, it will give fans another option to purchase sports. Without CBS, NBC and Amazon, among others, it is not the end all, be all, for a one-stop sports viewing buffet.
On the business side, the deal is a one-third split in ownership between ESPN, WBD Sports and Fox, however the fees that each company will receive are based on what they earn in their cable deals and with services, like YouTube TV, according to sources with knowledge of the agreement. This means that ESPN, which receives the highest fees, will receive a higher percentage from each subscriber to the new venture.
It is also just the leadoff hitter for ESPN’s direct to consumer offerings. It still plans on taking its mothership, ESPN, direct to consumer on its own by next year, according to sources with knowledge of the agreement. ESPN will still be offered on cable. In their most recent projections, ESPN+ will be priced in the $25-30 per month range. The new ESPN, WBD and Fox entity does yet have a price point yet.
ESPN is also continuing discussions with the NFL, other leagues and top digital players, on potential partnerships, according to sources with knowledge of the agreement.
For Fox, this is its first move into paid sports subscription service, as it has zigged when its competitors zagged in entering the space. It is a baby step with really no downside for the company. WBD Sports will continue with its plans with MAX, where it already offers all of its sports content.
While the company will have its own management team, including a CEO, it will not, at least for now, be bidding together for rights as one entity. In the end, this is basically similar to a Hulu-like venture for sports. It could be a solution for some cord cutters, but it is not the end all, be all, just yet. — Andrew Marchand, senior sports media columnist
The announcement comes at an interesting time
That this launches just months before the NBA takes its next media rights deal to market is certainly interesting timing for the league. Two likely bidders for parts of their rights package just agreed to a joint venture to stream those games starting next fall. WBD and Disney will still have their exclusivity on linear channels, so it’s not as if this is a monochannel absorbing their games. But there is now one stop shopping for consumers to watch NBA games and they’re sharing the revenue and costs for that.
What will the impact of that be on the rights fees the NBA gets? I think in one way the NBA might be happy because they do want their games to be more accessible and less split up and this new DTC app will at least allow fans to find a good number of the nationally televised games in one place. — Mike Vorkunov, national basketball business reporter
(Photo: Erica Denhoff / Icon Sportswire via Getty Images)