Alexandra Steigrad
A new streaming giant that will combine the sports assets of Fox, Disney’s ESPN and Warner Bros Discovery is poised to reshuffle the TV industry – and experts say the big loser will likely be the cable business.
The yet-to-be named standalone service, slated to launch this fall, will account for roughly 55% of the sports rights in the US, according to a Citigroup analyst.
It won’t stream NBC’s “Sunday Night Football” or NFL games airing on CBS, which this year will broadcast the Super Bowl.
Nevertheless, experts say the new app will likely get the ball rolling on reshaping the pay-TV landscape as streaming giants like Amazon, Apple and Netflix continue to hike up the already staggering price for sports rights.
“The newly announced joint-venture is going to send shockwaves through the entire media world,” said LightShed Partners analyst Rich Greenfield. “Is this opening a Pandora’s Box?”
Crucially, the new venture is focused squarely on sports – the main reason that most cable-TV subscribers are still hanging on.
It combines the might of the three media titans that broadcast the NFC Championship Game, the College Football Playoff and other top-tier bowl games, the NBA Finals, the World Series and the Stanley Cup Finals.
That poses a major threat to Comcast, owner of NBCUniversal, as well as CBS owner Paramount Global.
Greenfield said that networks not included in what he dubbed the “Winner’s Bundle” are scrambling.
“Whether you are Paramount, Comcast, NFL Network, AMC Networks, A&E Networks or station groups with large numbers of NBC or CBS stations, the successful launch of Winner’s Bundle is your worst nightmare,” he said.
Nevertheless, it’s doubtful whether the new package spells doom for cable.
While it will be available to ESPN+, Hulu and Max subscribers, giving cord-cutters access to a massive amount of sports content at a price point somewhere north of $40 a month, it will still fall short of the full breadth of sports coverage available on cable.
NBC and CBS own the rights to several top-rated events.
Aside from “Sunday Night Football,” the Peacock Network is home to Notre Dame football, and the Summer and Winter Olympics, while CBS televises the NCAA Men’s College Basketball Tournament (it shares rights with WBD), the AFC Championship Game and The Masters golf tournament.
“I don’t think it’s going to be the final nail in the coffin of pay television,” said Robert Thompson, the trustee professor of television, radio and film at the S. I. Newhouse School of Public Communications at Syracuse University.
“If you start adding it up and you like sports, you’ll pay at least $40 for the service but you’re still going to want to watch the NFL games that are not on the platform,” he added. “You’re going to want them one way or another.”
Indeed, Fox Chief Executive Lachlan Murdoch emphasized the venture isn’t meant to cannibalize pay TV, but instead attract new streaming subscribers to the fold who have been underserved.
Seizing on that point, Murdoch estimated there are more than 60 million homes in the US of “cord-nevers and cord-cutters” – mostly younger viewers – that the new app could attract.
“There is no product serving the sports fans that are not within the cable TV bundle,” Murdoch told analysts during Fox’s earnings call Wednesday.
Still, the Winner’s Bundle could exacerbate the trend of ditching cable for cheaper options.
Morgan Stanley analyst Benjamin Swineburne noted that cord-cutting is slowly killing the profitability of cable, with pay TV households down 25% since 2018.
Perhaps the biggest benefit from launching the service is that it may give the media companies some leverage over cable distributors and their rising carriage fees.
Last August, Charter Communications blacked out ESPN and ABC hours before kickoff of the Jets-Bills game on “Monday Night Football” in a dispute over carriage fees with Disney.
The impasse lasted more than a week until Disney agreed to offer Disney+ and ESPN+ streaming services to Charter’s subscribers in exchange for the cable operator paying a higher carriage fee for Disney’s other channels.
Thompson said the new service could just be the first step toward other unlikely marriages.
“We are going to see some interesting bundling and pairing up,” Thompson said. “It’s like this whole entertainment industry is playing musical chairs and the music is very much playing.”
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This post was originally posted by New York Post
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