Media companies join forces to co-stream sports
mTHE SONG OF THE NAM 100m Americans will tune in on February 11 for the Super Bowl, the biggest event in the nation’s sports calendar – and in its television schedules. In 2023 the audience for the football game (the American kind) was more than double the largest audience seen that year. Although many TV watching has moved to streaming platforms, when Americans want to watch sports, old school “serial” TV where they go.
Is that about to change? On February 6th three of America’s biggest sports programs – Disney (home of the ESPN sports network), Fox and Warner Bros. Discovery (WBD) – have announced a plan to bring their most valuable content to a new platform. The eponymous streamer will launch in the autumn, showing everything from American football to tennis at Wimbledon. If successful it could be a game changer for the media industry.
Most other types TV has already turned online. Last year streaming accounted for more minutes of viewing in America than either broadcast or cable TV, according to Nielsen, a ratings company. Sports are an exception. Although big technology has added sports to its schedule – Amazon and YouTube have bought the rights to American football, Apple has got involved in proper football and Netflix is going to involved in wrestling – true sports fans still have to go out for cable. The audience is huge: 44 of the 50 most watched broadcasts in America last year were sports (see chart).
The new service is the biggest sports bet made on streaming. Total value of platform sports rights – golf, NASCAR, hockey and many others – about $ 16bn a year, according to Bernstein, a broker. In total, the content slate will include about 55% of American sports rights by value, says Citigroup, a bank.
Some wonder if the new candidate will ever make it to the starting line. Antitrust regulators may oppose three sports content giants merging. And joint ventures can be inconvenient. Many are already comparing the new streamer to Hulu, an early platform launched in 2007 by Fox and NBC to combat the threat from YouTube. This shared ownership slowed it down, stifled investment and earned it the nickname “ClownCo”. There is a risk that the new sports venture is “ClownCo 2.0”, says Brian Wieser of Madison and Wall, an advertising consultant.
Success may come at a price. LightShed Partners, a research firm, estimates that subscriptions will start at $35 a month (plus a generous helping of ads), less than half the cost of a complete sports package on cable. Sports fans might think that’s not enough. But casual fans may be tempted to ditch cable eventually, accelerating the decline of cable and satellite companies, which have lost half of their American subscribers in the past decade .
What’s in it for Disney, WBD and Fox? They lose out first, because the flexible cable market is shrinking. But the target market is streaming homes only that never had cable, said Lachlan Murdoch, head of Fox, to investors on February 7. And by giving viewers a streaming package including sports, they could cut customer churn. People can easily cancel their Disney+ subscription after canceling the latest “Star Wars” product (about 5% do that every month). But they can’t take over football season. And when that ends, it’s time for basketball, then basketball and so on.
A merger could also improve the bargaining power of the three compared to sports leagues. The competition for sports rights is very intense as new bidders like the big technology conglomerate are entering. WBD and Fox bid together, they could keep up with the price inflation that leagues are now demanding. For companies left out of the campaign, the successful launch would represent their “worst nightmare”, argues LightShed Partners. Companies like Paramount and NBCUniversal may find it harder to attract viewers to its own sports streaming ventures, even as the cable market shrinks, where it still makes most of the their money, accelerating. Time for a new game plan. ■
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